Airbnb: taxes?

pasquale83

Folks, I'd like to rent a spare room posting it on airbnb. What kind of taxes should I pay on the rent income? I am a PAYE.

Is there any more tax-efficient way to rent a room?

Thanks!

Rew

Have a read over the rent a room scheme info:

http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/rent_a_room_scheme.html

pasquale83

Rew wrote: »

Have a read over the rent a room scheme info:

http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/rent_a_room_scheme.html

Thanks Rew. The rent a room scheme applies only for long stays. If I'd like to rent the room for short periods what are the taxes I should pay?

athtrasna

Tax payable at the marginal rate so depends on your income. USC and prsi also due. Rent a room way more attractive

The_Conductor

As per the above comments- the rent-a-room scheme does not apply. You have no allowable deductions for the income- its all taxed at your marginal rate.

Ireland signed up to a mutual cooperation agreement with several other EU countries recently- regarding Airbnb- as the number of beds available on Airbnb has now surpassed the number of hotel beds in 7 EU countries (and at current rates- another 2 by the end of the summer).

Don't play any games with Revenue on this- you will be hung out to dry.

pasquale83

The_Conductor wrote: »

As per the above comments- the rent-a-room scheme does not apply. You have no allowable deductions for the income- its all taxed at your marginal rate.

Ireland signed up to a mutual cooperation agreement with several other EU countries recently- regarding Airbnb- as the number of beds available on Airbnb has now surpassed the number of hotel beds in 7 EU countries (and at current rates- another 2 by the end of the summer).

Don't play any games with Revenue on this- you will be hung out to dry.

I am asking to avoid to be hung out to dry, indeed

Being the taxation on rents too high outside of the rent-a-room scheme, I will definitely avoid Airbnb and rent out the room on Daft.ie and legally pay no taxes

The_Conductor

pasquale83 wrote: »

I am asking to avoid to be hung out to dry, indeed

Being the taxation on rents too high outside of the rent-a-room scheme, I will definitely avoid Airbnb and rent out the room on Daft.ie and legally pay no taxes

Up to 12k gross income- inclusive of all contributions for bills and/or any other cash given to the home owner.

Go one penny over the 12k- and the whole lot is taxable.

pasquale83

The_Conductor wrote: »

Up to 12k gross income- inclusive of all contributions for bills and/or any other cash given to the home owner.

Go one penny over the 12k- and the whole lot is taxable.

Yeah, I know. I'll keep that in mind

friendlybee

For those who may not have heard

There's been news about taxes implications today and theres a public meeting for hosts this evening at 630pm at the airbnb office The Watermarque building, Dublin 2

athtrasna

Mod note:

Friendlybee please do not post duplicate comments on multiple threads. Thanks

Gas Jockey

I'm sympathetic to the airbnb interpretation of the rules. There's nothing in the legislation which says that the room must be let out for an extended period versus a shorter term.
I'm not a lawyer but Revenue could well be challenged on this.

Gas Jockey

Gas Jockey wrote: »

I'm sympathetic to the airbnb interpretation of the rules. There's nothing in the legislation which says that the room must be let out for an extended period versus a shorter term.
I'm not a lawyer but Revenue could well be challenged on this.

There is.
"The relief applies only to residential tenancies, not to short-term guest arrangements. The occupants must be using the room on a long-term basis. For example, renting a room to a student for the academic year is covered, but taking in guests for short breaks is not." http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/rent_a_room_scheme.html

Are these B n B's registered with Failte Ireland or are they regulated by anyone?

Marcusm

The_Conductor wrote: »

As per the above comments- the rent-a-room scheme does not apply. You have no allowable deductions for the income- its all taxed at your marginal rate.

Ireland signed up to a mutual cooperation agreement with several other EU countries recently- regarding Airbnb- as the number of beds available on Airbnb has now surpassed the number of hotel beds in 7 EU countries (and at current rates- another 2 by the end of the summer).

Don't play any games with Revenue on this- you will be hung out to dry.

That's not only tax advice but it's also wrong. To the extent that a person engages in a short term lettings business, there is nothing precluding that person from deducting direct costs of a revenue nature against the income in arriving at the profit to be taxed under Sch D Case V. Such expenses could include, advertising, commission, laundry, cleaning and other direct expenses at the minimum.

mickdw

Marcusm wrote: »

That's not only tax advice but it's also wrong. To the extent that a person engages in a short term lettings business, there is nothing precluding that person from deducting direct costs of a revenue nature against the income in arriving at the profit to be taxed under Sch D Case V. Such expenses could include, advertising, commission, laundry, cleaning and other direct expenses at the minimum.

I've heard that there are (quite unfairly ) no allowable deductions re airbnb letting.

The_Conductor

Marcusm wrote: »

That's not only tax advice but it's also wrong. To the extent that a person engages in a short term lettings business, there is nothing precluding that person from deducting direct costs of a revenue nature against the income in arriving at the profit to be taxed under Sch D Case V. Such expenses could include, advertising, commission, laundry, cleaning and other direct expenses at the minimum.

I'm not aware that any of those costs are allowable under the legislation as it stands- as its not deemed to be a residential letting, or a business. The gross income is chargeable at the person's marginal rate of tax- period. If/when this changes- as it is sure to do- it'll need enacting legislation etc- before they are allowable. Its a mess. If I'm wrong- do please point out where it allows the deduction of costs- because as far as I can see- it doesn't allow any costs, at all, of any nature.

Grolschevik

The_Conductor wrote: »

I'm not aware that any of those costs are allowable under the legislation as it stands- as its not deemed to be a residential letting, or a business. The gross income is chargeable at the person's marginal rate of tax- period. If/when this changes- as it is sure to do- it'll need enacting legislation etc- before they are allowable. Its a mess. If I'm wrong- do please point out where it allows the deduction of costs- because as far as I can see- it doesn't allow any costs, at all, of any nature.

For what it's worth, a tax advisor was just quoted on Newstalk's 5pm bulletin as saying that certain expenses are deductible, as it's akin to self-employed income.

Marcusm

The_Conductor wrote: »

I'm not aware that any of those costs are allowable under the legislation as it stands- as its not deemed to be a residential letting, or a business. The gross income is chargeable at the person's marginal rate of tax- period. If/when this changes- as it is sure to do- it'll need enacting legislation etc- before they are allowable. Its a mess. If I'm wrong- do please point out where it allows the deduction of costs- because as far as I can see- it doesn't allow any costs, at all, of any nature.

I'm sorry but you have no idea what you are talking about. There is no more need to change the law to tax the income/profits arising from AirBnB arrangements than from a traditional B&B or a "digs" type arrangement. The position is as I have posted it. I'm happy to delete it all (even though I strongly assert it's correct) provided you delete your very categoric but incorrect statements that no deductions are available.

Alternatively, we coud simply direct the OP to the Revenue's very clear guidance on what is deductible against "rental income" which includes all revenue sums derived from Irish land (excepting those taxed as a trade scuh as hotelkeeping).

http://www.revenue.ie/en/tax/it/leaflets/it70.html#section3

Avatar MIA

Why would people using Airbnb not think they would be taxed?!?

It's a form of B&B trading.

Thinking they could use the Rent a room scheme as a loop hole is delusional.

Best to keep in mind PPR CGT implications also.

JuliusCaesar

I think the whole idea is dodgy. Fire and safety regulations, taxes, any provision of food - how can you make a business out of renting out rooms in your house and claim it's not a business? Airb&b does provide (I think) some insurance against loss - in case your tenants/customers steal stuff - but do they also provide personal injury indemnity? What when somebody falls down your stairs, drunk or otherwise?

Coat22

I would venture that the kind of people using AirBNB to rent out rooms are paying very little if any tax in the first place on other income - the very idea of paying taxes is alien to 38% of income earners - the slightest effort by Revenue to get any money out of these people is viewed as akin to a mugging.

They are trading on the black market. Only right that they pay taxes and are regulated.

browne_rob5

Do B&B's have to pay CGT on the portion of the home they were letting following a disposal?

Mrs OBumble

Deleted User wrote: »

They are trading on the black market.

I'm sorry, but they are not.

The black market involves advertising by word of mouth or small local noticeboards (ie non-traceable places), and receiving cash payments only.

If you are letting via AirBnB, then the customers pay be credit card to AirBnB, and you get your money via them. There is a very clear electronic trail of what your income was, it's totally auditable - and you can expect that AirBnB will be co-operating with Revenue in whatever countries they are operating it. Nothing black market about it.

The_Conductor

Mrs OBumble wrote: »

I'm sorry, but they are not.

The black market involves advertising by word of mouth or small local noticeboards (ie non-traceable places), and receiving cash payments only.

If you are letting via AirBnB, then the customers pay be credit card to AirBnB, and you get your money via them. There is a very clear electronic trail of what your income was, it's totally auditable - and you can expect that AirBnB will be co-operating with Revenue in whatever countries they are operating it. Nothing black market about it.

Not so.
Just because there is, or is not, a paper trail- has no baring whatsoever on whether an enterprise is paying its taxes and behaving as a responsible business, or operating in the black market.

A strict definition of someone who is operating in the black market is-

A person, business or entity, providing an illegal traffic or trade in officially controlled or scarce commodities.

Technically- you could be paying tax in full- and still operating in the black market (if for example- you were operating in a regulated sector- and did not have the requisite permits etc to do so- but this is only one example).

The manner in which a person, business or entity advertises their goods or services- or indeed, in which they are paid- has no relevance whatsoever to whether or not they are operating in the black market- though admittedly they may be a useful yardstick to give an indication of the legitimacy of the business in question.

El_Duderino 09

Mrs OBumble wrote:

The black market involves advertising by word of mouth or small local noticeboards (ie non-traceable places), and receiving cash payments only.

That's a very narrow definition of black economy. Shadow economy, hidden economy, black economy, underground economy. They all mean pretty much the same thing and the main point which differentiates them from tax evasion, is the fact that the person receiving money has a primary job which they are registered and pay tax for.

So assuming the air B&B supplier is employed, pays tax and uses air B&B as a second source of income and doesn't declare it, it fits perfectly within the hidden economy and is a tax related crime.

Mrs OBumble

But it would be impossible to not declare income from AirBnB! The audit trail is so strong, you'd be utterly crazy to think you could get away with it.

Avatar MIA

Mrs OBumble wrote: »

But it would be impossible to not declare income from AirBnB! The audit trail is so strong, you'd be utterly crazy to think you could get away with it.

There are many people now complaining about their records being passed onto Revenue.

I think referring to it as the black economy until Revenue forced AirBnB's hand is fair enough.

You'd almost feel sorry for some of them
"One man had travelled from Cork but was told he could not enter because he had not responded to an invitation on time. He was told he could attend the next meeting, which has yet to be organised.
"I have a mortgage of more than €300,000 but lost my job last year, so have been using my house to earn some extra money to pay the bank," he said.
"My social welfare is under threat now too as my Airbnb money is considered taxable income and apparently it does not count under the rent-a-room scheme."" http://www.independent.ie/business/irish/airbnb-plans-fight-against-decision-to-tax-homeowners-31445714.html

If he'd taken the time to read up on the rent a room scheme, he'd know it's not for short term lets.

The_Conductor

Surely rent-a-room income is counted as 'means' when calculating entitlements for means tested social welfare payments anyway- or is it not? (I know we're digressing). If its counted as means for social welfare purposes- how on earth would airbnb income not be counted? If its not- well, then- perhaps it could be legitimately challenged.

Rent-a-room income has to be fully declared to the Revenue Commissioners on an annual basis via a tax return- even if there is no tax due on it. Airbnb people imagined they were somehow shielded from this obligation (irrespective of whether or not tax was due on the income).

riclad

You are allowed to work part time while on welfare ,
i doubt if theres many people on welfare providing rooms on air bb .
How many people on welfare have 1 or 2 spare rooms,
maybe people over 60.
Pensioners, most people over 60 don,t use the web or even have a smartphone.
maybe people presumed it was like rent a room,
tax free up to 12k .
this maybe could be challenged in court .

The_Conductor

riclad wrote: »

You are allowed to work part time while on welfare ,

Any means based payments- will assess means- and have limits over which any means based social welfare entitlements will be reduced or withdrawn

riclad wrote: »

i doubt if theres many people on welfare providing rooms on air bb .

If you listen to Newstalk- there would appear to be more than a few. How many- god only knows.

riclad wrote: »

How many people on welfare have 1 or 2 spare rooms,

Seeing as a PPR that is non income generating might not detract from means based payments- potentially there could be a large cohort. Not all people on social welfare are living in minimal sized properties.

riclad wrote: »

maybe people over 60.
Pensioners, most people over 60 don,t use the web or even have a smartphone.

Tell that to my late mother. She was using computers since the mid 70s, she had the first Commodore PET in the country- texting from the early 90s- and loved her smart phone dearly. My father- 70 sends e-mails daily- and while I wouldn't accuse him of being addicted to the internet- is mighty proud of his Macbook and what he can do with it.

Lots of people in their 60s and 70s- grew up and were part of the early revolution in home computers.

riclad wrote: »

maybe people presumed it was like rent a room,
tax free up to 12k .
this maybe challenged in court .

The rent-a-room scheme income has to be declared on an annual basis, via a personal tax return, to the Revenue Commissioners. It may be tax free- up to 12k gross- but that doesn't mean you don't have to declare it- you do.

riclad

riclad wrote: »

You are allowed to work part time while on welfare ,
i doubt if theres many people on welfare providing rooms on air bb .
How many people on welfare have 1 or 2 spare rooms,
maybe people over 60.
Pensioners, most people over 60 don,t use the web or even have a smartphone.
maybe people presumed it was like rent a room,
tax free up to 12k .
this maybe could be challenged in court .

That is the rock they will perish on. NEVER presume. Make sure of facts before starting any venture.

Pensioners and people over 60 are well capable of using Internet and smartphones! We don't just stop on reaching a certain age!

riclad

Was there any info advice on air bb website , re tax compliance, this income may be taxable.before revenue made this announcement .

i,m saying theres a lot of people over 60 who dont use the internet ,or cant be bothered using smartphone,s etc

All rental income must be declared , whether its under 12k or not. all rent a room income must be declared even if its only 3k .

i,m sure theres 1000s of people over 60 who use smartphones ,broadband etc
the no of people on welfare who are air and b hosts is quite small in my opinion.
is there a law that says everyone has to use a smartphone. can i get one for free from the welfare office.?

i know some people on high income who dont use the web, they cant be bothered .they us basic mobile phones , i,m not saying people over 60 are thick.

i,m 50 plus i have a smartphone and 2 pcs and 2 laptops. is there 1000s of air bb hosts on welfare, i doubt it .
i think you can earn around 130 approx and still claim a full welfare payment .
probably depends on how much rent you pay ,etc

theres people over 60 programming in c + ,building websites etc. Your brain does not switch off when you reach a certain age .

The regulations for rent a room and taxes etc were written before air bb was invented, before apps ,app stores were on the web.

Revenue are saying if you rent a room for a short time ,a few days or a week,
you,ll have to pay tax on income under 12k ,ie air bb is not covered by rent a room scheme.

Thats my opinion ,im not a tax expert or a lawyer.

riclad

riclad wrote: »

Was there any info advice on air bb website , re tax compliance ,.

The first line of their terms and conditions, while aimed at American hosts is valid for hosts anywhere
"HOSTS SHOULD UNDERSTAND HOW THE LAWS WORK IN THEIR RESPECTIVE CITIES." https://www.airbnb.ie/terms

sunnysoutheast

riclad wrote: »

....

i,m saying theres a lot of people over 60 who dont use the internet ,or cant be bothered using smartphone,s etc

...

In which case, how do they rent their rooms on AirB&B in the first place?

riclad

I,m saying alot of 60 year olds may not use the internet ,
may not have broadband installed .
SO They DO not rent rooms on air and b.
So i dont think theres 100,s of pensioners on welfare ,
renting out rooms on air and b .
I think you,d need a modern smartphone to be a host on air and b .
to recieve emails ,bookings etc
Even if there is , you get a tax form fill it in ,I recieved x amount of rental income in 2014 .
if you wish to be tax compliant .
Then in a few weeks they,ll send you letter , you owe x amount tax.
You can be fined for not sending in a tax form re rental income,
even you the tax you owe is only 200 euro .

JuliusCaesar

riclad wrote: »

Pensioners, most people over 60 don,t use the web or even have a smartphone.

Please don't patronise us older people. There are so many of us here that we have our own forum. My 88 year old mother loves her iPad (looks furtively around in case she's here).

riclad wrote: »

maybe people presumed it was like rent a room,
tax free up to 12k .
this maybe could be challenged in court .

People can presume what they like but ignorance is no defence in the law. Everyone knows that you should pay tax on income. There's a rent-a-room scheme now, but who knows how long it will last?

Coat22

I had to laugh at some of the characters on the news last night whinging about having to pay tax:

"I can't afford to pay tax" was the common gripe.

Well unless the tax on what they're earning is more than 100% then they can absolutely afford out of the income they are earning from AirBNB.

People in this country (typically the 38% who don't pay tax) need to understand theres a huge difference between "I can't afford to" and "I don't want to"

zulutango

As an AirBNB host I think it's perfectly reasonable that the income is taxable. I don't earn much through it, but every cent of what I take in is spent on maintaining and renovating the property.

In this case, the money spent on maintenance and renovations far exceeds the revenue I've earned through being a host. So, I'm thinking there's no tax due, right? I've kept receipts for every expense relating to the maintenance and renovation.

filbert the fox

zulutango wrote: »

As an AirBNB host I think it's perfectly reasonable that the income is taxable. I don't earn much through it, but every cent of what I take in is spent on maintaining and renovating the property.

In this case, the money spent on maintenance and renovations far exceeds the revenue I've earned through being a host. So, I'm thinking there's no tax due, right? I've kept receipts for every expense relating to the maintenance and renovation.

Good luck with that.

If it's anything like the current tax situation on landlords you can forget about thinking nothing is owed.
Take a look at this typical example:

In: Monthly Rent €650 (€7800p.a.)


Out: Mortgage €640 (€7680)
+ insurance
+Property tax
+ Maintenance
+ PRTB
registration etc €1650

So on the face of it the landlord is down €1530 and appears to have made a loss based on your logic.

WRONG. Revenue treat the rent as unearned income and you pay tax at your marginal rate on the whole lot less expenses which include 3/4 of the interest you pay on your mortgage.

Sorry about that chief as a smart man once said....:mad:

Coat22

<mod snip>

You make a few quid you pay tax on it - that's how it works. Tax isn't only for those on 100k+ you know (although if the shinners had their way....)

Mrs OBumble

zulutango wrote: »

In this case, the money spent on maintenance and renovations far exceeds the revenue I've earned through being a host. So, I'm thinking there's no tax due, right? I've kept receipts for every expense relating to the maintenance and renovation.

Speak to your accountant about how the renovations are handled: they may need to be depreciated over several years.

But be aware that you can only claim renovations that are directly related to your operation as a BnB (no matter whether the bookings were taken from AirBnB or some other way). Eg Putting in a new door to keep guests from wandering into your private sitting room or putting an en-suite into a room used purely for guests probably would count. But putting in a larger window so there's a nicer view from the sitting room that you share with your guests probably wouldn't.

If it were me, I'd be looking for some non AirBnB bookings as well. Very risky strategy to be dependent only on one source of customers.

zulutango

Deleted User wrote: »

Are these B n B's registered with Failte Ireland or are they regulated by anyone?

It's effectively self-regulating and is almost certainly a superior system to that of Fáilte Ireland or any other body.

zulutango

zulutango wrote: »

It's effectively self-regulating and is almost certainly a superior system to that of Fáilte Ireland or any other body.

Are you serious? Have you looked at their website?

zulutango

Deleted User wrote: »

Are you serious? Have you looked at their website?

I've used it lots and I've stayed in plenty of traditional B&B's. I'm fairly certain that the AirBNB system is superior.

Why do you think it's not?

zulutango

zulutango wrote: »

I've used it lots and I've stayed in plenty of traditional B&B's. I'm fairly certain that the AirBNB system is superior.

Why do you think it's not?

Had a look at a few and thought they looked like student accommodation. One had the owners clothes still in the wardrobe!

zulutango

Deleted User wrote: »

Had a look at a few and thought they looked like student accommodation. One had the owners clothes still in the wardrobe!

The fact that you can see that before you book kind of proves my point, doesn't it?

With AirBNB I can see exactly what the place is like, I can read the reviews, etc, and I can choose accordingly. With regular B&B's I can't really do that.

JuliusCaesar

filbert the fox wrote: »

Take a look at this typical example:

In: Monthly Rent €650 (€7800p.a.)


Out: Mortgage €640 (€7680)
+ insurance
+Property tax
+ Maintenance
+ PRTB
registration etc €1650

So on the face of it the landlord is down €1530 and appears to have made a loss based on your logic.

If I were a taxman (I'm not), I'd look at that and ask:
Do you live in the property? If yes, you can forget about claiming the mortgage.
Does the maintainence benefit you yourself?

filbert the fox

JuliusCaesar wrote: »

If I were a taxman (I'm not), I'd look at that and ask:
Do you live in the property? If yes, you can forget about claiming the mortgage.
Does the maintainence benefit you yourself?

JC please read my post again.....

Landlords .......not rentaroom

athtrasna

filbert the fox wrote: »

JC please read my post again.....

Landlords .......not rentaroom

And this thread is about Air BnB and the tax situation that applies to hosts. Thanks.

mickdw

athtrasna wrote: »

And this thread is about Air BnB and the tax situation that applies to hosts. Thanks.

Yes but the person who believes they owe nothing because they use bnb earnings to maintain the property might be in for a shock.