Pro’s & Con’s Of Using Your Residence As An AirBNB
The sharing economy has taken off over the past few years, giving people new ways to earn an additional income.
Have a car and some spare time? Drive an Uber. Possess a unique skill and have some extra time? Perform tasks as an AirTasker. Vacant property collecting dust? Rent it out on AirBNB.
In fact, AirBNB is one of the most popular ways to generate additional income in the sharing economy, with spare rooms and holiday homes being put to use.
Before you list your property on AirBNB, here are so pro’s and con’s that you should be aware of.
1. Extra Income
Let’s start with the most obvious point first. The main reason people consider listing their property on AirBNB is to generate an additional income. This extra money can be used to supplement your lifestyle expenses or put towards that family holiday that you’ve been putting off.
2. Claim Tax Deductions
This can include:
- interest on your mortgage,
- internet and phone expenses, and depreciation on your furniture and other eligible equipment.
- depreciation on your furniture and other eligible equipment.
1. Capital Gains Tax
Capital Gains Tax (CGT) is payable on income producing assets when sold. This tax bill can be quite hefty! Usually, CGT is not payable on your residence, since it is an exempt asset, and generally doesn’t produce income.
If you decide to rent out a portion of your principal place of residence as an AirBNB, it naturally becomes an income producing asset. While this enables the tax deductions mentioned above, it also brings into play CGT.
CGT can take a fair chunk out of the proceeds of the sale of your property so before you decide to list your residence on AirBNB, take the time to sit down with a financial planner to work out whether it is a viable strategy to help you meet your financial goals.