Renting out all or part of your home for short stays, for example on Airbnb or Bookabach, earns you rental income. Usually you'll pay tax on this income in the year it's earned.
The short-stay standard-cost is a fixed nightly rate guests pay to stay in your home. The rate is set to cover the costs you're likely to have when they do.
There's no tax to pay or tax return to file for your income if you charge up to the fixed nightly rate. It's exempt income.
You can charge guests more than the fixed nightly rate. When you do you'll have to pay tax on what you've charged over the rate. This means you'll have to file an income tax return. (There are no deductible expenses using this method.)
Check if you use the short-stay standard-cost method
The short-stay standard-cost method does not apply to all rental property types. There are other tax rules that can apply.
Check what to do for your property type:
Rules for using the short-stay standard-cost method
You’ll be able to use the short-stay standard-cost method if:
- you’re a natural person (that is an individual not a company or organisation)
- the property is your main home
- you rent out short-stay accommodation (that's no more than 4 consecutive weeks at a time)
- you rent out to guests who stay in your home or its rooms
- you only rent out your home or its rooms in your home for 100 nights or less in the year. Each room counts as 1 night, so if you rent out 2 rooms for 1 night that's 2 nights.
- you do not offer your short-stay accommodation as part of a GST taxable activity
- you're not also offering private boarding services in your home
- the property you’re renting out is not held in a trust, or if it is you paid all of the costs for the year for the use of the property (for example, mortgage interest or rent, insurance, rates, and repairs and maintenance)
- neither you or anyone else claims another standard-cost amount for income earned from childcare, boarders or home share care provided in the same home
- no one claims deductions for actual costs in the same income year for using the home to provide accommodation to others (for example, flatmates).
Applying the short-stay standard-cost method
- The short-stay standard-cost rates for the 2023-24 income year are $61 per night for homeowners and $55 when you're not the homeowner.
- All the rent you get up to the level of the standard cost rate is exempt income. You only pay income tax on what you charge over the standard-cost rate.
- The standard-cost covers expenses you will likely have for short-stay guests in your home. This means you do not have to work out your allowable rental expenses and deduct them from your rental income.
- If you want to deduct your allowable rental expenses from your rental income, use the actual cost method instead.
What to do if you cannot use short-stay standard-costs
If you cannot use the short-stay standard-costs, or you do not want to, use the actual cost method. You need your allowable rental expenses and gross rental income to work out what tax you pay. You'll then file a tax return.
Actual cost method for working out rental income and expenses
Teneti rents out a room in his home for 60 nights in the year.
He charged $75 per night.
His total gross income for the year is $4,500.
The short-stay standard costs for him as the homeowner are $61 per night.
Teneti works out his standard costs: $61 x 60 nights = $3,660.
Teneti now checks to see what income he needs to pay tax on:
$4,500 (his total gross income) minus $3,660 (his standard costs for the 60 nights he rented out his room) = $840.
Teneti needs to file a tax return to pay income tax on $840.