- More and more people are turning to Airbnb as a source of extra income
- We examine the pros and cons of becoming an Airbnb host
- Using a credit card for any expenses related to renting out your property makes those expenses easier to track for tax purposes, and could boost your rewards points earning
Another week is nearly over and you're left with a bank balance that doesn’t quite reflect your plans for a weekend spree. You’re dreaming of a weekend away visiting wineries, enjoying delectable cheeses and a drop of sav blanc. But with the increasing cost of living expenses, your budget reflects the local bottle shops budget bin, some Jatz and a bit of leftover cheddar cheese in the back of the fridge.
You’re not alone. The increased cost of living expenses is hurting many people’s pockets, leaving them looking for secondary income sources to boost their income and keep extra money coming in.
One popular way to bump up your secondary income is to use your home as an Airbnb. Whether you decide to hire out your entire home or just your spare room, the extra income can quickly add up. And with some smart planning it can come with a boost to your points balance too. So that winery weekend spree could well be a possibility.
How to become an Airbnb host
Becoming an Airbnb host is as simple as starting with five easy steps.
- Decide whether you will hire out your entire home or apartment, a single room, or multiple rooms.
- Create a list of all the features and benefits of your property or room.
- Research the market.
- Set your price.
- Set-up your Airbnb listing.
Alternatively, if you are just looking for a way to bolster your income, renting out a single room on Airbnb could be the perfect answer.
Before creating your listing, you should think about all the features and benefits of your room or property that potential guests might be looking for. Some important features may include:
- Sleeping arrangements and bedding (single, double, queen, king, bunk beds etc.)
- Bathroom usage (will they be sharing a bathroom or have their own exclusive ensuite?)
- Audio and entertainment (will you offer wi-fi, their own TV, DVD player, access to Netflix?)
- Parking (street, carport, garage and how many spaces)
- Extra amenities (pool, close to the beach, ocean views, close to local parks, nearby shopping)
It is also recommended to have professional quality photos taken to show off your property to the best of its ability. This can be arranged directly through Airbnb.
Become a host and earn extra income
Spare time and spare room - that’s all you need to get started earning extra income as a host on Airbnb. Whether you want to become an entrepreneur and work for yourself or you already have a full-time job and just hope to make some extra cash in your free time, you can find what you’re looking for on Airbnb
This placement is sponsored by Airbnb.
This credit card offer is subject to change and may not be directly related to the content of this article.
The perks of being an Airbnb host
There are plenty of benefits to becoming an Airbnb host and getting that second source of income flowing in. Let’s take a look at why being an Airbnb host might be right for you.
- The biggest pro for most people is the extra money you can earn.
- You could use the extra income you earn to complete renovations or upgrades to your existing home. A win-win, since you benefit from the upgrades and it may be partly tax-deductible too.
- It’s a low-cost way of advertising your room/home when compared to other forms of marketing and advertising.
- Your guests are often barely using their room/accommodation. There is a chance you will attract people who simply need a comfy bed for the night. During the day they are out exploring the sights, working, or perhaps attending a conference.
- You can read reviews about your guests and find out more about them before you let them book your room/home.
- Airbnb provides a guarantee whereby your property is protected from any damage caused by guests (in case something happens to go horribly wrong). You are also in control of being able to reduce your risk of this occurring. Airbnb allows you to set your own house rules which can help act as a way to attract the kind of guests you are after. So you could set a rule that there are to be no parties after 8pm, or you could make a rule that it is a no smoking property.
- The flexibility of blocking out dates when you may need the room or home for your own visitors, yourself, or just because you’d like some quiet time with no guests.
- No need for clunky booking systems. Airbnb takes care of the booking process for you, making it much quicker and easier.
- Airbnb makes it easy for you to know how to price your property, by providing a demand forecast tool. This is on a destination basis so you know when the high demand and low periods are within the year. Allowing you to maximise dates available, and therefore financial returns, when at the peak of demand.
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This credit card offer is subject to change and may not be directly related to the content of this article.
Things to consider before becoming an Airbnb host
Whilst there are lots of great benefits to being an Airbnb host, it’s important to consider the following before you decide to take the plunge.
- The amount of weekly (or monthly) income you receive from your Airbnb rental can fluctuate, at times a lot. Some months you may be run off your feet due to the warmer weather or events in your area. Other times you might be lucky to get one booking all month. It’s hard to predict. But Airbnb knows this and the forecast tool we mentioned above can go a long way to help. Giving you a bit more peace of mind in knowing when to expect leaner months.
- Cleaning. Lots and lots of cleaning. Depending on how much you charge to rent out your property, you may be able to outsource and hire a cleaner. And there are plenty of third party vendors who are available in the market and specialise in the cleaning of Airbnbs. You can factor the cost of cleaning into the prices you set for the property.
- If hiring out only a single room, you have the added worry of making sure that yourself (and any other family members or housemates) keep the kitchen, bathroom and mutual living areas clean and tidy during their stay.
- Having a stranger in your home – particularly when you are hiring out just one room and having to share that space with them. But you can know who your guests are before they arrive, and the Airbnb platform ensures everyone is properly Government ID verified. You can also put the settings for your property on a request basis, so that you can check out past reviews of the guests before you approve their stay.
- A guest being loud, offensive, over-friendly or rude. What potential impact will this have on your relationship with your neighbours? You can help reduce the risk of something like this happening by putting in place solid house rules for your property.
- Extended periods of time with no bookings.
- General wear and tear on the carpet, floor coverings, curtains, linen and furniture.
- Ensuring you are available to answer emails and questions in a timely manner.
- Unhappy guests. Even if you feel like you have done all the right things, there are some people who may have higher expectations than what you can deliver on.
Even though there are many things to consider before becoming an Airbnb host, most of them can be alleviated with the right house rules and a plan in place. But if you ever need more advice once you've become a host, Airbnb has a host support line that is available 24/7. Giving you the chance to ask any questions you might have.
How to boost your credit card points with Airbnb
When hosting an Airbnb, you can use your credit card to pay for a number of expenses relating to the hosting of your property. By using your credit card to purchase these items you can easily track them for tax purposes, and can also maximise the benefit of accumulating points linked to your credit card. Win-win.
Some of the expenses that you might have in hosting your property on Airbnb are detailed below. By purchasing these on a rewards credit card you can quickly see a boost to your points balance.
- Any updates or improvements to your property to make it more appealing to people looking for accommodation.
- Purchasing quality linen. Using high-quality linen and towels can make a big difference to the overall guest experience (and subsequent reviews).
- Updating locks on internal or external doors and windows. For extra security for your home and any rooms you may wish to close off when guests are using your home.
- Wi-fi internet. Setting up your internet to a suitable plan that allows guests to also use when they stay, and for streaming services like Netflix. This is often something guests are looking for when choosing where to stay.
- Bathroom products. Keeping a quality range of shampoo, conditioner, shower gel and even a cleanser and moisturiser. Products that are natural and organic, or suitable for sensitive skin, are always popular.
- Appliances to make your guests' life easier. Having a spare hair dryer, straightener, iron (and ironing board), clothes dryer and coffee machine can all add up to a 10/10 guest experience.
- Replacing or updating furnishings, including blockout curtains.
- Basic staple grocery supplies (such as tea, coffee, salt, pepper, condiments, long-life milk etc).
- Family-friendly items. If you are catering to families, then investing in a high chair, portable cot, kids toys, board games and DVDs will make for a wonderful experience for your guests.
With regard to the above expenses, it is recommended that you clarify any expenses with the Australian Taxation Office (ATO). Further details on which of these property-related expenses can be claimed as a taxable deduction can be found on the ATO website.
Potential tax implications of being an Airbnb host
In addition to some of the more common expenses you may incur for your rental property as mentioned above, there are also other deductions you can claim.
You may be able to claim a deduction for the depreciation of your property, or the portion of your property available for rent (in the case of a single room). You will also need to consider the portion of the year that your property (or room) was rented for and use this in your calculations.
This portion of your property may also be used in calculations for:
- Internet and phone usage
- Council and water rates
- Energy or gas usage
- Depreciation of furnishings or floor coverings
- Interest on your mortgage
- Household insurance
However, when claiming deductions for your home, or a portion of your home, one of the biggest considerations as an Airbnb host is the potential tax implications. This includes Capital Gains Tax (CGT) on any profit you make when you sell your home, and how it may apply to your property and individual circumstances.
Generally speaking, an individual’s primary residence is considered CGT free, under the main residence exemption. However, by renting out a portion (or all) of your home as an Airbnb host, you may only be eligible for a partial main residence exemption.
Therefore, if you go on to sell your main residence and make a gain or profit upon the sale, you will be required to pay tax on a portion of the capital gain.
There are other considerations to the above, including if your home was purchased prior to 20 September 1985, pre-20 August 1996, or after 20 August 1996. For further details, check out the ATO guidelines on CGT, or get in touch with your accountant.
Do you have a room to rent out on Airbnb?
Becoming an Airbnb host and renting out a room (or your entire home) could be a lucrative side hustle. But there are a number of things to consider before you make the leap. With some forward planning, becoming an Airbnb host could turn into a lot of fun and a whole lot of extra points. And it could help you get away for a weekend winery tour sooner than you imagined!