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Investing Outside the Box – All Eyes on AirBnb

In a world of Block Chain and the shared economy are we missing out on opportunities by not latching onto these initiatives?

Are we worse off for not using Bitcoin for property purchases or putting our house on Airbnb whilst we enjoy our summer vacation?

With these new initiatives comes new challenges. Challenges in both the legal and monetary sectors.

In this latest edition of Investing Outside the Box, we explore Airbnb and tackle some burning questions around Airbnb for investment purposes.

Airbnb, since its entrance into the market until now screams insurance issues. Whilst Airbnb may claim to provide up to $1,000,000 AUD of coverage in the case of property damage, we suspect if you’re putting 20 people in your house for holiday letting, that’s insured as a standard family house which then burns down, a battle with the insurance company is bound to arise.

An Airbnb investment is very proactive and certainly more proactive than investments we typically deal with. Unless you’re paying big dollars to large companies to manage your listing on Airbnb, chances are you’re going to have to get involved to ensure your listing is up to scratch with the Airbnb strict standards.

Not only are you required to remain readily available throughout your guests stay, there’s ample cleaning and maintenance expectations in addition to the requisite of a streamlined check-in process (the type that you’re expected to be there for too).

Let’s talk tax…

Now, we are not accountants and as such are not here to provide accounting advice. Having said this though, many accountants we speak with highlight their concerns around how Capital Gains Tax (CGT) will be treated. There are a number of triggers around Capital Gains Tax for a Principal Place of Residence (PPOR).

Once the PPOR asset becomes income producing, this will likely trigger CGT. Whilst these may not be frequently assessed as of yet, if it is evaluated in the future, the ability to justify this as capital gains exempt would not be easy.

Who’s to say the government aren’t already catching on to the tax implications surrounding Airbnb? Let’s take Uber for example, another share economy initiative.

The government was quick to crack down on Uber. With the hotel industry already making significant complaints, it’s only a matter of time before Airbnb is given their own set of taxation rules and regulations.

Don’t count on Airbnb to be your life-changing investment.

Contact us today, for a tailored strategy and personal approach.