Airbnb

marty66

I earn above €32k per annum and have been using AIRBNB to rent out a spare room in my apartment. I know I have to pay tax as it doesn't fall in to the rent a room scheme. I assumed it was 20% but I know hear that it can be as much as 51% depending on earnings. Anyone got any advice?

jon1981

a quick google

http://www.irishtimes.com/business/personal-finance/revenue-dashes-hopes-of-airbnb-generation-1.2090130



http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf?download=true

Income from the provision of accommodation to occasional visitors for short periods,
including, for example, where the accommodation is provided through online
accommodation booking sites, does 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-aroom
relief.

Where the qualifying conditions for rent-a-room relief are not satisfied, the income is
subject to PRSI and the levies, or the USC, as the case may be, in the normal manner.

So i presume this income is added on to your salary and taxed accordingly, i.e. if you're in the higher band, then it's taxed as so.

Geuze

marty66 wrote: »

I earn above €32k per annum and have been using AIRBNB to rent out a spare room in my apartment. I know I have to pay tax as it doesn't fall in to the rent a room scheme. I assumed it was 20% but I know hear that it can be as much as 51% depending on earnings. Anyone got any advice?

In 2015 the 40% band starts at 33,800 for single people.

http://www.revenue.ie/en/tax/it/leaflets/it1.html#section3

Extra income above that is subject to 40% tax + 7% USC = 47% plus maybe PRSI.

Carawaystick

Yeah, its 4% prsi, so 51%

airbnb have HQ in Ireland, so it's feasible the revenue would audit them sometime in the future and find a papertrail.
then thre revenue would apply a penalty of the tax again (102%) and interest @8%

Given you'ld have almost half of the income to keep, ask yourself if that is reasonable to have strangers in your home.

Or you could get married, and the high tax rate band jumps up to 48k or so, and you'ld be paying 31% tax

Mrs OBumble

Carawaystick wrote: »

Or you could get married, and the high tax rate band jumps up to 48k or so, and you'ld be paying 31% tax

Yeah - but you have to take account of your spouse's income, too. And the married-rate credit only kicks in the year after you marry.


OP, all the information you need about registering is here:
http://www.revenue.ie/en/business/running/registering-tax.html#section2 AirBnB is a side business, just like any other. Personally I think that getting to keep just under 50% of your total revenue would be well worth it.

What I don't know is what expenses you can claim against this. There must be some - at very least the costs of providing breakfast and cleaning. I'd check with an accountant re others.

Arbiter of Good Taste

As a matter of interest OP would you be better off going with the rent a room scheme?

marty66

Yes I hear you but I have loved the AIRBNB and how I can have a spare room when it suits me.

marty66

Thanks for the suggestion on marriage:)

Pkiernan

Keep in mind that you have now turned your principal primary residence into a rental property and you are no longer guaranteed selling this free of Capital Gains Tax:

"People renting out rooms to holidaymakers on AirBnB have been warned that the Revenue Commissioners could begin monitoring the company's website to ensure they are paying tax.Around 4,500 Irish properties are listed on the website, which allows people to rent out rooms or entire houses on a short-term basis.According to the Irish Independent, those renting rooms may be liable for capital gains tax if they sell a private property that has previously been rented out."

Grandpa Hassan

Pkiernan wrote: »

Keep in mind that you have now turned your principal primary residence into a rental property and you are no longer guaranteed selling this free of Capital Gains Tax:

"People renting out rooms to holidaymakers on AirBnB have been warned that the Revenue Commissioners could begin monitoring the company's website to ensure they are paying tax.Around 4,500 Irish properties are listed on the website, which allows people to rent out rooms or entire houses on a short-term basis.According to the Irish Independent, those renting rooms may be liable for capital gains tax if they sell a private property that has previously been rented out."

I'd question the Indo's interpretation that a room being rented in an owner occupied house is the same as a 'private property that has been rented out'. Excluding temporary arrangements like airbnb from the rent a room scheme is one thing.....suggesting that a principal private residence becomes an investment property as a result is something else entirely. To try to codify that in legislation would just open a can of worms.

Of course there are plenty of places on airbnb which are not the owners PPR, and would be treated as investment properties

Pkiernan

On Thursday last, a Revenue spokesman speaking on Newstalk radio suggested that there could be a total or partial loss of CGT exemption on properties rented out using AirBNB.

Mrs OBumble

Pkiernan wrote: »

On Thursday last, a Revenue spokesman speaking on Newstalk radio suggested that there could be a total or partial loss of CGT exemption on properties rented out using AirBNB.

There's a big difference between properties and rooms.

Pkiernan

Mrs OBumble wrote: »

There's a big difference between properties and rooms.

I know there is.

The Revenue spokeman was specifically referring to ROOMS rented out under AIR BNB .

marty66

Guys,

I really appreciate all the feedback. Keep it coming and I do think it's a debate that won't go away any time soon. I read an article about some US state or city where an agreement was reached between AIRBNB and the local revenue whereby tax at an agreed figure was deducted at source. This sounds like a great solution but can't imagine our system allowing this.

athtrasna

GrnRm wrote: »

Has anyone seen anymore clarification on the whether your home changes status from Private Principle Residence to Investment Property if renting a room?

Are you referring to AirBnB or rent a room?

GrnRm

Sorry AirBnB.