Landlords - Airbnb in your property - Yay or Nay?

Unregistered39

Hi there,

I am a long-time renter of a 1-bed apartment and am thinking of occasionally (maybe a total of a week per month) letting it out through Airbnb and moving out (my parents live nearby so not a problem). As with most tenancies I'd be breaking my lease terms by doing this so was thinking of actually asking the landlord if it's OK to do it. I know most people would take the risk and not mention it but I have a nice place at a decent rent and would hate to jeopardise this.

So my question to landlords is yay or nay to letting a (very good, reliable) tenant sublet? I'd take out my own insurance and guests would pay a security deposit.

An alternative I'm considering is renting a two-bed apartment nearby and running Airbnb full time from it, while keeping my own place.

Any advice gratefully accepted.

seamus

I'd say you'd be very unlikely to get any landlord being happy with what you're proposing, especially as you'll be moving out, so you won't even be there to supervise. The landlord would lose the ability to vet potential airbnbers, and if they were to cause serious damage or burn the place down, his own insurance may give him some hassle covering it since the property was being occupied by someone other than the registered tenant.

No harm in asking; your landlord will appreciate that you did. But I'd be very surprised if they said yes.

SarahMollie

Unregistered39 wrote: »

An alternative I'm considering is renting a two-bed apartment nearby and running Airbnb full time from it, while keeping my own place.

Any advice gratefully accepted.

Would this actually be worth the hassle? I'm assuming at least 1200 for a 2 bed in Dublin (this is a low assumption!) and then you'll be taxed on your AirBnB income - this is really punitive if you're PAYE at the higher rate.

The_Conductor

Keep in mind- you cannot offset rental income against rental outgoings..........

In all honesty- I can't see any landlord being happy with a suggestion like this from a tenant- landlords are very exposed 'as-is'- however, having random strangers in the property- is not what they sign up to (and indeed- it probably invalidates their landlord insurance).

SarahMollie

The_Conductor wrote: »

Keep in mind- you cannot offset rental income against rental outgoings..........

In all honesty- I can't see any landlord being happy with a suggestion like this from a tenant- landlords are very exposed 'as-is'- however, having random strangers in the property- is not what they sign up to (and indeed- it probably invalidates their landlord insurance).

Also, if you're renting this 2 bed apartment, wouldnt you then have the same issue with the owner of that property?

Or do you just not mind in that instance as you're not risking your own living arrangements?

Unregistered39

Thanks all for the input, even if it's not what I wanted to hear

For what it's worth, the reason behind using Airbnb is that you can vet guests beforehand, plus they pay a security deposit. I've been renting my own place for 15+ years so my landlord does trust me. Also, I'm self-employed, not PAYE.

I'll think of something!

Thanks again.

beaufoy

Could try renting student apartments for the 3 month block summer holiday then renting them out per day on AIRBNB

L1011

The tenant could be as good and reliable as possible but it doesn't matter a damn as you've no idea who the Airbnb guest will be. Wouldn't countenance it.

4ensic15

you could be putting the landlord in breach of his lease, you would be causing the landlord to commit a criminal offence in that there would be an unauthorised change of use to the property as well as expose him to a law suit from any guest injured in or about the property. No landlord in his right mind would allow it!

Pkiernan

What criminal offence ffs??????

4ensic15

Pkiernan wrote: »

What criminal offence ffs??????

It is a criminal offence to change the use of a property without planning permission. Maybe you didn't know that!

Pkiernan

4ensic15 wrote: »

It is a criminal offence to change the use of a property without planning permission. Maybe you didn't know that!

Change in use how?
Renting to renting?

You are just needlessly exaggerating which diminishes your argument.
Any landlord would be a fool to allow sublet, but he would not be committing a crime. End of story.

athtrasna

Revenue class Air BnB as commercial letting so a property would go from being residential to commercial, change of use.

4ensic15

Pkiernan wrote: »

Change in use how?
Renting to renting?

You are just needlessly exaggerating which diminishes your argument.
Any landlord would be a fool to allow sublet, but he would not be committing a crime. End of story.

Tell that to the judge.
Thomas McMahon and Others (plaintiffs) v The Right Honourable The Lord Mayor, Aldermen and Burgesses of Dublin.
The High Court (before Mr Justice Barron); judgment delivered 19 June 1996.

Mr Justice Barron so held in determining that the use, for short term lettings as holiday homes, of houses which were designed and intended for owner occupiers was not a permitted use under a planning permission which excluded non residential use but which did not state the nature of the permissible residential use.

jd

athtrasna wrote:

Revenue class Air BnB as commercial letting so a property would go from being residential to commercial, change of use.

If it's deemed commercial usage, the head lease between apartment "owner" and the OMC probably forbids it too.

Victor

beaufoy wrote: »

Could try renting student apartments for the 3 month block summer holiday then renting them out per day on AIRBNB

Most formal student accommodation is let by way of licence, like a hotel and is personal to the licencee, so that won't work.

beaufoy

Victor wrote: »

Most formal student accommodation is let by way of licence, like a hotel and is personal to the licencee, so that won't work.

Maybe I am missing something as I understand it:
The student apartments are empty of students during the summer break, some are rented out to tourists by the OMC, some are taken over by the owners (they pay a fee to the OMC to do this) and are either lived in by the owners or rented out by the owners. Therefore provided there is nothing in the lease preventing sublets then my suggestion works

andekwarhola

Outside of the revenue considerations, we're landlords and if we found out our tenant(s) were doing this, they'd be out on their ear at the soonest legal opportunity.

beaufoy

andekwarhola wrote: »

Outside of the revenue considerations, we're landlords and if we found out our tenant(s) were doing this, they'd be out on their ear at the soonest legal opportunity.

Sometimes the irish revenue is confusing, but I will make my case and it will be up to the revenue to decide. Eighty percent of self employed business comes down to buying something at one price and selling it at another. Therefore how it should work is as follows:
Rent collected from AIRBNB..........20,000
Rent paid to obtain apartment.......10,000
Other expences travel/refurb/electric ect ect ect......2000

This leaves a taxable income of 8000 and whatever bracket the renter falls into will decide how much tax he has to pay.

Of course the OMC and/or owner of the student apartment would have to give permission

beaufoy

andekwarhola wrote: »

Outside of the revenue considerations, we're landlords and if we found out our tenant(s) were doing this, they'd be out on their ear at the soonest legal opportunity.

I am a land lord and provided it is safe and legal and makes me money I would allow someone to rent my property at one price and then let it at another. In fact I asked city apartments to do this for me but my property was not up to their standards

athtrasna

beaufoy wrote: »

Sometimes the irish revenue is confusing, but I will make my case and it will be up to the revenue to decide. Eighty percent of self employed business comes down to buying something at one price and selling it at another. Therefore how it should work is as follows:
Rent collected from AIRBNB..........20,000
Rent paid to obtain apartment.......10,000
Other expences travel/refurb/electric ect ect ect......2000

This leaves a taxable income of 8000 and whatever bracket the renter falls into will decide how much tax he has to pay.

Of course the OMC and/or owner of the student apartment would have to give permission

That's not how it works though. One rent cannot be offset against the other

The_Conductor

beaufoy wrote: »

Sometimes the irish revenue is confusing, but I will make my case and it will be up to the revenue to decide. Eighty percent of self employed business comes down to buying something at one price and selling it at another. Therefore how it should work is as follows:
Rent collected from AIRBNB..........20,000
Rent paid to obtain apartment.......10,000
Other expences travel/refurb/electric ect ect ect......2000

This leaves a taxable income of 8000 and whatever bracket the renter falls into will decide how much tax he has to pay.

Of course the OMC and/or owner of the student apartment would have to give permission

As Athtrasna has rightly pointed out- you're making a lot of invalid assumptions.

1. You cannot offset rental outgoings against rental income- full stop. This has been debated ad nauseum over the last decade- and is seen as an inequity- particularly for owners of a single property who are forced to move for work or other reasons- and rent elsewhere- and end up having to fund their rental of property 2 from their net income.

2. The 20k is rental income and is taxed at your marginal rate of tax- and is not treated independently of any other income you may have.

3. While there are some deductions allowable as costs before determination of taxable income- you do not get to charge for your own time or any work you put into the property. You do not get to charge for remedial work to bring the property up to standard. Any depreciation of furniture, fixtures and fittings- would only be deductible on a pro-rata flatline basis over 8 years (aka if the property is let for 36 days in a calendar year (not implausible)- you get a 1/10 of 12.5% cost of the depreciation as an allowable cost........)

4. Revenue are not happy with Airbnb- and any rental income, days let etc- are now shared by Airbnb with Irish Revenue officials......... (to many people's annoyance)

What you are proposing- simply doesn't stack up (wholly aside from all the other issues- such as putting a landlord in breach of his obligations to the Management Company etc. etc.)

beaufoy

The_Conductor wrote: »

As Athtrasna has rightly pointed out- you're making a lot of invalid assumptions.

1. You cannot offset rental outgoings against rental income- full stop. This has been debated ad nauseum over the last decade- and is seen as an inequity- particularly for owners of a single property who are forced to move for work or other reasons- and rent elsewhere- and end up having to fund their rental of property 2 from their net income.

2. The 20k is rental income and is taxed at your marginal rate of tax- and is not treated independently of any other income you may have.

3. While there are some deductions allowable as costs before determination of taxable income- you do not get to charge for your own time or any work you put into the property. You do not get to charge for remedial work to bring the property up to standard. Any depreciation of furniture, fixtures and fittings- would only be deductible on a pro-rata flatline basis over 8 years (aka if the property is let for 36 days in a calendar year (not implausible)- you get a 1/10 of 12.5% cost of the depreciation as an allowable cost........)

4. Revenue are not happy with Airbnb- and any rental income, days let etc- are now shared by Airbnb with Irish Revenue officials......... (to many people's annoyance)

What you are proposing- simply doesn't stack up (wholly aside from all the other issues- such as putting a landlord in breach of his obligations to the Management Company etc. etc.)

Let me try to answer your four points:
1) You cannot off set rental expenses against rental income. In order to prove this point you mention people who have to move and rent cannot offset one rental income against rental expenses. In my own opinion someone moving should be able to claim rental expenses against rental income. However, they can't, but this does not effect my (valid) assumptions. The scenario you point to is not a business, but my valid assumptions are based on a business. When someone drives to work he cannot claim traveling expenses, but if a business owner has to travel to a meeting he can claim expenses. Same applies to the rental market if someone runs a business renting properties long term then renting them out short term he can claim for rent paid. Most hotels run in the same way
2) I never said the rental income is treated independently.
3) Concerning refurb I mentioned in a list with ect ect ect. I never stated all refurb is tax deductable.
4) I never said AIRBNB keep quiet about rental incomes of customers

mrs vimes

The_Conductor wrote: »

As Athtrasna has rightly pointed out- you're making a lot of invalid assumptions.

1. You cannot offset rental outgoings against rental income- full stop. This has been debated ad nauseum over the last decade- and is seen as an inequity- particularly for owners of a single property who are forced to move for work or other reasons- and rent elsewhere- and end up having to fund their rental of property 2 from their net income.

You keep saying this but Revenue clearly state otherwise in their guide to taxation of Rental income (IT70):

The following are examples of expenditure you may deduct when calculating your rental income or losses. As advised in the introduction, a separate calculation must be made for each letting.

rents payable by the landlord in respect of the property, e.g. ground rent,

The rent payable by the person sub-letting under the head lease is entirely different to rent you are paying to house yourself elsewhere.

The_Conductor

Errr- the Revenue document specifically mentions ground rents- which are an allowable cost- ground rents are a totally different kettle of fish to the situation here........

Anyhow- the OP obviously has their mind made up- and it doesn't seem to matter what anyone says- they are going to do their own thing.

All I really advise to the OP at this stage- is get professional advice.

mrs vimes

Errr - It says "rents payable by the landlord in respect of the property, eg ground rents"

It does not in any way exclude rents other than ground rents. If it had intended to exclude rents other than ground rents it would say "ground rents payable by the landlord in respect of the property".

This is presumably why tax advise is banned on Boards.ie.

OP, write to Revenue and they will put you straight.

The_Conductor

mrs vimes wrote: »

OP, write to Revenue and they will put you straight.

Revenue- do not readily offer tax advice (for numerous reasons). The OP needs proper tax advice from a tax consultant.

Guy:Incognito

I cant see why any landllord would allow it. Theres no gain for them and they take on additional risk. They are currently getting the rent from you so whats their incentive to let you make money off their property for free?