Being an Airbnb host is a great way to earn supplementary income by renting out spare space in your home or it could even be fully-fledged income generating business by renting out your entire property.
Either way you will have tax obligations to meet says New Zealand-wide accounting and financial experts at Tutbury & Associates Limited.
“At Tutbury & Associates Limited we understand all the Income Tax and GST consequences that comes from running an Airbnb,” says Kelly Tutbury, Accountant and Managing Director at Tutbury & Associates Limited.
Income earned from providing short-term accommodation (including through websites such as Airbnb or Bookabach) is taxable in New Zealand. This includes any payment for one-off or irregular rentals. “You have to declare the rental income you earn when you complete your annual tax return (IR3), and you need to keep good records,” adds Kelly.
You must include the amount you receive in your tax return. “You can claim deductions for expenses that is connected to you earning this income. If you are unsure whether this applies to you, we can offer you professional advice,” adds Kelly.
Inland Revenue is suggesting that people who rent out their house, holiday home or a room in their home for up to 100 days a year should be able claim a fixed amount of $50 a night for their expenses against their tax bill, regardless of their actual costs. “However, that amount will decrease to $45 a night if you are renting the accommodation they let out,” advises Kelly.
There are also different tax rules if you have a mixed-use holiday home. A mixed-use holiday home is where you use the holiday home yourself, rent it out and it's unoccupied for 62 days or more. “If you have a mixed-use holiday home and you earn less than $4,000 a year from renting it out you don't need to include this income in your annual tax return,” adds Kelly. Additionally, if you select not to declare this rental income you won't be able to claim expenses for it.
Providing short-term accommodation such as an Airbnb can be taxable supply for GST purposes. However, GST registration is only mandatory when the gross rental income exceeds $60,000+.
Need a little help? Contact the friendly team at Tutbury & Associates Limited with any queries you have or to discuss your specific situation in more detail to ensure that you are meeting your tax obligations.
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About Tutbury & Associates Limited:
Tutbury & Associates Limited has worked hard to build their reputation of excellent customer service by working interactively with their clients and making sure that their clients get value for money. They are ideal for ideal for trades people, or anyone who wants to grow their business.
Contact Tutbury & Associates Limited:
Phone: 07 576 2194
Address: 23 Myres Street Tauranga
Phone: 0274 587 724