AirBnB Megathread - ALL A&P related Airbnb discussion here please

Maybe try to get someone in Monday to Friday on the rent a room scheme instead. If you are in Dublin (which I assume you are at your rental cost) there are a lot of people working up there that go home to their family for weekends. They would usually travel up Monday morning and back after work friday so you would essentially have a free house from Friday morning till Monday evening, the weekend would be the most time you would appreciate a free house rather than your plan of renting the room on Airbnb during the weekend.

This would allow you to avail of the rent a room scheme, it would all be tax free and much simpler to do.

Glass fused light

maxmarmalade wrote: »

Ok thanks, ill seek advice. It would seem though that it depends on who has signed the lease - if i haven't signed it they cant touch me.

Amazing the lengths we have to go to avoid pay yet more tax - I pay 4K+ income tax per month:( - and Apple get away with 13 billion. What a country.

Apple paid handsomely for tax advice and for the legal eagles who are still arguing that tax advice was correct.

If I remember correctly the law was changed to oblige people who had bright ideas, particularly after spotting loopholes, to tell the Revenue about them otherwise the tax avoidance moved into tax evasion territory.

Point to note if lease is only in your girlfriends name would your contribution not also fall into her income, with rent a room filings needed.

For the price of a letter.
You are both entitled to write to Revenue requesting an opinion (which I think Apple did). Lay out the facts i.e. explain that even though you both are on the lease why you are not the recipient of the rent etc and they write back. If they accept your facts you don't have to pay the tax

Michael D Not Higgins

That would fall under the rent-a-room scheme.

maxmarmalade

Glass fused light wrote: »

Point to note if lease is only in your girlfriends name would your contribution not also fall into her income, with rent a room filings needed.

Ah jaysus! You're probably right, i would. I think this country is approaching bureaucracy boiling point.

Ill sign the lease so and put all earnings to partners name as airbnb account is in her name. Im taking a chance but given I contribute massively every month to them (4K+ in monthly income tax alone), maybe they'll cut me some slack.

Michael D Not Higgins

maxmarmalade wrote: »

Ah jaysus! You're probably right, i would. I think this country is approaching bureaucracy boiling point.

Ill sign the lease so and put all earnings to partners name as airbnb account is in her name. Im taking a chance but given I contribute massively every month to them (4K+ in monthly income tax alone), maybe they'll cut me some slack.

If that's the case, you're making ~120 grand a year. Would you not just live in the apartment alone without the hassle?

maxmarmalade

Kylee Millions Badminton wrote: »

Maybe try to get someone in Monday to Friday on the rent a room scheme instead. If you are in Dublin (which I assume you are at your rental cost) there are a lot of people working up there that go home to their family for weekends. They would usually travel up Monday morning and back after work friday so you would essentially have a free house from Friday morning till Monday evening, the weekend would be the most time you would appreciate a free house rather than your plan of renting the room on Airbnb during the weekend.

This would allow you to avail of the rent a room scheme, it would all be tax free and much simpler to do.

Yeah possibly. Problem is the kitchen is absolutely tiny, literally only one person can fit in there at a time. Thats why we preferred to do Airbnb (theres an option on Airbnb where u can say kitchen is off-limits)

maxmarmalade

Michael D Not Higgins wrote: »

If that's the case, you're making ~120 grand a year. Would you not just live in the apartment alone without the hassle?

Im making less than that. Im a contractor so the company essentially pays me what they would pay in PRSI contribution if i was an employee - thats why im on good wages.

I'd perfer the hassle if it reduces rent. The costing of living in dublin, running a car, exorbitant income tax etc, doesnt leave much opportunity for saving for the future, even on good wages.

Baby01032012

Why do we have 3 Airbnb threads now following the one stream ie replica posts now in each. I was happy with different threads but now all seem to have been merged into one without deleting the other two? Maybe I'm looking at it incorrectly.

Michael D Not Higgins

Baby01032012 wrote: »

Why do we have 3 Airbnb threads now following the one stream ie replica posts now in each. I was happy with different threads but now all seem to have been merged into one without deleting the other two? Maybe I'm looking at it incorrectly.

All the old threads redirect to this thread. The redirects expire in three days. They'll naturally fall down the list anyway.

maxmarmalade

This is interesting: Airbnb have a section on their website for Irish Hosts on the Rent-a-room Scheme with a link to an Ernest & Young report questioning Revenue's interpretation of the law. Scroll down to Rent-a-room Relief:

https://www.airbnb.ie/help/article/1378/responsible-hosting-in-ireland

and the EY summary:

https://www.airbnb.ie/help/article/1122/rent-a-room-relief--ey-summary-of-technical-position

Looks like Revenue's case isnt so watertight.

Baby01032012

maxmarmalade wrote: »

This is interesting: Airbnb have a section on their website for Irish Hosts on the Rent-a-room Scheme with a link to an Ernest & Young report questioning Revenue's interpretation of the law. Scroll down to Rent-a-room Relief:

https://www.airbnb.ie/help/article/1378/responsible-hosting-in-ireland

and the EY summary:

https://www.airbnb.ie/help/article/1122/rent-a-room-relief--ey-summary-of-technical-position

Looks like Revenue's case isnt so watertight.

Are you going to tax a test case to the courts against Revenue?

It doesn't look like revenues case isn't so watertight on Apple either at the moment...

SteM

maxmarmalade wrote: »

What a country.

You've said that twice now but you're happy to live in a country where you can earn so much that you have pay 4k pm income tax.

You have to take the good with the bad I'm afraid.

maxmarmalade

Baby01032012 wrote: »

Are you going to tax a test case to the courts against Revenue?

It doesn't look like revenues case isn't so watertight on Apple either at the moment...

I wonder have people actually being declaring Airbnb as income? I know 4 or 5 people who earned 12k last year and have no intention of paying anything. As Ernest & Young have pointed out, by the letter of the law, it looks like Revenue would actually lose. Seems to be that there would need to be a legislation change before Revenue can treat it all as income.

Glass fused light

maxmarmalade wrote: »

I wonder have people actually being declaring Airbnb as income? I know 4 or 5 people who earned 12k last year and have no intention of paying anything. As Ernest & Young have pointed out, by the letter of the law, it looks like Revenue would actually lose. Seems to be that there would need to be a legislation change before Revenue can treat it all as income.

They may have no intention of paying the problem arises is the Revenue come collecting.
Then its (( Income * ( tax rate +social rate) + ( (Income * ( tax rate +social rate) ) * (penalty rate )) * ( interest rate * time ) plus the pleasure of explaining their cash flow to prove nothing else is due and maybe a little note in the newspapers
It's all income, it's just that if you follow the rules the rent a room income is tax free.

Peregrinus

maxmarmalade wrote: »

I wonder have people actually being declaring Airbnb as income? I know 4 or 5 people who earned 12k last year and have no intention of paying anything. As Ernest & Young have pointed out, by the letter of the law, it looks like Revenue would actually lose. Seems to be that there would need to be a legislation change before Revenue can treat it all as income.

But, even if your view is that AirBnB income comes within the terms of the rent-a-room scheme, under the terms of that scheme it still has to be reported to the Revenue, so you have to report it. (You can't demand that it be treated as within the rent-a-room scheme if you yourself are not treating as the scheme requires.) The Revenue, of course, take the view that it's not within the terms of the scheme, so they'll assess it to tax. It's then up to you to challenge the assessment, and fight the case until you get a definitive judgment in the courts.

You might very well win, if E&Y are right. But you will have to fight the fight, so there's no point in going down this route unless you are ready to do that.

maxmarmalade

Peregrinus wrote: »

But, even if your view is that AirBnB income comes within the terms of the rent-a-room scheme, under the terms of that scheme it still has to be reported to the Revenue, so you have to report it. (You can't demand that it be treated as within the rent-a-room scheme if you yourself are not treating as the scheme requires.) The Revenue, of course, take the view that it's not within the terms of the scheme, so they'll assess it to tax. It's then up to you to challenge the assessment, and fight the case until you get a definitive judgment in the courts.

You might very well win, if E&Y are right. But you will have to fight the fight, so there's no point in going down this route unless you are ready to do that.

I will write to Revenue, presenting them with E&Y's assessment and see what they say.

Peregrinus

maxmarmalade wrote: »

I will write to Revenue, presenting them with E&Y's assessment and see what they say.

But we already know what they'll say, because they have already issued guidance on this very point. ("The room or rooms must be used for the purposes of residential accommodation, i.e. the occupant is using the room, either on its own or in conjunction with other parts of the residence, as a home. The relief does not apply to rooms that are used for the provision of accommodation to occasional visitors for short periods, including, for example, where the accommodation is provided through online accommodation booking sites."). Their reply will simply point you to their published guidance. They're aware of the contrary view expressed by E&Y, but clearly they don't find it persuasive.

Which is not to say that E&Y is wrong; just that you won't get the Revenue to accept that E&Y is right just by dropping them a line pointing to the published summary of the E&Y advice. Someobody's going to have to report AirBnB income, get an assessment to tax on it, object to the assessment on the basis of the E&Y position, and fight it out through the appeals process before this will change.

Glass fused light

maxmarmalade wrote: »

Im a contractor

Additionally if you are actually going to write to Revenue arguing for the E&Y position, I would strongly recomend that you get a qualified professional tax advisor to review your tax affairs or a second opinion if you already have one. The letter is likely to raise a flag and put you on the audit list.

maxmarmalade

Glass fused light wrote: »

Additionally if you are actually going to write to Revenue arguing for the E&Y position, I would strongly recomend that you get a qualified professional tax advisor to review your tax affairs or a second opinion if you already have one. The letter is likely to raise a flag and put you on the audit list.

I've since gotten the opinion of a qualified tax advisor since and they have agreed with E&Y's position, mainly because there the legislation does not include any definition for what "residential accommodation" means.

Im not prepared to fight this out in court though - i'd be marked for life. It's a bit worrying that Revenue are, essentially, chancing their arm and demanding income tax be paid on money when there no legislation to back up their position.

Peregrinus

maxmarmalade wrote: »

I've since gotten the opinion of a qualified tax advisor since and they have agreed with E&Y's position, mainly because there the legislation does not include any definition for what "residential accommodation" means.

Im not prepared to fight this out in court though - i'd be marked for life. It's a bit worrying that Revenue are, essentially, chancing their arm and demanding income tax be paid on money when there no legislation to back up their position.

Well, we have to ackowledge that there's also no legislation to back up E&Y's position, as they themselves point out in the summary of their advice that AirBnB has published.

The point is that the legislation says that the relief is available for the provision of residential accommodation, but doesn't define "residential accommodation". The revenue have to operate the legislation and therefore have to take a position on what it means, and they have done so. E&Y point out that in the context of some UK legislation the same phrase (also not defined in the relevant legislation) has been held by the courts to include short-term tourist lets.

That doesn't in itself prove that the Revenue is wrong. AirBnB have only published a summary of the E&Y advice. They haven't published any analysis by E&Y (or anyone else) of the Revenue's position, or any examination of whether there's any authority the Revenue can point to. They haven't published any compare-and-contrast of the UK and Irish legislative provisions, so that you can decide if the context in which the UK courts interpreted the phrase differs in any way from the context in which the Irish courts would have to interpret it, and whether this might affect how it would be interpreted.

I don't think you'd be "marked for life" if you fought this out in the Irish courts, if by that you mean that the Revenue would have it in for you. They're quite happy for people to challenge their assessments, appeal to the courts, etc; they don't seek revenge for this. What's far more likely to have someone "marked" is the discovery that they have failed to declare some item of income, or that they have cooked the books by falsely declaring the income as that of their partner, who has a lower marginal rate. But correctly declaring the income and then arguing that it attracts this tax treatment rather than that tax treatment is absolutely fine; it's what ethical and responsible taxpayers do, as far as the Revenue is concerned.

The main drawback to fighting the Revenue's position here is not that it would leave you "marked for life"; it's that it would cost you a lot of money, and there is no guarantee that you would succeed.

Glass fused light

I agree with Peregrinus post.

The Revenue have a code of pratice to deal with their customers (everybody: the tax paying and the tax avoiding and the tax evading).
What I meant about the audit is that as they are moving to a risk based cost/benefit assessment model, with your letter, you get flagged as a potential tax avoider who may 'accidentally' become a tax evader. Add that to your not paye and you move up the risk scale.
Then a bit like Santy Claus they need to find out if you are naughty or nice.

If you stay on the nice list they are not going to spend the time (= money ) going after you because you could lodge a complaint and they then have to follow a process .....etc and the guy dealing with this is not catching evaders (adding to the tax take) ..... Basically there is no money in it for them.

If you end up on the naughty list...... Well Happy days!! the Inspector(?) may even get a promotion if they spotted something that can be applied across other audits.

smegger

I suspect a change in legislation will come in the next finance act (be it a favourable one or unfavourable one). Due to the lack of legislation, I find it unlikely that Revenue would challenge any position taken by an individual. In monetary terms it is small for Revenue to spend a lot of resources on challenging "rent a room" relief. Revenue has the list of individuals in receipt of AirB&B payments and I suspect the first check Revenue would perform is to see what individuals haven t filed a tax return. It is difficult to say if they will inspect the tax returns of individuals with gross rents of less than 12k.

An approach that I am thinking of taking is to file my tax return (1st one I ever will file as I am a PAYE worker and 2015 is the 1st year I started using AirB&B) and declare the income as 'rent-a-room' and include an "expression of doubt". If Revenue check my return and disagree with the treatment of AirB&B income, I will then just pay the extra taxes. (if they review, it is very likely they will disagree). But I think its worth the chance giving the uncertainly.

Benefit of "expression of Doubt",if correctly used, is that Revenue won't apply penalties.

Glass fused light

smegger wrote: »

I find it unlikely that Revenue would challenge any position taken by an individual. In monetary terms it is small for Revenue to spend a lot of resources on challenging "rent a room" relief.

NB IMO:

The Revenue have already said what the classification this income falls under and that it will not receive the rent a room relief. They have to treat everyone the same.

The individual will be challenging the Revenue position.

Once this happens they will defend their position, best practice would be for them to allow the courts to decide who was correct (point if law). It's for the principal that they go to court otherwise they are deciding piecemeal on classifications. Even if the law is changed it would seen as being in the public interest so monetary considerations would not factor (plus it public money funding).

Peregrinus

smegger wrote: »

I suspect a change in legislation will come in the next finance act (be it a favourable one or unfavourable one).

Two thoughts:

If the legislation is amended to define “residential accommodation”, it will define it in a way that excludes short-term tourist lets. That’s what the Revenue think the legislation already means, and the purpose of the amendment would be to clarify the legislation, not change its effect. Plus, the policy considerations which underlay the introduction of the rent-a-room scheme suggest that this would be the appropriate definition.

But, in fact, I don’t expect there will be an amendment. To make an amendment to clarify the legislation is to concede that the legislation is unclear, and the official position is that it’s perfectly clear, what is this “ambiguity” of which you speak? If you were to amend the legislation for 2017-18 and future years, you’d be encouraging challenges to assessments issued for 2016-17 and previous years, and you don’t want to do anything to encourage challenges.

If more than a few people do challenge assessments and the challenges are successful or are expected to be successful, then you might see an amendment being brought forward. Otherwise I suspect not.

maxmarmalade

Peregrinus wrote: »

Two thoughts:

If the legislation is amended to define “residential accommodation”, it will define it in a way that excludes short-term tourist lets. That’s what the Revenue think the legislation already means, and the purpose of the amendment would be to clarify the legislation, not change its effect. Plus, the policy considerations which underlay the introduction of the rent-a-room scheme suggest that this would be the appropriate definition.

But, in fact, I don’t expect there will be an amendment. To make an amendment to clarify the legislation is to concede that the legislation is unclear, and the official position is that it’s perfectly clear, what is this “ambiguity” of which you speak? If you were to amend the legislation for 2017-18 and future years, you’d be encouraging challenges to assessments issued for 2016-17 and previous years, and you don’t want to do anything to encourage challenges.

If more than a few people do challenge assessments and the challenges are successful or are expected to be successful, then you might see an amendment being brought forward. Otherwise I suspect not.

True, but its not just a case of AirBnb hosts challenging Revenue assessments - its a case of them completing ignoring what Revenue have said in relation to rent-a-room. From my - admittedly small - sample of Airbnb hosting friends (a total of 6), not one have declared earnings as income tax and not one intends doing so. This will all come to a head soon.

Peregrinus

maxmarmalade wrote: »

True, but its not just a case of AirBnb hosts challenging Revenue assessments - its a case of them completing ignoring what Revenue have said in relation to rent-a-room. From my - admittedly small - sample of Airbnb hosting friends (a total of 6), not one have declared earnings as income tax and not one intends doing so. This will all come to a head soon.

But not in a good way. If Mr X has AirBnB income but fails to declare it, and if he gets audited and it comes to light that he had AirBnB income but didn't declare it, he really has no credibility if he argues that it is covered by the rent-a-room exemption. If income is within the rent-a-room exemption, you have to declare it. He didn't declare it; therefore he himself didn't treat it as coming within the rent-a-room exemption.

This doesn't make it absolutely impossible to run the argument that the income is exempt under the rent-a-room relief. Should that argument succeed, you'll still be liable to the penalties for making a false return, but not to tax on the undeclared income, or interest/penalties on that tax. But you're going to look as if you're running the argument as a rationalisation to mitigate the consequences of what started out as outright tax evasion.

To have the best chance of success here, the ideal strategy would be (a) earn income from short-term tourist lets; (b) make a tax return, showing the income (clarifying that it is from short-term tourist lets) and claiming the rent-a-room relief; (c) get assessed to income tax when, as expected, the relief is denied; (d) challenge the assessment.

Where a significant number of taxpayers make a similar objection to their assessments, there's a practice by which the Revenue will pick one of the objections and agree to treat it as a "test case", the outcome of which will determine all the other similar objections. For the test case, you pick an objection which raises the relevant issue and, so far as possible, doesn't raise other issues (like failure to make a return) and isn't characterised by unusual facts or circumstances. It wouldn't amaze me if AirBnB were talking to the Revenue about this possibility, since it's obviously in their interests to have this clarified (depending, of course, on which way it gets clarified).

Glass fused light

maxmarmalade wrote: »

True, but its not just a case of AirBnb hosts challenging Revenue assessments - its a case of them completing ignoring what Revenue have said in relation to rent-a-room. From my - admittedly small - sample of Airbnb hosting friends (a total of 6), not one have declared earnings as income tax and not one intends doing so. This will all come to a head soon.

This not a problem for Revenue at all.
They have a process and rules.
If and when your friends get caught in the tax net the Revenue will start the process and follow their rules.

In order for the tax evaders to successfully get the rent a room relief they have to file 'the paper work'.
But say they have been (caught) assessed and given the tax bill.
Appeal on the basis of incorrect classification of income : Case I(?) according to Revenue against Case V(?) according to the tax evader.
The appeal process rolls up through the ranks with the Revenue standing firm.

Peregrinus wrote: »

and the official position is that it’s perfectly clear, what is this “ambiguity” of which you speak?

This is why :

Peregrinus wrote: »

you’d be encouraging challenges to assessments issued for 2016-17 and previous years, and you don’t want to do anything to encourage challenges

(consider this applies to all taxes where the meaning of the words could be challanged)

now the tax evader is looking for clarification on what a section of law means (residential accommodation) and the Revenue will require tax evader to go to court to prove that.

They would then have to argue that failing to file paperwork should not count....see where this is going

The tax evader would want to be making serious money or like the challange to be willing to argue the point over a 12k relief.

So don't expect a change of law too soon just unhappy (poorer) friends.

Edit Peregrinus explains it better

newacc2015

maxmarmalade wrote: »

True, but its not just a case of AirBnb hosts challenging Revenue assessments - its a case of them completing ignoring what Revenue have said in relation to rent-a-room. From my - admittedly small - sample of Airbnb hosting friends (a total of 6), not one have declared earnings as income tax and not one intends doing so. This will all come to a head soon.

Regardless of whether or not you use Airbnb or an ad in your local Tesco, you have to declare income earned under rent-a-room. There are penalties for filing an incorrect tax return form.

Revenue have stated that rent-a-room scheme doesnt apply to short term lets. I dont see how anyone could think otherwise

I dont think you or your friends seem to realise that once a year Airbnb will send a folder of data to Revenue with all the hosts in Ireland and their earnings from Airbnb. It will not take Revenue much effort to see which of those have filed a tax return or not. Most Irish people are completely obvious to the fact that Irish Revenue is possible the most tech savvy revenue service in the World. Your friends thinking they will get away with no paying tax on their airbnb is seriously naive

newacc2015

newacc2015 wrote: »

Revenue have stated that rent-a-room scheme doesnt apply to short term lets. I dont see how anyone could think otherwise

This stance could be open to being challenged in court though if a person wanted to just because revenue say it doesn't mean its correct. That would be decided by a court.

Now obviously no normal person is going to go down that route so you have no choice but to pay tax on the airbnb income. I do think its unfair though, I dont see why someone renting a room in their home (which they are living in) on airbnb should not be able to avail of the rent at a room scheme and I think if challenged in court there would be a good chance that a judge would find in favour of it being under the rent a room scheme. Obviously full houses/apartments let on airbnb is totally different.

Glass fused light

:eek: Oops speed reading and commenting on mis-read.