People who regularly rent out their homes, or rooms in their homes, on platforms like Airbnb and Stayz could be slammed with bills amounting to tens of thousands of dollars in capital gains tax (CGT) once they decide to sell their homes, the Australian Taxation Office has confirmed.

As per the ATO, regular hosts on such platforms will lose their residence exemption. The ATO’s advances in data-matching technology now mean it’s fully capable of “keeping up with the sharing economy,” amassing more than 650 million pieces of data annually from a range of third-party sources, including bank records of individuals’ income.

“The ATO’s technology is … able to find where taxpayers have left out a significant amount of income,” ATO assistant commissioner Graham Whyte said in a statement. “The data enables us to estimate what a person’s assessable income should be and, if something doesn’t look right, it sends up a red flag for us to investigate further.”

When people rent out all or even part of their homes, they become liable for CGT once they decide to sell their houses or apartments. This applies to the proportion of the floor area that’s set aside to produce income as well as the period it’s used for that purpose, the ATO said.

Property owners could risk paying fines for unpaid income taxes if they don’t declare the extra money they’re making.

“As well as deriving assessable income, they will be hit with CGT for the room when they sell,” said Tania Waterhouse, principal at Waterhouse Lawyers. “The only saving grace is that they can claim mortgage interest expenses as a deduction. The deduction will be the portion of the mortgage that relates to the room.”

With property prices having surged in the southeastern capitals over the past five years, the potential tax bills could be huge.

“As house prices have gone up so fast, that CGT could potentially easily wipe out whatever benefits people have got from renting out their properties in the first place – and then some,” said Mark Chapman, director of tax communications at H&R Block. “They could lose their income, plus more. Exactly how much depends on the type and size and value of the property. The amounts could certainly be substantial.”