In short: Lenders treat short-stay income far more conservatively than a permanent lease. Many exclude it entirely. Those that accept it typically want two years of tax returns showing the net figure and then shade it hard, often to 50% or 60%. Owners corporations in Victoria can now ban short stays, and Victoria applies a short stay levy of 7.5% of the booking fee on stays under 28 days.
A property earning $58,000 a year on a booking platform and the same property earning $33,800 on a permanent lease do not look the way you would expect on a lender's calculator. The short-stay property is often assessed as worth less borrowing capacity, not more.
Why lenders discount short-stay income
A lender's rental income policy is designed around a signed twelve-month lease with a bond and a managing agent. Short-stay income has none of that.
- No lease. No contracted tenant, no enforceable term; next month's income is a forecast.
- Seasonality. A coastal or event-driven market can earn most of its year in three months, but the repayment falls every month.
- Regulatory risk. A property whose income depends on a permission can lose the permission.
- High and variable costs. Cleaning, linen, platform commission, utilities and management can absorb 40% or more of gross revenue.
- Platform concentration. A change to one platform's rules, or an account suspension, is a single point of failure.
The result across the market:
| Lender approach | What it means for you |
|---|---|
| Excludes it entirely | Income counted: nil. The repayment still counts in full. |
| Accepts it with two years of tax returns | Uses the net figure from your returns, then shades it, commonly to 50% to 60%. |
| Uses a market rental appraisal for permanent letting instead | Counts what the property would earn on an ordinary lease. |
| Assesses it as a business | Serviced or professionally operated properties move to commercial or self-employed assessment. |
The third row is more common than people expect, and often the best outcome available: the lender simply asks what a normal tenant would pay. Read rental income and how lenders shade it.
Owners corporation and council restrictions
Before the finance question there is a permission question. In Victoria, from 1 January 2025, an owners corporation can make a rule banning the use of lots for short stay accommodation. The rule requires a special resolution, meaning support from 75% of lot owners or lot entitlements, and it cannot apply to a lot that is somebody's principal place of residence — an owner or renter living there can still let their home or a room. A short stay here means a booking of less than 28 continuous days. Consumer Affairs Victoria explains making rules to ban short stay accommodation.
A rule can be passed after you buy, so ask for the owners corporation rules, register and recent minutes before you make an offer. Read owners corporation and strata in Victoria. Some councils also apply planning controls or registration requirements, varying by council and state, so check the specific address.
Victoria's short stay levy
Victoria applies a short stay levy of 7.5% of the total booking fee, which commenced on 1 January 2025. Key points as set out by the State Revenue Office:
- It applies to a stay of less than 28 consecutive days in the same property.
- It is calculated on the total booking fee, including charges such as cleaning fees, and GST where applicable.
- Where a booking platform is used the platform is liable; for direct bookings, the owner or tenant is.
- A property that is the owner's or renter's principal place of residence is exempt.
- Commercial residential premises such as hotels, motels and hostels are not subject to it.
Confirm the current rate, registration obligations and exemptions on the short stay levy pages, because settings can change, and check the rules of the state the property is in. Whether the platform pays it or you do, it comes out of the same booking.
Land tax, the main residence and CGT
- Land tax. Victoria's principal place of residence exemption applies to the home you actually live in. An investment property let on short stays is assessed like any other investment land: at $600,000 of taxable land value the 2024–2033 rate produces $2,250 plus 0.6% of the excess. See land tax in Victoria explained.
- Vacant residential land tax applies state-wide in Victoria to residential land left unoccupied beyond the permitted period. Genuine short-stay use may count as occupation, but that depends on the facts and the records you keep. Read vacant residential land tax.
- Capital gains tax. Using part or all of your main residence to produce income reduces the main residence exemption. The ATO apportions the gain by floor area used and days used that way, so letting a spare room for years creates a partial CGT liability on sale — see renting out all or part of your home and capital gains tax on property.
Short-stay income is assessable and platform data is reported to the ATO.
Insurance
The gap people discover after a claim, not before.
- A standard home and contents policy generally does not cover a property let to paying guests.
- A standard landlord policy is written for a tenancy under a residential tenancies agreement, not a stream of short-stay guests.
- Cover offered by a booking platform is typically a limited guarantee with exclusions, not a policy.
- Owners corporation insurance covers common property, not your contents or your liability as a host.
Tell your insurer exactly how the property will be used and get short-stay cover in writing. Your lender requires insurance at settlement in any case, and an insurer not told the truth about the use may decline a claim.
Worked example: permanent lease versus short stay
A three-bedroom house in Melbourne valued at $750,000 with a $600,000 loan. For illustration at 6.00% p.a. over 30 years the repayment is $3,597 a month, assessed at 9.00% p.a. under the APRA buffer.
Option A: permanent lease at $650 a week
- Gross rent: $650 × 52 = $33,800 a year
- Lender shades to 80%: $33,800 × 0.80 = $27,040 counted
Option B: short stay, $58,000 gross a year
| Item | Amount |
|---|---|
| Gross booking revenue | $58,000 |
| Less Victorian short stay levy at 7.5% | −$4,350 |
| Less platform and management fees, about 20% | −$11,600 |
| Less cleaning and linen | −$7,800 |
| Less utilities, internet and consumables | −$3,600 |
| Net short-stay income | $30,650 |
So the "$58,000 property" produces $30,650, less than the $33,800 gross of a permanent lease. Now the lender applies its policy. One that accepts short-stay income with two years of tax returns and shades the net figure to 50% counts:
- $30,650 × 0.50 = $15,325 counted
The gap
- Counted income difference: $27,040 − $15,325 = $11,715 a year, or $976 a month
- After tax at a 30% marginal rate plus the 2% Medicare levy, $976 × 0.68 = about $664 a month of assessed surplus
- At the assessed 9.00% p.a. over 30 years, $664 a month supports about $82,500 of borrowing
Same house, same mortgage, roughly $82,500 less borrowing capacity because of how the income is earned. With a lender that excludes short-stay income entirely, the whole $27,040 disappears while the $3,597 repayment stays. Run your own numbers through the investment property cashflow calculator and the borrowing power calculator.
The practical conclusion
The cleanest route is usually to demonstrate what the property would earn on a permanent lease and let the lender assess that, then run it as a short stay afterwards if the numbers and the rules allow. Buying on nightly-rate projections and hoping a lender counts them is how finance clauses lapse.
Frequently asked questions
Will a bank count my Airbnb income for a home loan?
Many will not count it at all. Those that do require two years of tax returns showing net income after cleaning, platform fees, utilities and the levy, then shade that figure, commonly to 50% or 60%. Some lenders sidestep the question by using a market rental appraisal for a permanent lease, which is often the better outcome.
What is the Victorian short stay levy?
Victoria applies a short stay levy of 7.5% of the total booking fee, including charges and GST where applicable, on stays of less than 28 consecutive days. It commenced on 1 January 2025. Booking platforms pay it for platform bookings and owners for direct bookings, and a property that is the owner's or renter's principal place of residence is exempt. Confirm current settings with the State Revenue Office.
Can my owners corporation stop me listing my apartment?
In Victoria, since 1 January 2025, an owners corporation can pass a rule banning short stay accommodation by special resolution, meaning 75% support. The ban cannot apply to a lot that is somebody's principal place of residence, so an owner or renter living there can still let their home or a room. Check the rules and recent minutes before you buy.
Do I lose the main residence CGT exemption if I list a room?
You lose part of it. The ATO apportions the capital gain by the floor area used to produce income and the days it was used that way, so letting one bedroom representing 20% of the floor area for part of your ownership period creates a proportionate CGT liability on sale. Keep records of the dates and the area from the start.
Talk to GNT Finance
If your plan depends on short-stay income, answer two questions first: whether the property is allowed to be used that way, and which lenders will count any of the income. We check both before you commit, and show you what the same property looks like on a permanent lease.
Book a free consultation or call 0426 403 703.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.