Airbnb Hosts and tax

frebel

Article today in times about revenue looking at incomes from airbnb.
I'm assuming there's no way round this?
There was an article in the indo that said it qualified under rent relief scheme but don't think that's the case


4.3 Business use
The room or rooms must be used for the purposes of residential accommodation, i.e. the occupants are effectively using the room on a long-term basis, 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 business purposes. Also, income from the provision of accommodation to occasional visitors for short periods would not qualify for relief as the visitors use the accommodation as guest accommodation rather than for residential purposes. Income from guest accommodation such as a bed and breakfast or a guesthouse operation is generally treated as trading income (Case 1) and not rental income (Case V). This type of income, even where it is under the relevant limit, does not qualify for rent-a-room relief.

If you rent out a room in your home, you are not covered by landlord and tenant legislation so the rights and obligations under that legislation do not apply to you. For example, you are not obliged to register as a landlord with the Private Residential Tenancies Board (PRTB), provide a rent book to the tenant or ensure that the accommodation provided meets any minimum physical standards.

aierlan1000

No-looks like the Airbnb dream has died! Revenue have now issued some clarification. Pity-think it would be fairer if some middle-ground or compromise position could be reached. I would have a certain amount of sympathy with the hotel industry though.

athtrasna

Too bloody right! The rent a room relief being abused costs us all in the long term. I'd rather air b'n'b be taxed than risk the rent a room relief being cut!

aierlan1000

I wouldn't call it abuse-people were staying below the thresholds...better solution might have been to reduce the limit and increase the scope!

The_Morrigan

aierlan1000 wrote: »

I wouldn't call it abuse-people were staying below the thresholds...better solution might have been to reduce the limit and increase the scope!

How would that help those who have long term lodgers residing with them for below market rates?
The commercial short stay area typically charges higher rates than you would find in the rental sector or under the rent a room scheme.

Mrs OBumble

aierlan1000 wrote: »

I wouldn't call it abuse-people were staying below the thresholds...better solution might have been to reduce the limit and increase the scope!

It's routinely abused by people pretending they live in places where they don't live. I know several people who have houseshared in places where the LL's official mail all came to the house, despite the fact that none of the bedrooms were allocated to them.



The AirBnB dream has not died. It is just liable for tax in the same way as any other side business is - this way it always has been, and should be.

As a person with a side-business (not AirBnB), yes it annoys me to be paying 51% tax on it. But in fairness, it's the same rate I'd be paying if my day job earned more. And 49% is still a long way better than nothing.

aierlan1000

Mrs OBumble wrote: »

It's routinely abused by people pretending they live in places where they don't live. I know several people who have houseshared in places where the LL's official mail all came to the house, despite the fact that none of the bedrooms were allocated to them.

that's a different issue really...and raises all sorts of other issues such as capital gains etc.

While 49% is better than nothing- it's you not the government who is earning it so don't you think, in principle, at least you should be allowed to keep it?

I do take your point but at the same the rent a room scheme is in place and it allows for students during term but not airbnb people. touch of hypocrisy about that. cest la vie I suppose....except like I say-if there was some middle ground that could be reached!

wyndham

aierlan1000 wrote: »

While 49% is better than nothing- it's you not the government who is earning it so don't you think, in principle, at least you should be allowed to keep it?

The same could be said for all income? Let's do away with income tax completely!

Stark

wyndham wrote: »

The same could be said for all income? Let's do away with income tax completely!

51% on income tax is also too high imo. Sure, tax people but 51% on earnings above 32k or whatever is taking the piss.

aierlan1000

All true and I do agree with the sentiment of no income tax but I think it's slightly off the point! Basically I think Airbnb type accom is really beneficial and a good use of property (in the same way as rent a room) and it would be nice to see some kind of accommodation made rather than all out treating the same as any other business!

The_Morrigan

aierlan1000 wrote: »

All true and I do agree with the sentiment of no income tax but I think it's slightly off the point! Basically I think Airbnb type accom is really beneficial and a good use of property (in the same way as rent a room) and it would be nice to see some kind of accommodation made rather than all out treating the same as any other business!

But it is a business.
There are some very high quality apartments and houses for short term let on the site. These are not people who are renting a room in their private residence, they are people with empty properties.

Eldarion

Took them long enough.

Sure we've had anecdotes directly from people on this forum explaining their business models and how they run the airbnb side of things, most never even meet the tenants or live in the properties at all. It's evolved enough now that it's fully competing on the short term letting market and so should be taxed at the same rates as the competition.

Idbatterim

The same could be said for all income? Let's do away with income tax completely!

nobody is saying that, but the current marginal rate is a disgrace given the low threshold it kicks in at and the very high cost of living in Ireland, but Dublin in particular...

Grandpa Hassan

The_Morrigan wrote: »

But it is a business.
There are some very high quality apartments and houses for short term let on the site. These are not people who are renting a room in their private residence, they are people with empty properties.

But most of them are renting rooms in their private residence. And it is a fine line between airbnb and having a turnover of lodgers.

I am not sure how you differentiate in legislation between short term lets under rent a room relief and airbnb

If I decide I want to rent my spare room out for a month, just to get a bit of income in, surely I am perfectly entitled to under rent-a-room. Just have to use daft instead of airbnb to get the advert out

aierlan1000

All the same the rent-a-room scheme is there and previous revenue guidelines said it just had to be part of your house and under threshold- didn't matter whether it was 1 tenant or 10 or how long they stayed so long as you lived there and the yearly total was below the threshold (now €12k).

If you have a second home and rent it-then it's classed as income, end of story. There is no tax relief scheme for these types of lettings.

In Dublin, you could prob hit the 12k with a long term tenant...down the country, it's a more interesting way of reaching the threshold than getting students, trainee accountants etc!

Just as an aside-the high rate of tax is mental! Prob for another forum but what is it in other countries?

Arbiter of Good Taste

The fact is that the rent a room scheme is an exemption from tax. Prima facie the income is taxable, but as a concession Revenue is exempting it. If they wanted to level the playing field, it's likely they would remove the exemption rather than making AirB&B income exempt.

Grandpa Hassan

Arbiter of Good Taste wrote: »

The fact is that the rent a room scheme is an exemption from tax. Prima facie the income is taxable, but as a concession Revenue is exempting it. If they wanted to level the playing field, it's likely they would remove the exemption rather than making AirB&B income exempt.

They couldn't do that. It'd be a disaster in a market where there are already not enough rooms to meet demand. It would take a ton of spare rooms off the market and drive up demand and rent prices for what's left

Arbiter of Good Taste

Grandpa Hassan wrote: »

They couldn't do that. It'd be a disaster in a market where there are already not enough rooms to meet demand. It would take a ton of spare rooms off the market and drive up demand and rent prices for what's left

Absolutely agree.

The point I'm making is that rather than viewing the taxation of income from AirB&B as unfair, people need to realise that the rent a room scheme is the execution from the norm.

miryan

Hi all -
Does anyone know the situation about declaring air bnb room to revenue - has someone done this and how much were they taxed?
Thanks a lot
M

miryan

Hi all -
Does anyone know the situation about declaring air bnb room to revenue - has someone done this and how much were they taxed?
Thanks a lot
M

Mrs OBumble

How much they are taxed depends on how much they earned from other sources, an dwhat tax credits they have from other sources (oldness, sole-parentness, etc)

Worst case it's 51% on the lot. But with proper accountant advice, there will be some expenses that can be claimed against this.

athtrasna

Guy from Revenue on Newstalk this lunchtime said they're going to crack down on AirBnB and was quite specific that rent a room does not apply, the owner is operating a guest house when they use the site to rent out rooms in their homes. It's going to be interesting to see how they decide what's a bona fide rent a room situation and what isn't

Celly Smunt

What if the fee was a "gift",as in a 500 euro thank you for a week stay?

athtrasna

Celly Smunt wrote: »

What if the fee was a "gift",as in a 500 euro thank you for a week stay?

If you do it through AirBnB there will be an audit trail

Stark

Plus we have taxes on gifts to cut out that kind of shenanigans.

Grandpa Hassan

Stark wrote: »

Plus we have taxes on gifts to cut out that kind of shenanigans.

Good luck to revenue trying to go down that road!

Arbiter of Good Taste

Celly Smunt wrote: »

What if the fee was a "gift",as in a 500 euro thank you for a week stay?

Try it out. Let us know how you get on :rolleyes:

L1011

Celly Smunt wrote: »

What if the fee was a "gift",as in a 500 euro thank you for a week stay?

Gifts asked for and services given "coincidental" don't wash with revenue.

Mrs OBumble

L1011 wrote: »

Gifts asked for and services given "coincidental" don't wash with revenue.

Or with AirBnB, who are able to take their cut from the transaction by insisting that all payments are by credit card.


Seriously, quit the tax-evasion mentality, it's a huge waste of time and energy, and you will lose eventually.

Focus on building a profitable business and on legal aspects of tax-management (sometimes unkindly called tax-avoidance).

ardmacha

It would be helpful if some straightforward system for tax could be devised for AirBNB type transactions. For instance, a standard expenses allowance per day for the property without too much paperwork. OK if someone if running a real business, but someone letting a holiday home for a few weeks in July is likely to avoid revenue because of paperwork as the tax paid.

The_Conductor

Mrs OBumble wrote: »

Focus on building a profitable business and on legal aspects of tax-management (sometimes unkindly called tax-avoidance).

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........

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.)