Nina Kazmierczak- Partner and Principal Adviser
Sovereign Wealth Partners
Amongst all the political chaos and disfunction of the past few weeks, it’s no surprise that a lot of ‘other’ news from parliament could have been missed.
A new law passed in parliament last week impacts AirBnB hosts in both NSW and Victoria.
Back in June, the NSW government was on the verge of announcing a virtual free-for-all for short-term holiday lets with no restrictions on the number of nights properties could be let to holiday makers. After protests they suggested a limit of 180 nights a year, following further revolt in government ranks, the NSW Government confirmed that “opt-out” laws would now apply to residential apartments.
Coming into force from 2019, the new legislation allows apartment blocks (owner’s corporations) to pass by-laws banning commercial holiday leases where the owner is not present during the let, provided they get a 75 per cent majority vote. The mandatory Code will apply to online accommodation platforms, letting agents, hosts and guests across the State.
More and more Australians are considering the opportunity of leasing part of their homes to supplement their income. Further to the legislated changes to residential apartment buildings above, there are some key possible tax implications that must also be considered.
The first and most obvious tax impact is that net rental receipts (after deducting relevant expenses) are generally taxable income in the income year received. So the net rental income will be taxable at your marginal tax rate. Some may be inclined to avoid disclosing rental income, but heed this as a warning, rental platform providers such as Airbnb are required to share data with the ATO.
Big brother is watching!
More importantly, using a home for income-producing purposes may impact your main residence capital gains tax (CGT) exemption.
If you’ve used any part of your home to produce income – for example, by renting out part or all of it – you’re generally not entitled to the full exemption. This is vital.
We suggest that if you are leasing your home or considering the benefits of some extra income whilst you yourself holiday, that you also consider all the possible implications.