How Airbnb and short-term rental income is taxed in Australia

Income from Airbnb, Stayz and other short-term rental platforms is assessable rental income that must be declared in full — gross, before platform fees — in your Australian tax return, with deductions apportioned between income-producing and private use by time and floor area. Residential rent is input taxed so GST generally does not apply, but renting out any part of your home reduces your CGT main residence exemption, and the ATO receives host income data directly from platforms under the Sharing Economy Reporting Regime.

Key points:
- All short-term rental income is assessable — declared **gross**, before platform fees and commissions, and including retained bonds, cancellation fees you keep and insurance payouts — in the year the guest or platform pays, split according to legal ownership share (ATO pages current to 24 June 2026).
- Expenses that relate only to hosting — platform commission, advertising, cleaning after paying guests — are deductible in full; shared costs are apportioned by days rented and floor area, using methods the ATO formalised in [PCG 2026/2](https://www.ato.gov.au/law/view/document?docid=COG/PCG20262/NAT/ATO/00001) (issued 20 May 2026).
- Major 2026 development: under [TR 2026/1](https://www.ato.gov.au/law/view/document?docid=TXR/TR20261/NAT/ATO/00001) and PCG 2026/3 (both issued 20 May 2026), a holiday home is a *leisure facility* under section 26-50 ITAA 1997 — ownership costs such as loan interest, rates, insurance and repairs are deductible only where the property is used, or held for use, **mainly to produce rental income**. Section 26-50 itself is long-standing enacted law, and TR 2026/1 applies to income years both before and after its issue; what changes the practical position is a transitional compliance approach under which the ATO will not devote compliance resources to this rule for expenses incurred before 1 July 2026 — so it bites in practice from the 2026-27 year.
- Residential rent is *input taxed*: no GST on rent or bonds, no GST credits on related purchases, and it does not count towards the $75,000 GST registration turnover threshold.
- Renting any part of your main residence costs you part of the CGT [main residence exemption](/technical-resources/glossary#main-residence-exemption) — worked out by floor area and days rented — and starts the *home first used to produce income* rule: get a market valuation when hosting begins.
- The ATO already sees the income: short-stay platforms have reported host income twice a year under the Sharing Economy Reporting Regime since 1 July 2023, alongside a property management data-matching program covering 2018-19 to 2025-26.
- From **2027-28**, Schedule 2 of the [Treasury Laws Amendment (Tax Reform No. 1) Act 2026](https://www.legislation.gov.au/C2026A00049/asmade) quarantines the excess of residential-property deductions over residential-property income: the excess is not deductible that year, but is carried forward and may be applied against specified residential capital gains. A house or unit let by the night is still a residential dwelling; hotels, motels, inns, hostels and boarding houses are not (s 26-160(1)).
- From **1 July 2027**, Schedule 1 restructures the [CGT discount](/technical-resources/glossary#cgt-discount) — it is not abolished. For CGT events on or after that date the percentage is 0% for resident individuals and non-superannuation trusts on ordinary assets, with cost-base indexation available instead, running only from 1 July 2027.