Should You AirBnB Your Holiday Home

We're frequently asked by clients whether listing a holiday home on AirBnB is a financially smart move. On the surface, the appeal is obvious: short-term letting offers the potential for significantly higher nightly rates than a traditional long-term rental, with the added flexibility of being able to block off time for personal use. For many holiday home owners' this can seem like an ideal way to make their holiday home work harder.

However, in our experience, the decision to AirBnB a property is rarely just about dollars and cents. While the potential for higher income exists, it's essential to consider the broader financial picture, the tax implications, and just as importantly, the non-financial trade-offs that come with short-term property management. We often find that these intangible costs are where expectations and reality can diverge. It's not surprising for a client to begin with an intention to AirBnB property, only to find it's too much time, hassle and stress and then find a long-term tenant.

The Financial Reality Behind AirBnB Income

Let's start with the financial aspect. There's no doubt that AirBnB can generate more income per night, sometimes two or three times what a long-term tenant might pay on a weekly basis. But short-term letting comes with higher costs and more volatility. Cleaning is required after every guest stay, utilities like internet and power are ongoing expenses, and management fees (if you choose to outsource the work) can easily reach 20–30% of the booking revenue.

Furnishings need to be kept fresh and in good condition, and there's a higher chance of wear and tear, or worse, damage, from a steady stream of strangers using your property for weekend getaways. Factoring all these costs in, the upfront cost to start an AirBnB are higher (often $30,000 or more in furniture and fitout compared to $0 for a residential rental property), and the net returns from AirBnB often shrink considerably and may not be as far ahead of long-term renting as initially expected.

Tax Implications and Compliance Burdens

From a tax standpoint, short-term letting introduces more complexity. Income from AirBnB is fully taxable, and if your rental income from the property exceeds $60,000 annually, you're required to register for and charge GST. The property may also fall under the Mixed-Use Asset rules if you use it personally, which limits the expenses you can claim.

If you do fall into the GST registration, the entire property falls into the GST net. This means that on the sale of the property you will need to repay 15% of the purchase price as GST to Inland Revenue. Effectively a 15% haircut on any otherwise (generally speaking) tax free capital gain (provided outside the bright line period, and not purchased with an intention to sell).

You could lose access to full interest deductibility and be required to deal with depreciation recovery if you sell. In contrast, a long-term residential rental is generally simpler to manage from a tax and compliance perspective. There's usually no GST to worry about, and the record-keeping burden is much lighter. We often see clients underestimating the ongoing tax compliance costs and administrative demands that come with short-term letting.

Furthermore, if the property is used privately (as well as for short term rental), there are more complicated pro-rata adjustments to expenses and different tax rules depending on how many nights the property is used privately.

The Hidden Cost: Time, Stress, and Lifestyle Impact

Yet it's the non-financial side that we feel deserves more attention in this decision. Let's take the example of one of our clients, an entrepreneurial couple in their 40s with young children. They owned a holiday home in Raglan and decided to list it on AirBnB, seeing it as a way to boost their income and help cover the mortgage.

What they didn't anticipate was the time and mental load involved. Weekends were dominated by managing bookings, organising cleaners, fielding guest questions, and dealing with last-minute cancellations or requests. The family stopped using the bach during peak times because they didn't want to block out valuable booking slots. One weekend, a group of guests left the house in disarray, with wine-stained carpet and a broken heater. After a year, they returned to a long-term tenancy arrangement, not because it made them the most money, but because it gave them back their time, peace of mind, and the original lifestyle they'd envisioned when they bought the property.

A Different Way to Think About Return on Investment

This is where we encourage a different perspective. Yes, the numbers matter. But for most of our clients, business owners juggling staff, clients, family life, and their own wellbeing, the value of simplicity and predictability shouldn't be underestimated.

A long-term rental provides steady, low-maintenance income, typically from a single tenant who takes responsibility for the property. There are no Friday night cleaning crises, no reviews to manage, and no juggling calendars during the school holidays. For many, this approach aligns more closely with the original purpose of owning a holiday home: to create memories, offer retreat, and add balance, not to create another job.

When AirBnB Might Still Make Sense

That said, short-term letting can work well in the right circumstances. If your property is in a high-demand tourist spot, if you're comfortable outsourcing management, and if you're clear on the tax and compliance obligations, it might be a viable strategy. But it's one that requires careful planning, accurate financial modelling, and a clear understanding of your own time and priorities.

How We Can Help

At Doyle Accountants, we specialise in helping business owners make strategic decisions not just about tax, but about how their assets support the life they want to live. If you're considering AirBnB or want to reassess how your property fits into your overall financial picture, we're here to help. Sometimes the best returns aren't measured in dollars, but in freedom, time, and peace of mind.

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