Do you earn income from an Airbnb property?
Not all lenders will accept short-stay accommodation income, but we know which lenders take a common sense approach to the gig economy and offer Airbnb income home loans.
How do I qualify?
- Generally speaking, lenders will take 70% of the gross rental income from an Airbnb. Seasonal rent is discounted even further.
- You’ll need to provide your most recent tax return showing income and expenses for your property
- Alternatively, some lenders will accept the market rent listed on the lender’s valuation.
Call us on 1300 889 743 or complete our online enquiry form to discover if you qualify for an Airbnb income home loan.
Want to buy an Airbnb investment property?
We can help you get a home loan to buy a property to rent out to short-term Airbnb renters.
The key to getting approved for a mortgage is the property type and the location:
- Studio apartment: You can borrow up to 95% of the property value for apartments over 50m2 and between 80-90% for units between 18-50m2.
- High-density unit: https: Each lender has a different appetite for accepting properties in high-density locations, and this can restrict your borrowing power.
- Location: Generally speaking, properties located in major cities and regional centres are more readily accepted than rural locations. Try the postcode calculator to find out if your property will be accepted.
- Properties that are otherwise unique: This includes hobby farms and large rural blocks, bushfire prone properties, flood zone properties, hotel units, and warehouse conversions.
What do lenders think about Airbnb properties?
Airbnb properties are facing a higher level of scrutiny by the lenders than standard investment properties due to their short-term rentals in nature.
However, this is not mission impossible. In general, lenders require two years’ tax returns to show income consistency.
And when assessing the deal, the rental incomes could be further discounted based on high vacancy rates and maintenance costs.
So the key to maximising your borrowing power with Airbnb income is to apply with the right lender.
Is an Airbnb considered to be a commercial property?
The good news is that banks generally don’t view Airbnb properties that way which means you can qualify for much cheaper residential investment loan rates.
It’s unclear how long before lending policy catches up to this growing market so speak to a mortgage broker about buying a property or turning your home in to short-term rental property.
Call 1300 889 743 or complete our free assessment form today.
Do I get a higher rental return through a shot-term rental?
There is a big misconception that through Airbnb’s platform, you stand to generate a higher rental yield than through the traditional way of renting out a property.
That means you may find that your property remains vacant for weeks or even months.
The average Airbnb host in Australia earns an average of $5,600 per year which is not a lot compared to renting out a unit in most capital cities.
Choose your online accommodation platform carefully
Other than Airbnb, there are a number of other online accommodation booking sites that you can choose to list your property on:
These sites include:
- Stayz (owned by HomeAway)
- AURA Travel
- Travelling Frogs
Typically, creating a listing is free. However, some listings require you to sign up for an annual fee.
Alternatively, some will charge you a so-called service fee, which can vary anywhere between 3 per cent or 10 per cent of the total booking or rental income.
The annual might be a more beneficial option for you if you find that you’re renting out your property for the majority of the year.
In contrast, the service fee may be beneficial if you’re renting out your own home for a short period once or twice a year.
Will I pay CGT when I sell my Airbnb property?
Yes! You will be liable to pay Capital Gains Tax (CGT) when you sell your Airbnb property, even if it’s your own home.
This is calculated based on the floor area of the property that is rented out and for how long the property was rented out over the financial year.
Speak to your accountant to find exactly how much CGT you’re liable to pay.
You should bear CGT in mind if the Airbnb property is an investment, specifically how this cost fits into your overall Airbnb property investment strategy.
Golden tips when buying an Airbnb
- If you’re planning to rent out your apartment, you have to check that your strata owners corporation allows this.
- If you’re buying a property, consider tourism locations and properties located near public transport and good infrastructure.
- Airbnb uses their own pricing which can help you set a fair rental income for your property type and location.
- Be sure to declare your income to the Australian Taxation Office (ATO) because the government is cracking down on tax evaders.
- The Airbnb Host Guarantee covers you for up to $1 million for guest damages or guest injuries above the security deposit but there’s a lot that Airbnb won’t cover you for such as the theft or damage of cash, rare artwork, jewelry and pets.
- Get your own insurance and keep in mind that the majority of insurers don’t actually cover Airbnb hosts and tenants. It’s true!
- You’re essentially taking on the role that a property manager would do if you were to rent out the property in the traditional sense. This means answering enquiries and managing tenants, managing your listing on the Airbnb website, and taking care of marketing and advertising.
Short-stay accommodation regulations
In 2018, the New South Wales (NSW) government began developing new laws governing short-term holiday rentals in a bid to curb the impact on the wider rental market and to protect hosts.
- Strata owner corporations will have the power to pass by-laws that prevent short-term letting in their block if the host does not live in the unit they are letting out.
- Hosts letting properties in the Great Sydney area will only be allowed to rent out their home for up to 180 night a year.
- To crackdown on so-called “party houses” and reducing noise compaints and damage to the host’s property, online accommodation platforms will need to enforce a mandatory code of conduct. Fines for individuals breaching these codes are upwards of $200,000.
Whether these rules will be introduced to other states is yet to be seen, but with the growth of the short-term holiday stay market, it’s possible.
Can I claim depreciation on the Airbnb property?
Yes, it’s possible to claim depreciation on your home share property but it’s best you speak with your accountant because it can be complex.
Specifically, if you live in the property and only let out some rooms, you can only claim expenses on the floor area of the property that you’re letting to short-stay tenants.
Some expenses that you may be able to claim include:
- Home loan interest
- Council rates
- Home protection insurance
- Furniture depreciation in the rented room
- Professional cleaning services and products for the rented area
- Repairs and maintenance
- Provisions you provide as hospitality to the guests such food and drinks.
Do you need a home loan?
Whether you need a lender who will accept your income from renting out your property to short-stay tenants, or home loan to buy an Airbnb investment property, get in touch.
Call us on 1300 889 743 or fill in our online enquiry form to discover if you qualify for a home loan.