Victoria’s New Short Stay Levy- What it means for property owners

Introducing the 7.5% Short Stay Levy in Victoria on January 1, 2025, marks a significant change for short-term rental property owners. While the levy aims to alleviate housing shortages and support affordable housing initiatives, it also presents new obligations and financial implications for those earning income from platforms like Airbnb or private arrangements.

Here’s what property owners need to know and how to adapt to these changes effectively.

1. Understanding the Short Stay Levy and what are the exemptions

The levy applies to revenue generated from properties rented for less than 28 days. Unless an exemption applies, revenue from platforms such as Airbnb, Booking.com, Stayz or direct bookings is subject to the levy.

Key exemptions include:

• Primary Residences: Properties used as the owner’s principal place of residence. So, if you rent out your principal residence occasionally, it is exempt.
• Commercial Properties: Hotels, motels, and other commercial accommodation providers.
• Specialist Housing: Such as retirement villages or student housing.

The revenue collected from this levy is intended to fund housing programs and level the playing field between short-term rental operators and traditional accommodation providers.

2. Key Responsibilities for Short-Term Rental Property Owners

To ensure compliance, property owners must:

Register for the Levy

The State Revenue Office (SRO) requires property owners to register before their first levy payment is due.

• Platform-Only Bookings: If all bookings occur through platforms like Airbnb, no registration is required as the platform handles payments.
• Direct Bookings: Owners accepting private bookings must register through the SRO portal, lodge returns, and pay the levy directly.

Lodge Returns

• Quarterly Returns: For properties earning over $75,000 annually, the first return is due by April 30, 2025.
• Annual Returns: For earnings under $75,000, the first return is due by January 30, 2026.

Calculating the Short-Stay Levy

Due to the compliance burden, calculating this short-term stay levy can be complex due to the reporting period and the variation of individual stays, especially during the initial rollout. We encourage you to contact your advisor for assistance.

3. Maximising Returns and Staying Compliant

• Report All Revenue Accurately: Maintain detailed records of income, bookings, and exemptions to avoid penalties and ensure compliance.
• Adjust Pricing Strategically: The levy will increase the operational costs of short-term rentals. Consider raising your nightly rates to offset this impact while remaining competitive. Transparent communication about pricing adjustments can help maintain guest trust.
• Reevaluate Property Use: For some owners, transitioning to long-term rental markets might be a viable alternative to avoid the levy and maximise returns.
• Claim All Allowable Deductions: Work with your tax advisor to ensure all eligible expenses—such as property maintenance, utilities, and platform fees—are deducted to optimise your tax position.

How Morrows Can Help

We specialise in guiding our clients through complex regulatory and financial environments. Our team of advisors can assist with:

• Compliance: Ensuring you meet all obligations with the SRO and ATO.
• Tax Planning and Deductions: Identifying opportunities to offset costs and maximise returns for all your property investment portfolios.
• Evaluating your Investment and Property Portfolio Strategies: Our advisors can also help evaluate your portfolio returns and guide you to ensure your strategy delivers the required returns.

The Short-Stay Levy is already in effect, and the first compliance deadlines are fast approaching. Feel free to contact your Morrows advisor to discuss any concerns and ensure your property investment continues to deliver strong returns while remaining fully compliant.