Starting January 1, 2025, rental property owners in Victoria will face a new 7.5% levy on revenue from short-term accommodation (the ‘Airbnb Tax’). This initiative, led by the Victorian Government, aims to address the housing shortage and promote long-term rental options.
1. Levy Details
Who Pays the Levy?
The tax applies only to reservations made on or after January 1, 2025, which means any reservations secured before this date will be exempt—even if the stay occurs later. Depending on the reservation method, responsibility for paying the levy differs:
Platform Bookings: Major platforms like Airbnb or Vbro will handle levy payments for bookings made through their systems.
Direct Bookings: If a guest books directly with the property owner, then the owner is responsible for paying the levy based on the total booking fees.
2. Exemptions
Stays greater than 28 days: Longer stays will be exempt.
Primary Residence : Properties that serve as the owner’s primary residence are exempt from the levy, making it easier for homeowners to rent occasionally without incurring additional costs.
Commercial Accommodation: Hotels, motels, and similar commercial properties are not subject to the levy.
Specialist Accommodations: Exemptions also extend to specific property types, such as rooming houses, retirement villages, and student housing associated with educational institutions.
3. Reporting and Payment Requirements for Short term Rental Hosts
Property owners will need to report their earnings and pay the levy based on their total annual booking revenue:
For hosts whose earnings total $75,000 or less per year, an annual return will be due by January 30, 2026.
For those earning more, quarterly returns will be required, with the first report due by April 30, 2025.
Registration: Hosts will need to register with the State Revenue Office (SRO) by the due date of their first return.
4. Preparing for the Short Term Rental Levy as a Property Owner
Property owners should consider taking proactive steps to prepare for the levy:
Adjust Your Pricing: Factor the levy into your pricing strategy to avoid absorbing additional costs. Adjusting rates slightly may help maintain profitability without deterring potential guests.
Stay Informed: The legislation is still being finalised, so it’s essential to keep an eye on updates from the Victorian Government and the SRO. Changes could affect how you operate.
Monitor for Exemptions: If your property qualifies for an exemption, be sure to have documentation ready to demonstrate compliance.
Review Tips on how to maximise your return: For tips on how to maximise your returns in Melbourne click here
5. How will BnB Butler respond to the changes
We are constantly monitoring rates and ensuring they are competitive whilst maximising owner’s returns. With properties potentially leaving the short stay market due to the levy, there is an opportunity for owners to maximise returns as there will be less supply in the market. Staying competitive and future proofing your pricing is critical in maximising returns.
We will have further information after the bill passes.
