AirBnb – prepping for tax season

Running an AirBnb is a lot more work than owning a rental property – and the things you can claim are significantly different too.  Below are a list of things that you should be getting ready to claim for come 2020 tax season.

• Laundry
  • How many loads of sheets do you do for each visitor? 
  • Keep a diary counting the loads of washing – you can declare  $1 per load.  This can quickly add up!
• Work out what percentage you can claim for annual expenses.
  • You have to work out how many days in the year your property was available for rent.
  • You also need to work out what percentage of the house is being used by AirBnb rentals.
  • Example:  Rates are $1000.  You have your house available for 6 months of the year.  You have 25% of your home available for AirBnb.  Amount to claim is $1000 x 50% x 25% = 500 x 25% = $125 can be claimed.
  • Note that new AirBnb COVID19 72 hour blocked out time  between bookings would not necessarily mean the place was ‘unavailable’.  The 72 hour block must be endured to obtain the next booking and pay for a deep clean.
• Rates, including water rates can be claimed as a percentage as above.
• Land Tax – which is not always payable on Airbnb properties which are deemed as primary residences – cannot be always expected to be fully claimable – mostly as you have to examine the number of days the rooms were available to rent.
• Pest Control – including ants, possums, rats/mice can be claimed depending on what areas it covered. (Did you only fumigate the rental rooms or the whole house)
• Commission expenses
  •   You need to put the gross rental amount your property earned – and then put the commissions you paid to Airbnb in as an expense on your tax claim.
  • If you are also selling other tours and entry fees to visitors onsite you must also claim the income you make on the commissions the other providers pay you.
• Interest expenses can be claimed as a portion via the method described above.  However you need to ensure that the PURPOSE of the mortgage against the rental property is in fact for the either the purchase of the property or for rennovations/improvements.  You cannot take out a loan against your rental property and use the money for a holiday and expect to still claim the interest as a deduction against rental income.
• Repairs and maintenance can be confusing.
  •   Ultimately – you need to consider did you maintain what was there or did you totally upgrade it?
  •   Repairing a hole in a fence is a repair – redoing a fence is a capital expense (which needs to be slowly expensed over a long time).
  • Fixing a leaking roof is a repair unless the roof was replaced completely.
  •   Particular to AirbBnb properties is the fact that large scale maintenance needs to be proportionately applied to the part that was rented out. 
• Cleaning being additional to laundry expenses can include dry cleaning and subcontractor/waged cleaners.  This includes cleaning products and tools such as mops/buckets.
• Kitchen and bathroom stocking materials such as shampoo, conditioner, dishwashing tablets, salt, pepper and so forth.
• Internet/Wifi that you have supplied to the visitors
  • This will need to be carefully proportioned, especially if  you are offering/using netflix and other high-draw internet services.
• Electricity
  • Never forget to work out the portion of electricity your guests have used.
  •   You may need to consider the power draw on the heaters supplied for instance when working out the proportion to claim.
• Insurance.
  • Have you informed your insurer that your home/house is on the short term rental market?  Failure to let them know can mean they will not pay out on any claims
  • Do you have public liability insurance as well as the house and contents insurance?
• Gardening
  • This can include mowing the lawn and  planting out seasonal flowerbeds
  • Larger projects like landscaping and tree arboury are also claimable but as capital expenses which are claimed over a long period of time.
• Printing and stationary, telephone expense and postage
  • Anything associated with running the Airbnb in a home based office could be at least partly claimable.
  • Printers, computers if exclusively used for Airbnb
  • Ink Cartridges and pens, paper etc
• Advertising expenses
  • If you also promote your Airbnb on facebook or google, those fees are also claimable.
  • Signage and flyers
• Bank Fees
• Body Corporate fees
  • these may include rates, water, insurance and land tax expenses
• Asset purchases
  • If you invest in a new air conditioner or similar large items such as beds you will need to record not just the cost but also the date and details about the purchase.
  • Sheets, crockery and cutlery can also be recorded this way when you set up.  Later when you replace broken glasses and plates you can claim those at repairs and maintenance.