Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Australia tax professional before filing.
Melbourne, Australia · Australia · Short-term rental taxes
Short-Term Rental Taxes in Melbourne, Australia
Short term rental taxes in Melbourne: Victoria's 7.5% Short Stay Levy on stays under 28 days, ATO income tax on your net rental profit, and what the City of Melbourne does — and doesn't — require of hosts.
The 30-Second Answer
- Short-term rental tax in Melbourne has two layers: the ATO taxes your net rental income at your marginal rate, and Victoria charges a 7.5% Short Stay Levy on stays of under 28 days booked from 1 January 2025.
- The levy is 7.5% of the total booking fee, including cleaning fees and GST where applicable. The booking platform pays it on platform bookings; you pay it on bookings you accept directly.
- Stays in someone's principal place of residence (owned or rented) are exempt, and hotels and motels sit outside the levy. The City of Melbourne has no STR registration or night cap in force — its proposed scheme was paused.
- Residential rent is input-taxed, so most hosts do not charge GST. The ATO receives platform data twice a year under the Sharing Economy Reporting Regime, and its May 2026 holiday-home guidance (TR 2026/1) tightens deductions for part-private properties.
Deductions
What Melbourne STR Hosts Can Deduct
Expenses you incur to earn rental income are deductible for the period the property is rented or genuinely available for rent. Anything covering your own use must be apportioned out.
If a holiday home is not mainly used to earn rental income, the ATO denies ownership costs (interest, rates, insurance, maintenance) and allows only rental-specific costs such as platform commissions, advertising and cleaning after guest stays (ATO holiday homes guidance, updated May 2026).
Filing Calendar
Key Dates & Filing Calendar
Australia's income year runs 1 July – 30 June. The Short Stay Levy runs on its own track through the State Revenue Office (SRO) Victoria.
2026–27 resident rates: the second bracket drops to 15% (A$18,201–A$45,000); 30% still applies from A$45,001 to A$135,000, plus the 2% Medicare levy — the 32% estimator default.
ATO — Due dates for individuals; What is the SERR?; Tax rates for Australian residents (ato.gov.au); SRO Victoria — Short stay levy (sro.vic.gov.au)
Tax Treatment
Dedicated Short Stay vs. Part-Private Holiday Home
Australia has no simplified STR regime. What matters is whether the property is mainly used to earn rental income — that decides whether you can claim the big ownership costs at all.
Mainly Income-Producing Short Stay
Declare all rent; claim ownership and running costs
- Declare every booking in your individual tax return (rent schedule), including cleaning fees charged to guests.
- Claim interest, council and water rates, owners corporation fees, land tax, repairs, commissions and advertising.
- Apportion only for any private use — for example a week of your own stays in the off-season.
- Depreciate the building under Div 43 (2.5% a year) and new fittings under Div 40.
No threshold — net rental income is taxed at your marginal rate (up to 45% + 2% Medicare levy)
Holiday Home Not Mainly Used for Income
Private use dominates — ownership costs are not deductible
- The ATO weighs actual use, time rented, private use by you, family and friends, and availability in peak periods — no single factor decides.
- If the property fails the main-use test, interest, rates, insurance and maintenance are not deductible.
- You can still deduct costs tied to each rental: platform commissions, advertising and cleaning after guest stays.
- Guidance: TR 2026/1, PCG 2026/2 and PCG 2026/3, issued 20 May 2026.
All rental income remains assessable even when most deductions are denied
Depreciation
Depreciation for Melbourne STR Properties
The ATO splits property depreciation into capital works (the building) under Division 43 and plant and equipment (removable assets) under Division 40.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential building / capital works (Div 43) | 40 years (2.5% p.a.) | For residential construction started after 15 September 1987; claimable from completion of construction. |
| Short-term traveller accommodation (Div 43) | 25 years (4% p.a.) | Only for buildings with 10+ apartments, units or bedrooms run as traveller accommodation — not a typical single Airbnb apartment. |
| New furniture, appliances & fittings (Div 40) | ATO effective life | Claim over each asset's effective life; a quantity surveyor's schedule helps identify items. |
| Second-hand plant & equipment | Generally not deductible | For residential rentals acquired after 7:30pm AEST on 9 May 2017, unless you carry on a business of letting rental properties or another exception applies. |
Capital improvements are depreciated or added to the property's cost base rather than deducted immediately. Keep invoices and before-and-after photos for capital works.
When you sell, capital works deductions you claimed (or could have claimed) reduce the property's cost base, increasing the capital gain; Div 40 assets sold or scrapped trigger a balancing adjustment.
Victorian Short Stay Levy
Victoria's Short Stay Levy and Other Charges
Melbourne has no city lodging tax. The guest-facing charge is Victoria's statewide Short Stay Levy — Australia's closest thing to an occupancy tax — administered by the State Revenue Office.
From 1 January 2025 the levy applies to stays of under 28 days in residential properties: entire homes and apartments, private rooms where the home is not someone's principal place of residence, granny flats and tiny homes.
7.5% Short Stay Levy on stays under 28 days
SRO Victoria — Short stay levy applies from 1 January 2025 (sro.vic.gov.au); ATO — Residential premises (input-taxed sales)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb, Vrbo/Stayz or Booking.com booking | The booking platform is liable for the 7.5% levy and pays SRO | The levy does not pass through your payouts; keep platform statements showing it was applied |
| Direct booking (your website, repeat guests) | You, as owner or tenant accepting the booking, pay the levy to SRO | Register with SRO, add 7.5% to the total booking fee and lodge through the SRO portal |
| Room or home that is your principal place of residence | Exempt — no levy payable | On Airbnb, submit the principal-place-of-residence declaration so the levy stops being applied |
The levy is calculated on the total booking fee, including cleaning fees and GST where applicable. Stays of 28 days or more are outside it. Separately, Victorian land tax is an annual bill to the landowner, not a guest charge.
Platforms
How Airbnb, Stayz & Booking.com Handle Melbourne Taxes
Airbnb tax in Melbourne is largely automated: platforms pay the 7.5% Short Stay Levy on their bookings and report your income to the ATO. Income tax is still yours to declare.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — to the ATO twice yearly under the Sharing Economy Reporting Regime | Yes — applies the 7.5% Short Stay Levy to bookings from 1 January 2025 (PPR hosts can file an exemption declaration) | Earnings and transaction history in the host dashboard |
| Stayz / Vrbo | Yes — reported to the ATO under the SERR | Yes — as the booking platform it is liable for the levy on bookings made through it | Payout and booking history in the owner dashboard |
| Booking.com | Yes — reported to the ATO under the SERR | Yes — as the booking platform it is liable for the levy on bookings made through it | Reservation and payout statements in the Extranet |
| Direct bookings | No platform report — declare all income yourself | No — you pay the levy to SRO Victoria | Keep your own ledger of bookings and levy paid |
Using Multiple Platforms?
Each platform reports only its own bookings to the ATO and pays the Short Stay Levy only on its own vacation rental bookings. Combine every channel — Airbnb, Stayz, Booking.com and direct stays — in one income figure, and remember the levy on direct bookings is yours to pay.
Sharing Economy Reporting Regime — Australia's DAC7 Equivalent
DAC7 is an EU rule, but Australia's SERR has required platforms offering short-term accommodation to report host transactions to the ATO since 1 July 2023: by 31 January for July–December and by 31 July for January–June.
ATO — What is the SERR? (ato.gov.au); Airbnb Help Center — Victoria short stay levy (article 3819); SRO Victoria — Short stay levy
Illustrative P&L — Melbourne Apartment (Whole Year, A$)
Example only: whole apartment, no private use, all nights booked through platforms (the platform pays the 7.5% Short Stay Levy, so it is excluded from income shown). 30% bracket + 2% Medicare levy. Not tax advice.
Record-Keeping
Stay Audit-Ready: What to Keep and How Long
The ATO cross-matches SERR platform data with your return, and its 2026 guidance puts the focus on private use. SRO Victoria can also check levy on direct bookings.
| Keep | How long | Why |
|---|---|---|
| Platform statements and booking records | 5 years from lodgment | The ATO matches your declared rent against SERR data |
| Calendar of rented, available and private-use nights | 5 years from lodgment | Supports apportionment and the holiday-home main-use test |
| Receipts, rates notices, owners corporation and loan statements | 5 years from lodgment | Substantiates each deduction claimed |
| Direct-booking levy calculations and SRO payments | 5 years | Shows the 7.5% levy was paid on bookings taken without a platform |
| Purchase, sale and capital works records | 5 years after the CGT event | Needed to calculate the cost base and capital gain on sale |
If you have a rental or capital loss, keep the records until the amendment period ends for the year the loss is fully used — that can be well beyond 5 years.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
Educational summary based on ATO, State Revenue Office Victoria, City of Melbourne and platform sources checked in September 2026. All amounts in Australian dollars.
- SRO Victoria — Short stay levy applies from 1 January 2025 — 7.5% of total booking fees; under-28-day stays; PPR exemption; platform vs owner liability. sro.vic.gov.au/about-us/news-and-events/news/short-stay-levy-applies-1-january-2025
- Airbnb Help Center — Victoria short stay levy — Airbnb applies the levy from 1 January 2025; PPR declaration process. airbnb.com/help/article/3819
- City of Melbourne — Short-term accommodation policy (Participate Melbourne) — Registration fee and 180-night cap considered; policy paused. participate.melbourne.vic.gov.au/short-term-accommodation
- ATO — Renting out all or part of your home — All rent assessable; no GST on residential rent. ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/sharing-economy-and-tax/renting-out-all-or-part-of-your-home
- ATO — Holiday homes and new guidance for rental property owners — Main-use test; TR 2026/1, PCG 2026/2, PCG 2026/3 issued 20 May 2026. ato.gov.au/individuals-and-families/investments-and-assets/property-and-land/holiday-homes
- ATO — What is the SERR? — Short-term accommodation reporting since 1 July 2023; 31 January and 31 July reports. ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/third-party-reporting/sharing-economy-reporting-regime/what-is-the-serr
- ATO — Capital works and second-hand depreciating assets — 2.5%/40 years; 4%/25 years traveller accommodation; 9 May 2017 rule. ato.gov.au/individuals-and-families/investments-and-assets/property-and-land/residential-rental-properties/rental-expenses/capital-expenses/work-out-your-capital-works-deductions
- ATO — Tax rates for Australian residents — 2025–26 and 2026–27 brackets; 2% Medicare levy. ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents
- ATO — Records for rental properties and holiday homes — 5-year retention; private-use records. ato.gov.au/individuals-and-families/investments-and-assets/property-and-land/residential-rental-properties/records-for-rental-properties-and-holiday-homes
Questions
Frequently Asked Questions — Melbourne STR Taxes
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