If you’re an Airbnb host in Victoria, 2025 has brought some uncomfortable news. The state government has officially introduced a short-stay rental levy — commonly being called the “Airbnb tax” — and it’s already cutting into profit margins for thousands of property owners across Melbourne and regional Victoria. Whether you’re running a single spare room or managing a portfolio of investment properties, it’s time to seriously evaluate your short-stay rental strategy.
But before you panic and list your property on the long-term rental market, let’s break down exactly what’s happening, how much it’s going to cost you, and what your real options are in 2025.
What Is the Victorian Short-Stay Rental Levy?
Victoria’s short-stay rental levy came into effect in 2025 as part of the state government’s push to address the housing affordability crisis. The levy applies a 7.5% tax on revenue earned from short-stay accommodations — think Airbnb, Stayz, and similar platforms — for stays of fewer than 28 days.
The tax is designed to discourage property owners from keeping homes off the long-term rental market, where vacancy rates in Melbourne and major regional centres remain critically low. Revenue collected is intended to fund social and affordable housing initiatives.
In practice, this means if you’re earning $30,000 per year from your Airbnb listing, you could be handing over an additional $2,250 directly to the state government, on top of your existing income tax obligations, platform fees, and running costs. For hosts already operating on thin margins, that’s a significant hit.
How Much Will This Actually Affect Your Bottom Line?
Let’s be real — the levy alone won’t necessarily destroy your short-stay rental income. Whether it’s a deal-breaker depends largely on your property’s location, occupancy rate, and current pricing strategy. Here are a few scenarios to consider:
- High-demand urban properties: If your Melbourne inner-city apartment consistently books at premium rates, you may be able to absorb the levy or pass a portion of the cost to guests through modest price increases.
- Regional and seasonal properties: Hosts in areas like the Mornington Peninsula or Daylesford, where demand fluctuates significantly, may find the levy disproportionately painful during slow seasons.
- Low-yield listings: If your short-stay income was already modest, the 7.5% cut could genuinely tip the numbers into unprofitable territory.
The key is to run your numbers honestly. Factor in the levy alongside platform fees (typically 3–15%), cleaning costs, maintenance, mortgage repayments, and your time. If the profit margin is shrinking to the point where it’s no longer worth the effort, it’s time to consider a pivot.
Should You Switch to Long-Term Rental?
The most obvious alternative is transitioning your property to the long-term rental market. And in many cases right now, it actually makes strong financial sense. Rental vacancy rates across Melbourne remain historically low, and weekly rents have surged substantially over the past two years.
Long-term rentals offer:
- Predictable, consistent income every month
- Significantly reduced management workload
- No short-stay levy obligations
- Lower wear and tear on your property
The trade-off, of course, is flexibility and the potential for higher peak earnings during holidays and major events. Only you can weigh up whether that ceiling is worth the increased complexity — and now, the added tax burden.
Alternative Platforms and Strategies Worth Exploring
If you’re committed to staying in the short-stay game, it’s worth exploring strategies beyond the traditional Airbnb model:
Medium-Term Rentals (28+ Days)
Platforms like Furnished Finder and even Airbnb’s own monthly stay features cater to corporate travellers, remote workers, and relocating professionals seeking stays of one to three months. Because these fall outside the sub-28-day definition, they may not attract the levy — making this a smart structural pivot for the right property type.
Niche Accommodation Platforms
Consider listing on platforms that cater to specific traveller niches — pet-friendly stays, eco-tourism, or unique experiences through services like Hipcamp for rural properties. Differentiation can command higher nightly rates that better offset the levy’s impact.
Co-Hosting and Property Management
If managing your own listing feels less worthwhile, partnering with a local co-host or professional short-stay management company can reduce your workload while keeping the income stream active.
The Bigger Picture for Property Side Hustles in Australia
Victoria’s levy is unlikely to be the last of its kind in Australia. Similar policy discussions are already surfacing in Queensland and New South Wales, signalling a broader national trend toward regulating and taxing the short-stay sector. As an Airbnb host in Australia, now is the time to build a flexible, diversified property income strategy rather than relying on a single platform or income model.
Final Thoughts: Adapt, Don’t Abandon
Victoria’s Airbnb tax is a genuine challenge, but it doesn’t have to be the end of your property side hustle. The hosts who will come out ahead in 2025 and beyond are those who review their numbers honestly, stay informed about regulatory changes, and adapt their strategy proactively.
Ready to rethink your property income strategy? Explore more tips on making money from real estate, side hustles, and passive income right here on Post in Profit — and make sure your investments are working as hard as possible for you in 2025.
