TL;DR – What You Need to Know

- All income from Airbnb, Stayz, or other short-term rentals must be declared.
- You can only claim expenses for the periods the property is genuinely available for rent.
- If you (or your family) use the property personally, you must apportion your expenses.

The ATO is targeting unrealistic pricing, selective availability, and overstated claims so you must keep clear records of income, days available vs personal use, and all expenses.

If you rent out your home on Airbnb, list a holiday house, or have a property that sits vacant most of the year but earns some short-term rental income, pay attention. The ATO has had this area in its sights for several years, and compliance activity has been increasing.

The rules aren't complicated, but a lot of people get them wrong — and some don't realise they're in the system at all.

Airbnb reports to the ATO

Let's start here: Airbnb and other short-term rental platforms are required to report income paid to Australian hosts to the ATO. If you earned money through one of these platforms, it's already in the ATO's data.

The ATO doesn't need to audit you to find it — it's there in the pre-fill data. Which means if you don't declare it you are waving a red flag to the ATO.

All rental income must be declared

Whether you rent out:

  • A spare room in your home while you live there
  • Your whole home while you're on holiday
  • A dedicated investment property
  • A holiday house you also use personally

All income received must be declared on your tax return. The question isn't whether to declare it — it's how to calculate what you can claim against it.

The "available for rent" test

You can only claim expenses for the periods your property is genuinely available for rent — and the ATO means genuinely.

Setting your Airbnb listing to unavailable for half the year so your family can use the property, and then claiming 100% of the expenses, is exactly what the ATO is targeting.

A property isn't "available" just because you've listed it at some point during the year. It needs to be advertised at a realistic market rate, with dates that are actually bookable by the public.

Things that attract scrutiny:

  • A property listed only outside peak season, while reserved personally during the peak periods
  • Unrealistically high nightly rates during popular dates that make booking effectively impossible
  • Inconsistent claiming — large expense claims relative to very low income

Vacant days don't automatically count as rental days. If the property is not advertised or available for rent, those days are treated as private use for apportionment purposes.

Apportionment — how to split expenses fairly

If your property has mixed personal and rental use, you can only claim the rental-use proportion of your expenses.

Apportionment is generally worked out based on the number of days the property was available for rent vs days of personal use vs days it sat empty and wasn't available either way.

Here's a simple example:

Your beach house was available for rent for 180 days of the year (and actually rented for 120 of those days). You and your family used it for 60 days. It sat vacant and not listed for the remaining 125 days.

The rental-use proportion is the days available for rent (180) divided by the total days in the year (365) = approximately 49%.

You can claim 49% of expenses like council rates, insurance, and interest. Expenses directly related to the rental period (cleaning between guests, advertising) can be claimed in full.

Note that vacant days where the property wasn't advertised or available are not treated as rental days — they're essentially just wasted from a tax perspective.

What you can claim

For the days (or proportion) where the property is genuinely available for or earning rental income:

  • Loan interest (apportioned)
  • Council and water rates (apportioned)
  • Insurance (apportioned)
  • Repairs and maintenance for the rental periods
  • Cleaning between guests
  • Linen, if provided as part of the rental
  • Advertising costs (platform listing fees, photography)
  • Property management or platform service fees
  • Depreciation on furnishings and the building structure
  • Pest control, gardening

The same repair vs capital improvement distinction applies as for standard investment properties — a new kitchen is not an immediate deduction; fixing a broken shower is.

Renting out a room in your main home

The rules are a little different if you're renting out a room (or rooms) in the home you live in.

You can claim the direct costs of having the guest — cleaning, supplies, any dedicated furnishings — as well as a proportion of running costs like electricity, internet and council rates based on the floor area of the rented space and the proportion of time it was rented.

What you can't do is claim your mortgage interest or capital works deductions on the main residence portion — the main residence exemption covers you for CGT on your own home, but you give up some of that exemption proportionate to the rental use. This gets complicated if you eventually sell, so it's worth understanding before you start.

Selling a holiday home or Airbnb property

Capital Gains Tax applies when you sell a short-term rental property. Unlike your main home, there's no CGT exemption.

If your property had mixed personal and rental use, the CGT is apportioned accordingly — the portion of the gain relating to the rental use is taxable, and the portion relating to personal use may attract partial main-residence exemption.

The calculation of cost base and the apportionment method matter here. Keep all your records from day one.

And with the Budget 2026 changes to the CGT discount and negative gearing — see our Federal Budget Changes guide — the timing of any sale is becoming more important.

What to bring us

  • Your total income received for the year (Airbnb provides a summary in your host dashboard)
  • Number of days the property was available for rent vs personal use
  • All expense receipts — rates, insurance, interest statements, maintenance costs
  • If you have an agent or use a platform like Stayz, their annual statement is the starting point
  • Settlement documentation if you purchased or sold during the year

Ready for tax time?

If you have an Airbnb or short-term rental, make sure you note it in the Growthwise 2026 Tax Return Checklist. We'll walk through the details with you.

For full-year rental properties and investment property generally, see our Rental Property Tax Guide.