The renting out of a single residential investment property owned by an SMSF via the Airbnb service does not constitute the running of a business allowing a greater range of deductible expenses to the fund, a senior technical manager has said.
“Airbnb is an interesting one because when you run an Airbnb it’s not just like you put the property on the lease market and you engage a real estate agent to manage it for you,” Colonial First State head of technical services Craig Day told practitioners attending the SMSF Association Technical Summit 2023 held on the Gold Coast last week.
“A lot of Airbnb [owners] run it themselves and that involves putting it up, advertising it, spending money on advertising, dealing with rental inquiries and leasing inquiries, showing up and letting the people in, dealing with complaints … that’s all very different from actually just leasing out the residential investment property.
“But the ATO takes the view that it is insufficient size and scale and it’s actually not that dissimilar from leasing out a residential investment property and therefore no [it is not considered running a business].”
The regulator’s approach means expenses incurred in inspecting an Airbnb property, such as interstate airfares, will not be deductible to the SMSF from a tax perspective, Day pointed out.
“So there are all these people who have applied to the ATO to say: ‘Am I running a business so I can claim the cost of flying to the Gold Coast to visit my apartment or inspect it? Is that deductible?’ and the ATO just said no,” he said.
According to Day, the outcome may be different in some situations.
“Occasionally you get a yes [from the regulator in these circumstances] and that’s when you’ve got four or five of these [properties]. But generally running your own Airbnb is not going to be [considered as] running your own business,” he noted.
