Can I AirBnb My Property In An SMSF?
Have you ever wondered if you can leverage your property assets through Airbnb?
Short answer – YES!
There are no legal barriers in the Superannuation or Income Tax Laws that prevent SMSF trustees from using hosting services like Airbnb. This opens up a world of opportunities, but as with any investment there are some important considerations.
Let us explore the benefits and considerations of Airbnb and your SMSF property.
BENEFITS
Higher Rental Yield
Airbnb typically offers higher rental returns compared to traditional long-term rentals. The ability to adjust pricing according to market demand, such as seasons, holidays or special events, can lead to a more substantial income stream.
Exposure to Capital Growth
In addition to the potential for higher rental income, your property can still appreciate in value over time. This dual benefit can significantly enhance your investment returns.
Property Management
Don’t be daunted by the idea of managing an Airbnb property in your SMSF. Many Airbnb agents specialise in property management, allowing you to take a hands-off approach while reaping the rewards.
Borrowing for Investment
You can use a Limited Recourse Borrowing Arrangement (LRBA) to purchase a property specifically for renting on Airbnb. This strategy can enhance your investment potential, making it possible to buy a more valuable asset!
Capital Gains Tax (CGT) Benefits
If you hold the property for more than a year, you’ll be eligible for a reduced CGT rate of 10%. Under certain conditions, the gain can even be tax-free, making your investment more tax-efficient!
Flexibility
If market conditions shift or you no longer wish to rent on Airbnb, you can always convert the property to a traditional rental lease.
CONSIDERATIONS
Investment Strategy
Your SMSF’s investment strategy must be flexible enough to accommodate this type of investment – that’s where we come in, we will guide you through the entire process.
Property Ownership
The property should be registered in the name of the SMSF or a bare trust if a LBRA is in place, which we will also take care of.
Expenses
Rental agreements, furniture, and associated expenses (cleaning, maintenance etc) must all be in the name of the SMSF.
Vacancy Considerations
Without a long-term lease in place, there may be times of vacancy or economic shifts that may require adjusting rental rates.
No Personal Use
Members, their associates and family cannot stay in the property. This ensures that the SMSF investment remains arms-length and compliant.
No Personal Services
Members or their associates cannot provide services to the property, such as maintenance, cleaning, repairs or servicing
Proper Insurance
It’s essential to have the correct insurance in place to protect the SMSF and its assets.
GST Considerations
According to the ATO ruling GSTR 2012/6, if your SMSFs plan is to list your property on Airbnb, and the property looks and feels like a hotel room, it may be categorised as a ‘commercial residential premises’.
Why does this matter? Well, if the ATO decides your SMSF is providing commercial residential accommodation, they’ll treat your Airbnb activities just like they do with hotels.
What does that mean for you? It means your rental income could potentially trigger a GST liability for your SMSF.
If your estimated annual turnover (rental fees) exceeds $75,000, you’ll need to register your SMSF for GST with the ATO. Good news though, we handle this too.
Using your SMSF for Airbnb property investment can be a very lucrative and tax-efficient strategy, and our team of experts at SMSF Wizard is here to guide you through every step of the way. We will provide tailored support and guidance to ensure your SMSF investment journey is both compliant and rewarding. Give us a call on 1300 282 347 and let’s chat investments