If you’ve come to the realisation that you can’t manage your investment property yourself, you’ve…
For many homeowners, Airbnb can be lucrative source of income; either in the form of renting out an investment property or renting out a room or area of your own home. There are, however, a few things to think about before you jump online and get listed. Here are the top five considerations.
What permissions do I need?
Before you list accommodation for rent, you’ll need to do some research into what type of approvals are necessary for your area. Council approval processes vary between states, and some building regulations or mortgage restrictions may prohibit you from listing. As a starting point, check the Airbnb website for guidance.
Phill Whyte, from City Plan Planning on the Gold Coast, says he has been inundated with calls from residents seeking advice after receiving “Show Cause Notices” from the Gold Coast City Council for undertaking unlawful activity on their properties. “Some of these clients have then been required to send applications to Council with fees starting at $5,000, so it can be an expensive process,” says Whyte. To avoid costly mistakes, check in with your council right from the start and follow any directives.
How much will it cost?
Apart from any council application fees, there are a few other costs to consider when calculating how profitable becoming a host will be. While listing your property on Airbnb is free, you will pay a service fee per booking – this currently set at 3%. You might also incur costs to deck out your accommodation with furnishings and appliances, and ongoing fees to make sure your accommodation remains top notch.
Do I have insurance?
As with any property, you should consider purchasing appropriate short-term rental insurance for your building and its contents, to cover you for events that could prove devastating. Some things to tick off in your policy include bushfire, flood and storm damage, theft of contents, and public liability, as well as damage caused by tenants, and loss of rent.
How much time is required?
To become a successful Airbnb host, you’ll need to dedicate some time to managing your booking requests and communicating with guests. The space you’re renting will need to be thoroughly cleaned between bookings, so decide whether that’s something you’re going to do yourself or hire independent contractors for (you can add cleaning fees to your booking). Remember to factor in time for lawn mowing and garden maintenance, too.
How will it affect my tax?
Any rental income from your Airbnb is generally subject to tax, so be aware that it may affect your overall taxable income, and tax liability, at the end of the financial year. There may also be capital gains tax implications on disposal of your property. The ATO receives data from Airbnb which may be used to ensure you report all your income. The ATO website provides an overview of tax issues to consider. You should seek your own tax advice from a registered tax agent before listing your property.
Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Terri Scheer. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy. The Target Market Determination is also available.
The information is intended to be of a general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon it – please make your own enquiries. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.