- To reduce their assessed asset base leading up to new pension rules in 2017. To avoid ‘losing the pension’ pensioners are considering home renovations to enable the provision of an income generating service such as Airbnb.
- Recent press articles have implied pensioners are ‘hogging’ prime residential space.
Monday, November 9, 2015
The Age Pension and Airbnb
We have received quite a few requests for information regarding running and Airbnb – or equivalent – while receiving the age pension.
There appears to be two reasons why people are considering this option:
So what happens if an age pensioner provides a service such as Airbnb?
Currently Centrelink will treat the income as a ‘board and lodging’ category income. In a more traditional ‘board and lodging operation’ the declared income is more easily declared. We understand this is currently understandably being reviewed by Centrelink.
So what happens if the income is sporadic? Then it falls into a type of wage/income reporting where fortnightly income reporting is the norm.
What about costs such as cleaning, maintenance etc? Can I declare these as costs and only declare the net income? Centrelink do have a ‘simple’ one-page Profit and Loss document that enables a reporting of gross income and costs. This document can be submitted annually, quarterly or as often as required. In some cases, this maybe the preferred reporting method.
Can I report the income annually? As above if you can accurately declare your income from the Airbnb then you can complete the P&L sheet. Remember if you under declare your income you will be liable to repay any overpayments. However, if you over declare Centrelink will not ‘make amends’.
As always remember that additional income may not necessarily have any impact on your pension. For example, we assisted an age pensioner who was an ‘asset based’ and receiving a part pension. In this case the client ‘spent’ $100,000 on home renovations to provide for the Airbnb service. The client’s pension increased as his deemed asset – e.g. bank account – went down by the $100,000 and the home is exempt from the assets test. His net income from the Airbnb service was below the income threshold - $6,500 – so he benefitted both from an increased pension and this additional Airbnb based income.
Now the above relates only to Centrelink and not the ATO. You should seek advice from your accountant and/or your financial advisor for any tax implications, including any capital gains implications etc.
Posted by athos at 1:44 PM