Short-Term Rental Tax Return Checklist For AIRBNB And Short-Stay Property Owners (2025–26)

Short-term rental properties such as Airbnb, Stayz, and Booking.com can be highly profitable, but they also create more tax complexity than traditional long-term rentals. At Investax, we regularly see short-stay property owners make honest mistakes at tax time — under-reporting income, over-claiming expenses, or failing to properly apportion private use.

With increased ATO data matching and tighter compliance activity in 2025–26, it is more important than ever to keep accurate records and understand what you can and cannot claim.

This tax return checklist for short-term rental property owners is designed to help you stay organised, prepare accurate records, and give your accountant everything they need to maximise your tax outcome while staying compliant.

Report All Short-Term Rental Income

All income earned from short-term rental platforms must be declared in your tax return.

The ATO now receives direct reporting from platforms such as Airbnb and Stayz and matches this data against your tax return. Any discrepancy can trigger review activity.

You must include all income received, including:

• nightly accommodation fees
• cleaning fees charged to guests
• booking or service fees paid by platforms on your behalf
• additional guest charges such as late checkout or extra guests
• insurance payouts relating to lost rent or guest damage

Income must be declared regardless of whether it was paid through a platform, directly into your bank account, or in cash.

✅ Tip: If any part of the income was paid in cash or direct bank transfers outside the platform, make sure it’s still included. The ATO cross-references listings and bank data.

Track Nights Available, Rented and Privately Used 

Short-term rental properties require careful tracking of how the property was used throughout the financial year.

You should record:

• total nights the property was available for rent
• nights actually rented to paying guests
• nights used privately by you, family, or friends
• periods where the property was unavailable for rent

This information is essential for calculating how much of your expenses are deductible.

Private use nights and periods where the property was not genuinely available for rent must be excluded when calculating deductions.

✅ Tip: A simple spreadsheet or booking calendar summary will do—just make sure it’s accurate and covers the full financial year.

Apportion Expenses If You Rent Portion of a Property

If you only rent out part of your property (e.g. a bedroom, granny flat, or studio), you can only claim expenses proportionately. You’ll need to work out:

• The floor space percentage of the rented area
• The time percentage it was rented vs used privately

For example, if you rented out 25% of your home for 180 days, you could only claim 25% of expenses for 49% of the year.

✅ Tip: Be conservative and consistent. Over-claiming on shared expenses is a major audit trigger for the ATO.

Common Deductible Expenses

Here are the common expenses short-term rental owners can claim:

• Mortgage interest (apportioned, if applicable)
• Council rates, water rates, and strata fees
• Electricity, gas, and internet used by guests
• Cleaning services and laundry costs
• Property management or co-hosting fees
• Advertising or listing fees
• Booking platform fees (e.g. Airbnb service fees)
• Repairs and maintenance
• Insurance (building, contents, and landlord)
• Depreciation on furnishings and appliances
• Initial cost of depreciation schedule (if applicable)
• Entertainment facilities and subscriptions for the guest (apportioned, if applicable)
• Pest control, garden maintenance, and pool servicing

✅ Tip: Expenses related solely to guest stays (like consumables or linen hire) are generally fully deductible without apportionment.

Capital Improvements vs Repairs

Not all property costs are immediately deductible.

Capital improvements include:

• bathroom or kitchen upgrades
• new flooring
• extensions or structural changes

These costs must be depreciated over time and cannot be claimed in full in the year incurred.

Repairs and maintenance, on the other hand, are generally deductible when they relate to restoring damage or wear and tear caused by guest use. Examples include fixing a leaking tap, repainting damaged walls, or replacing broken fixtures.

✅ Tip: Provide clear invoices and descriptions to your accountant to help distinguish between the two.

Depreciation for Short Term Rental Properties 

Short-term rentals often include furniture, appliances, and other assets that can be depreciated. If you’ve furnished the property or installed items like:

• Beds, lounges, dining sets
• Air conditioners and heaters
• Fridges, washing machines, microwaves
• Blinds and curtains
• Outdoor settings

…you may be eligible to claim depreciation on these items over their effective life.

Consider engaging a qualified quantity surveyor to prepare a depreciation schedule, especially if the property is newly built or you’ve undertaken significant renovations.

✅ Tip: You can still claim depreciation on second-hand items in short-term rentals (unlike long-term residential properties), provided you’re running the property more like a business than a passive rental.

Insurance Payouts Must Be Declared

If you received an insurance payout during the year—such as compensation for guest damage or lost rental income—it must be included in your tax return.

Some owners mistakenly think these amounts don’t count as income, but the ATO treats them exactly the same as regular rent.

GST – Usually Not Applicable (But Know When It Is)

Most residential rental income, including short-term accommodation, is input-taxed and doesn’t require GST registration. However, if you’re operating at a larger scale and offering hotel-like or boarding house type services, you might cross into commercial residential premises territory—which could trigger GST obligations.

If you’re earning over $75,000 per year from short-term rental activity, check with your accountant whether you need to register for GST.

Don’t Forget Your Bookkeeping and Records

The ATO expects good records for all rental activities. Keep:

• A log of all guest stays and nights rented
• Invoices for all expenses
• Receipts for asset purchases
• Any insurance documents and bank records
• A depreciation schedule if applicable

Even if you’re using a platform like Airbnb that tracks bookings, you’re still responsible for record-keeping to justify deductions.

✅ Tip: Use accounting software or a simple spreadsheet to stay on top of your records year-round. Your accountant will thank you (and so will your refund).

Final Tip & Conclusion

Running a short-term rental property can be rewarding, but it also brings added tax complexity. With data matching and tighter ATO scrutiny in 2025, there’s not much room for error.

At Investax, we help short-term rental owners get it right—from smart record-keeping to accurate tax claims. The key is to stay organised and treat your property like a business, not a hobby.

An accounting fee paid to a good accountant should be seen as an investment—not a cost. Especially when that fee is 100% tax deductible, it makes sense to work with someone who understands short-term rental tax.

If your current accountant isn’t experienced in this area, maybe it’s time to give Investax a go.

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Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

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