Airbnb

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Short Term Rental & Airbnb Review

Revenue have issued a review in regard to short term leasing from January 2020. Revenue have now defined that;

Income for providing short term accommodation for occasional visitors such as through an online accommodation booking system is not considered rental income (Case V) and is taxable as “other income” (Case IV) if occasional income or as “trading income” (Case I) if operated as a trade such as a guesthouse.

Therefore, in summary, Airbnb rentals and similar short-term rentals are no longer considered rental income and are to be declared as ‘other or trade income’.

What does this mean for my return?

Capital allowances (expenses subject to wear and tear) are not allowable against the profits of income under Case IV. However, expenses incurred to provide such accommodation are an allowable deduction such as ; commission fees, cleaning fees, reasonable cost of light and heat. Annual costs such as insurance, tv licence and general repairs and maintenance are no longer an allowable expense against profits under Case IV.

VAT

Now that this income is considered ‘other income’, You must register for VAT if your income is likely to exceed €37,500 per year. The VAT rate for short term accommodation is at a reduced rate of 9% and applies to;

  • Letting of a room(s) in a hotel or guesthouse.
  • Short term lettings of all or part of a house, apartment or similar building.
  • Letting of a part of a caravan park or similar place.
  • Letting of a part of a camping site or similar place.
  • Provision of any other holiday accommodation.

However, the provision of student accommodation is exempt from VAT.

A VAT registered business providing taxable short-term accommodation may reclaim Value-Added Tax (VAT) incurred on their business costs under the normal VAT rules.

Should you have any queries on this issue, please contact us on 01 5397999 or request our application here

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Tax Audit Crackdown on Airbnb hosts

As we mentioned in our blog last year, The Revenue Commissioners are continuing to analyse the tax compliance of Airbnb hosts and short-term lets.

Revenue have confirmed they are closely examining short-term lettings such as Airbnb and is a focus of their compliance team and may be upscaled to a compliance project.

12,000 letters issued by Revenue last year, advised taxpayers to include Airbnb income in their tax returns. As we highlighted previously, if you are in receipt of rental income through the Airbnb website, your rental income will be subject to 20% or 40% tax depending on your circumstances.

Read our previous blog here

Should you have any queries on this issue, please contact us on 01 5397999 or request our rental income form and application here

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Rental Income including Airbnb

There has much press coverage of Revenue investigating tax affairs of homeowners, in particular, those letting rooms through the Airbnb website, as previously highlighted by us here.

A press release issued by Revenue on 18th September (read it here) has now directly referenced the recipients of Airbnb income. They state they are writing to 12,000 people, as a reminder to include this income in the yearly tax return.

In reference to this, we highlight the main areas you need to be aware of when receiving rental income –

 

If you receive rental income from renting out a property

If you are renting out a property and your profits exceed €5,000 per year, you will need to register for Income Tax. Each year you will need to file your Income Tax Return by 31st October through a Form 11.

If this rental income is less than €5,000 per year, then you are not required to register for Income Tax but you are still liable to be taxed on this income. You will need to file this yearly through a Form 12.

 

If you are renting out a room in your home (long term)

If you are renting out a room for a long period of time and your income exceeds €14,000, you will need to register for Income Tax. Each year you will need to file your Income Tax Return by 31st October through a Form 11.

If your rental income is less than €14,000, you may be eligible to apply for rent-a-room relief.

 

Rent-a-room Relief

This allows a homeowner to earn rental income tax free, you much meet the following criteria to apply;

  • Rental income does not exceed €14,000 in the tax year
  • The property must be in Ireland
  • The property must be your sole residence during the tax year
  • This relief only applies to residential and not to short term or temporary lettings i.e Airbnb

 

If you are renting out a room in your home (temporary/short term)

If you are renting out a room in your home or the entire property temporarily (i.e Airbnb) you are not eligible to apply for rent-a-room relief.

If this rental income is less than €5,000 per year, then you are not required to register for Income Tax but you are still liable to be taxed on this income. You will need to file this yearly though a Form 12.

 

Airbnb Rental Income

If you are in receipt of rental income through the Airbnb website, your rental income will be subject to 20% or 40% depending on your circumstances. This income has been split by Revenue;

Trading Income

  • Rental income exceeds €5,000 in that year or
  • You rent a room or property on 6 or more occasions per year or
  • Host for 30 or more nights in that year or
  • The property is available for renting all of the time
  • You will need to register for Income Tax. Each year you will need to file your Income Tax Return by 31st October through a Form 11.

Other Income

  • Rental income does not exceed €5,000 in that year
  • You are not required to register for Income Tax but you are still liable to be taxed on this income. You will need to file this yearly through a Form 12.

 

 

Renting to family members

Read our recent blog post on this here

 

Remember, you can offset a number of rental expenses which must be included in your rental return and keep a record of all invoices and receipts of expenses incurred. These include;

  • Mortgage Interest (80% for 2017, 85% for 2018)
  • Bank Charges
  • Letting Expenses
  • Insurance & Mortgage Protection premiums
  • RTB Registration Fee
  • Accountants Fees
  • Utilities
  • Advertising Expenses
  • Repairs & Maintenance
  • Wear & Tear

 

Why not also read our Pre-Letting Expenses blog here

 

Should you have any queries on this issue, please contact us on 01 5397999 or request our rental income form and application here

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Revenue investigating Airbnb homeowners

As reported in the Irish Times on Monday, 11th June 2018, Revenue are investigating the tax affairs of several homeowners who have let rooms through the Airbnb accommodation website.

The notice issued states that it is investigating all taxes and duties, including income from providing short-term accommodation, in the years 2014, 2015 and 2016. As stated in the Irish Times article, Revenue does not specifically mention Airbnb.

If income is found to be undeclared, there are significant penalties issued by Revenue.

Read this article in full here

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