Airbnb and taxation

[elliot]

We have set up a room in our home for airbnb and have it let most nights of the year. I know you have to pay tax on all income. The room is available all year. From a taxation point of you what can I claim as expenses. Am I entitled to claim depreciation on all furnishings, heat pumps, rates, power etc. Any comments appreciated.

[Nick G]

Anything that you run as a commercial concern should be depreciable, much as a computer is for my business. The tricky one will be interest on your mortgage as far as I can tell.

[Anthonyacat]

In short, yes. You can claim depreciation on furnishings, as well as a portion of your home insurance, electricity, rates, mortgage interest (not principal) and other household expenses.

The actual proportion will be a matter of some discussion and calculation with your accountant.

[elliot]

thanks for those comments. When is it under the rules for holiay homes and when is under a business

[Wayne]

thanks for those comments. When is it under the rules for holiay homes and when is under a business

When IRD decide.
Looks like a bit of a grey area.

[Anthonyacat]

thanks for those comments. When is it under the rules for holiay homes and when is under a business

You're talking about letting out a room in your own house, so that is not a holiday home - technical tax term is 'mixed-use asset'.

If you were letting a whole house on Airbnb, and occasionally used the house yourself, it is mixed-use.

[roughy]

hey guys not sure myself and you seem to know what you are talking about. I'm just interested to know if airbnb would fall under this category:

http://www.ird.govt.nz/income-tax-individual/different-income-taxed/rental-income/boarders/incometax-boarders-flyer.html

Thanks

[Rosco]

Hi all,

1) they are not boarders. It is short term accommodation

2) Not mixed use (holiday home) rules either

3) Main part is working out what portion of expenses you can claim. Overall needs to be fair apportionment. You would take into account
- number of people in the house. ie if mum, dad and two kids, plus one Airbnb. In simple terms they will use 1/5th of your power, internet, sky for the period of their stay.
- area used by Airbnb (exclusively) - could be room, seperate lounge?, seperate bathroom etc. So might be 25m2
- shared areas used and days used- toilet, bathroom, kitchen, lounge, hallways) might be 85 sqm. So might be 1/5th of these, but only renting for 1 day per week, so 1/7th of time. So business use = 85*1/5*1/7 = 2.4m2
- total house = might be 225m2

- Rates, insurance, interest - would claim 27.4/225 = 12%
- power, internet, gas, sky - Would the 12% be fair? Probably not as only 1/5th Airbnb, but only staying 1/7th of time. Probably more like 5% would be more realistic and would allow for higher use by guest plus extra washing etc
- consumables - could claim some soap, tea , coffee, milk, toilet paper and whatever else is provided. Would need to be fair amount, and probably very little per stay
- If provide dinner, then could claim portion of cost, ie 1/5th if Airbnb is with family of 4
- cleaning - fair share of cleaning products
- depreciation on chattels - 100% from bedroom chattels used exclusively for Airbnb, then probably be at the 5% business use for the other shared chattels similar to power.

Overall its all amount being reasonable. 25% of your house isn't right if they are only staying 1 day per week!


Ross

[brendan]

How does GST factor into it given that Elliott is running a micro-hotel?

[Anthonyacat]

How does GST factor into it given that Elliott is running a micro-hotel?

Probably not at all. Like most micro-businesses, the gross turnover will probably be below $60k, so no GST registration required.