How do I declare Airbnb income on my Australian tax return?

Airbnb income is assessable income and must be declared on your tax return. If you rent out part of your home, you include the rental income received and can deduct the expenses directly related to the rental portion. These include cleaning fees, Airbnb's service fee, consumables you provide, any direct repairs, and a proportional share of mortgage interest, council rates, insurance, and depreciation based on the area rented.

The portion used for Airbnb is calculated by floor area and time. For example, if you rent one bedroom that represents 15% of your home's total floor area for 180 days of the year, you can claim 15% of 180/365 of shared expenses like mortgage interest.

Renting out part of your home also affects the main residence CGT exemption. The portion of your home used to earn income is no longer fully exempt from CGT when you sell. Only the portion used as your main residence, for the proportion of time it was your main residence, qualifies for the exemption. This CGT impact is often overlooked and can be significant if the property appreciates substantially. If you rent the entire property while living elsewhere, the property is treated as an investment property and all rental income and related deductions apply.