Airbnb Hosts and tax

Peter File

The_Conductor wrote: »

There is absolutely nothing unkind about tax-avoidance- it is an entirely prudent manner of managing your business, to minimise your legitimate tax demand.

Move away from the shenanigans about tax evasion being discussed here. Aside from anything else- Airbnb officially offer Ireland as a destination- with over 800 properties, some as a whole unit- available in Dublin alone link here

Revenue can request details of lettings- in a similar manner that France has done- and levy taxes appropriately. Airbnb will comply- or face the consequences.

You do not have any allowable deductions (as far as I know) when you use Airbnb for short term lettings. This is unlike a conventional letting- however, it is in common with the Rent-a-room scheme (where even billshares for electricity, internet, gas etc- all count towards the 12k limit).

By all means- legitimately minimise your tax bill through conventional mechanisms- i.e. avoid tax- but don't evade tax..........

I'm having nightmares about the presentation I had to give Revenue on tax avoidance and evasion mechanisms and how to target both........

There are allowable expenses when using airbnb. You can deduct fees paid to airbnb and expenses exclusively related to upkeep of the room(s) you let out.

dino7

So a person casually renting out their home for a two week period during the summer (through airbnb or otherwise) must declare the money received to the revenue?

What tax rate would apply?

The_Conductor

dino7 wrote: »

What tax rate would apply?

Whatever your marginal rate of tax might be.
And yes- you have to pay PRSI and USC on it.

snubbleste

Why target AirBnB?
What about all the heavily advertised properties that are let out at extortionate prices during events ie. Galway Races, Golf championships

The_Conductor

snubbleste wrote: »

Why target AirBnB?
What about all the heavily advertised properties that are let out at extortionate prices during events ie. Galway Races, Golf championships

Oh they are now. There is a little section who keep an eye out for these type events. I'm guessing they're in the same Division that has been monitoring cash-in-hand trades.

cormie

Used air bnb as a customer and found it very impressive, but was curious about the business side of it. Would it not be really easy to just arrange with the renter to pay only 1/2 nights through the site and then pay the rest in cash if they are staying a week or so?

Mrs OBumble

The same forces that stop your customers from arranging a deal with your van drivers to fo the other half of a move next week without you being involved.


(ie's a risk, AirBnB put it in their contracts, but there will always be some of it)

The_Conductor

There is a presumption that people won't be this mercenary. Also- I believe the hosts are insured via the site- and this would invalidate their insurance- so if the 'lodger' robbed the place- they'd be high and dry.

Also- your regular contents insurance will not pay- if you invited the guest into your home (paying or otherwise). Check the small print.......

Its a case of caveat emptor.

Grandpa Hassan

cormie wrote: »

Used air bnb as a customer and found it very impressive, but was curious about the business side of it. Would it not be really easy to just arrange with the renter to pay only 1/2 nights through the site and then pay the rest in cash if they are staying a week or so?

I've done it many times, when I've wanted to stay longer than I originally booked, and paid the additional days in cash. The owner would only do that if they were comfortable with you though, so I don't think many would take the gamble and assume that that is going to be the case

I've also state with people on a repeat basis, notably when I was moving to London and looking for a house. All the repeats I paid in cash

I think that the taxman will just have accept that there are some transactions that they will miss.

As an aside, my gf lives in my Dublin house, and doesn't pay rent. In a theoretical taxmans utopian perfect world, would she be expected to pay done kind of benefit in kind tax on that 'gift'. It's obviously never going to happen....I'm just interested

mille100piedi

the best idea would be limiting the hosting at 90 days in a year as they did in other places
I think that usually host families that rent their spare room to tourist for short term holiday wouldn't rent the same to long term tenants anyway

twiga

So the tax is here. That seems certain.

What a lot of us what to know is, if we are being taxed like a business, what expenses can we claim back against this business?

Examples include:
- Food bought for breakfast for guests
- Towels, linen, etc
- Extra charges for electricity
- Cleaning products, toilet paper, etc etc

If you're treated like a business, you should behave like on. Non?

Mrs OBumble

Agreed. Ask your accountant. Be prepared to keep detailed records so you know what was spent of paying guests vs what was your personal household expenditure.

The_Conductor

twiga wrote: »

So the tax is here. That seems certain.

What a lot of us what to know is, if we are being taxed like a business, what expenses can we claim back against this business?

Examples include:
- Food bought for breakfast for guests
- Towels, linen, etc
- Extra charges for electricity
- Cleaning products, toilet paper, etc etc

If you're treated like a business, you should behave like on. Non?

Nada.
With residential lettings under the rent-a-room or Airbnb- all income is taxable income- you have no allowable deductions.

If you let out an entire property- as a proper letting- you get 75% of mortgage interest, and 100% of fixtures and fittings deductible (on a flatline basis).

Food/towels/linen/electricity/cleaning products etc- nope.

mille100piedi

what about people they have been hosting for years? do they need to pay taxes from the previous years?and I guess most of them didn't keep receipt of any expenses

The_Conductor

mille100piedi wrote: »

what about people they have been hosting for years? do they need to pay taxes from the previous years?and I guess most of them didn't keep receipt of any expenses

Its moot. You're not allowed expenses.
Also- you were supposed to be declaring the income.
I doubt anyone is going to retrospectively come after you- but strictly speaking you do owe the tax.

mille100piedi

I declared the taxes under the rent a room scheme as I was advised by the Revenue. They really should clarify from which data things change, Airbnb is something new and there was not legislation before, I know about people that have been hosting for years declaring taxes under the rent a room scheme and they also told me they were advise to do so.

The_Conductor

In which case- you're fine.
Its the people doing this who don't bother declaring the income who have an undeclared liability- who may end up in trouble.

Henry Ford III

mille100piedi wrote: »

I declared the taxes under the rent a room scheme as I was advised by the Revenue. They really should clarify from which data things change, Airbnb is something new and there was not legislation before, I know about people that have been hosting for years declaring taxes under the rent a room scheme and they also told me they were advise to do so.

While Airbnb is novel insofar as it's a new medium to generate rental income the legislation covering the necessity to declare rental income is far from new.

The_Conductor

Its being treated under the rent-a-room scheme by Revenue- rather than under the general rental scheme- and taxed accordingly. Its not clear whether, or not, this is an appropriate way to deal with it. Time will tell.

Mrs OBumble

So what happens to a BnB operator who takes some bookings via AirBnB, and some via other channels - don't tell me that they have to declare the income separately!


(AirBnB isn't really new - it's just a new way of finding places and making bookings. The fundamental business model is well entrenched in the economy ere, and has been for a long time.)

mille100piedi

Maybe certain form of sharing economy were already known, but with internet it is getting bigger and the legislation is too slow. I think is different how a traditional BnB operates from somebody that rent a spare room in his own property. Most of the time Airbnb hosts are sharing bathroom or the kitchen with the guests so it is kind like having a flatmate because you can't have a privacy that BnB operator have so it should be treat as a different type of business, more like renting a room to students for a few weeks. What about renting to students, is it under the rent a room scheme or not? I think it is different matter if somebody rent a whole house. Also people that rent whole property can make more difficult the situation of people that are looking for long term rent, but people that rent just a room most of the time wouldn't take a long term flatmate because most of the time they are couples, family with children or retired people. If in the future I will not be allowed to rent for short time I will not rent for a long term to anybody

The_Conductor

Mrs OBumble wrote: »

So what happens to a BnB operator who takes some bookings via AirBnB, and some via other channels - don't tell me that they have to declare the income separately!


(AirBnB isn't really new - it's just a new way of finding places and making bookings. The fundamental business model is well entrenched in the economy ere, and has been for a long time.)

At the moment- if you ring Revenue- people are being advised to treat it as rent-a-room income, and have it treated as such under the scheme. Of course this means its limited to 12k- and you have no deductions- however, it doesn't sit comfortably under any heading- least of all rental income.

Peter File

The_Conductor wrote: »

Its being treated under the rent-a-room scheme by Revenue- rather than under the general rental scheme- and taxed accordingly. Its not clear whether, or not, this is an appropriate way to deal with it. Time will tell.

rent a room is tax free up to €12,000, renting through airbnb is fully taxable so they cant be treated the same way.

The_Conductor

Peter File wrote: »

rent a room is tax free up to €12,000, renting through airbnb is fully taxable so they cant be treated the same way.

Ring Revenue and ask.
Their staff are advising people over the phone to put it down as rent-a-room income.
Ring them with a 'hypothetical question' and see what they say to you........

Mrs OBumble

IMHO, forget ringing them: just because a Revenue staffer (who many not have even heard of AirBnB - you'd be surprised what sheltered lives some have lived) gives an opinion over the phone doesn't mean that's the final word.

I was running AirBnB (particularly like the ones I've stayed in, which have totally self-contained units - in some I've never even seen the host after meeting them to get the keys on the first day), I would be writing to them to get clarification.


Also, let's be very clear: even with Rent-a-room, it's not that you're only allowed 12k. You are allowed to earn as much as you want. But once you earn over 12k, you are liable for tax on the whole amount where as if you earn less than 12k, it's tax free.

Grandpa Hassan

I'd add that I equally don't necessarily believe some revenue officer mouthing off about it on the radio, threatening CGT implications etc.

I find it really hard to see how this can be treated any differently than the rent a room scheme on the condition that it is also the PPR. I mean, they can hardly single out airbnb as a platform / business. Because what about the other similar sites? And if they go down the 'short term lets' route, where do they draw the line. When I rented out my room, I did not want a flatmate....I just wanted some cash on occasion when I needed it. So I did a series of short lets....a month here, a couple of weeks there. Similar to airbnb, but clearly rent a room would apply? And if they restrict 'holiday lets', how do they define holiday.

Too many shades of grey. I think that they will end up checking that if is the PPR and if so applying the rent a room threshold. If not, full tax and CGT

dball

slightly off topic,
are food receipts allowed for offsetting taxes when hosting on airbnb?

CIARAN_BOYLE

The_Conductor wrote: »

At the moment- if you ring Revenue- people are being advised to treat it as rent-a-room income, and have it treated as such under the scheme. Of course this means its limited to 12k- and you have no deductions- however, it doesn't sit comfortably under any heading- least of all rental income.

do not rely on this, dealing with revenue over the phone is notoriously unreliable. Ive been involved in revenue audits where the inspector has had a transcript of the telephone conversation and said straight out this is wrong, since revenue gave you the wrong information we will assume that this is an innocent error.

shortys94

Hey guys

Not sure if this has previously been asked, but what is the deal with taxation on having an airbnb rented out? I mean is there a threshold to earning over which you start being eligible for taxation on it?

Just have few friends who were curious about it.

Cheers

Michael D Not Higgins

It's taxable income which you must declare in a tax return to Revenue. It doesn't qualify for the rent a room scheme which has a tax free threshold of €12000/year.