AirBnB offers a great opportunity to rent out an SMSF’s investment properties without a long-term commitment. It has become one of the most popular ways of generating income in an SMSF. However, there are tax implications of listing an SMSF’s property for rent via AirBnB that Trustees must take into account.
- Assessable income from AirBnB – Income derived from renting a property is assessable and needs to be declared. Trustees must keep accurate records.
- Deductions under s 8-1 of the ITAA97 – An SMSF may be able to claim expenses incurred when maintaining or furnishing properties as a deduction in its tax return. Common deductions are interest expenses, bank charges, borrowing expenses & insurance. For more details, please see our page on Expenses in SMSFs.
- New limitation on travel expenses – From 1 July 2017, no deduction for costs of travel in relation to residential properties can be claimed as a deduction.
- New limitation on depreciation claims – From 9 May 2017, Trustees can no longer claim depreciation on fixtures or fittings in residential rental properties unless these are bought as new items for the rental property. For more details on Property Depreciation, please see here.
- Capital works deductions – Capital works generally are deducted at 2.5% and will reduce a property’s cost base. It can be added to depreciation schedule of an investment property. For more details, please see our page on Property Depreciation in SMSFs.
- GST issues – Generally, an SMSF cannot claim GST on a residential property. However, our understanding is that if an AirBnB property is regarded as a commercial residential premise, Trustees may be entitled to claim the GST included in the purchase price of the property.
Renting property in an SMSF generally is not regarded as running a business. For more details, please see the Draft Ruling TR 2017/D7.
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