If you own a short-term rental property that you lease through platforms like Airbnb or Stayz, you could claim thousands of dollars in tax deductions through tax depreciation. Many owners don’t realise just how much they can claim in tax depreciation, especially if the property is older, has been renovated, or is a mix of private use and rental.
In our latest video, Acumentis Quantity Surveyor, Grant Roberts inspects a property where the owner lives upstairs while renting out the downstairs on Airbnb. With a brand-new kitchen and recent upgrades, it’s the perfect example of how depreciation works for mixed-use properties.
Here are some of the key takeaways from their conversation.
Can you claim tax depreciation if you live in part of the property?
Yes, absolutely. If you live in one section of the property and rent out another, you can still claim depreciation on the rental portion. For example, if the Airbnb area makes up 40% of the total floor area, then 40% of the eligible deductions can be claimed. The deductions are also adjusted for the number of days the space is available for rent each year.
This apportioning ensures your claim is accurate and ATO-compliant.
Does the age of the property matter?
Yes, but don’t let an older property put you off. While the original structure of a building over 40 years old generally can’t be claimed under Division 43 (capital works), renovations and improvements are a different story.
Think of things like:
- A new kitchen or bathroom
- Upgraded flooring
- Structural changes or fit-outs
These works can unlock thousands in depreciation deductions, even if the original home itself is too old to qualify.
What about claiming tax depreciation for appliances, furniture, and fittings?
Short-term rental properties usually come fully equipped, and the good news is these items are claimable under Division 40 (plant and equipment).
This includes:
- Ovens, cooktops, and dishwashers
- Washing machines and dryers
- Air conditioning units
- Sofas, beds, and other furniture
- Carpets, blinds, and light fittings
These assets are depreciated over their effective life, boosting your annual claim.
Is depreciation different for short-term vs. long-term rentals?
The type of rental, Airbnb or long-term lease, doesn’t change the deductions available. The main difference is how much time the property is income-producing.
Short-term rentals – claims are adjusted for the number of nights the property is available for rental. So, if you also use the property for personal stays, or make it available to friends or family, a pro rata adjustment is made to reflect private use.
Long-term rentals – usually 100% income-producing, so deductions apply year-round.
Key takeaway
Even if your property is older, renovations, appliances, furnishings and fit-outs can add up to significant tax savings. For mixed-use properties like this one in our video, apportioning correctly is essential to get the most out of your investment while staying ATO compliant.
Our expert team prepares tailored Tax Depreciation Schedules to help property owners unlock every eligible deduction.
Get in touch today to see how much you could save this tax year.