Airbnb Hosting - Irish Tax Guide

Airbnbs are a bit of a touchy subject at the moment, especially in Ireland when there's such a shortage of houses on the market

Worldwide there is about 5.6 million listings on Airbnb and about 10,000 or so of them are in Ireland

Running an Airbnb is pretty much the same as running a business and I'm guessing that a lot of people who have decided to set up their own Airbnb might not have a lot of business experience, especially when it comes to things like taxes

So that is what I'm going to give you a bit of information on and cover in this video

The first important thing to note here for an Airbnb is if you are renting out one of your rooms

as an Airbnb, this does not qualify you for that rent-a-room relief which everybody knows about

where you're able to get tax-free income of 14,000 per year. You cannot avail of this scheme if you are running an Airbnb

Secondly, there are slightly different rules depending on whether your Airbnb income is deemed

to be a trade income or occasional income. When you do your income tax return every year, revenue have a section for each type of income on the

It goes case 1, 2, 3, 4, 5 and so on. If your Airbnb income is deemed to be a trade, then that is case 1 income

And if it is deemed to be just occasional income, then that is case 4, which is a bucket for

all types of miscellaneous income. And as I was saying there are slightly different rules depending on what case your income is deemed to be Let have a look now and see how you can determine if your income is trade income or occasional income The main determining factor is the frequency which the room or the property is available

and how often it is actually used by guests. The property should be available for rent on a regular basis

rather than months off or occasional. The owner should be actively letting out the property

with a view to making a profit and they should be actively involved in

advertising the property, taking bookings, dealing with payments, arranging cleaning, laundry and also dealing with repairs and maintenance in between and during lets

The owner would also be doing things such as providing breakfast and dealing with questions

on tourist information or else hiring out all of these jobs to somebody else

That is pretty much all of the different guidance from revenue. They didn't have really any specific list that you could try and check off against, but

taxback.com have an actual list where you can check against to see if you are carrying on

a trade or occasional income. Basically, if you meet any of these criteria, then you are carrying on a trade

out the room or property on six or more occasions annually. You host for 30 or more nights a year

Your Airbnb income is 5,000 euro or greater. And lastly, your property is available for occupancy

all the time. So now you are able to determine whether it is a trade or occasional income

I going to show you what the differences are What you actually pay tax on for anything you earn from Airbnb would be your income less whatever expenses you have But as you can see from this table here depending on whether you are classified as a trade or its occasional income

the allowable expenses that you are allowed to deduct are different. If your Airbnb is only deemed to be occasional income, you're only really allowed to deduct expenses

that are incidental to the provision of the service. So they are things like your agent fees, the breakfast, waste collection, a portion of light and heat

advertising cost and cleaning and laundry. You cannot make taxable deductions for annual costs related

to the property, unlike when you have a trade where you can actually deduct these expenses. So for a

trade you can deduct your repairs and maintenance, your TV licence, your legal and accounting fees

if you have mortgage interest on the property, your capital allowances. So this relates to things such as

beds or furniture and other fixtures and fittings. If you buy a bed, for example, you can deduct

this over eight years. So it's 12.5% every year of the cost

offset against your income. Also certain pre-trading expenses are allowable under a trade where they're not

allowable under occasional income and you're also allowed to deduct your insurance. I will leave a link

to this blog post down in the description section if you want to check it out later on and go through

this table and a bit more detail. Another added benefit of carrying on a trade is that you can make

pension contributions that qualify as a deductible expense Some other tax considerations to take into account are the likes of that and capital gains tax if you ever sell your property Let go through these now as well

An Airbnb host that is carrying on a trade will be eligible to register for VAT whenever they

want but will not be required to do so until their income exceeds or is likely to exceed

37,500 euro in a trading year. So you have the option you can register before that

or you can wait until your annual income exceeds 37,500. If you do decide to register the current VAT rate that applies to short-term nettings of Ireland in 2022 is the second reduced rate, which is 9%, and registered traders then will also be able to reclaim VAT on any incurred business costs

The main capital gains tax implications that come into play are if you are using part of your main residence as an Airbnb, so part of the property or a room, this will affect your principal private property relief

Any portion of the gain made on disposal of a house or apartment which is being exclusively used for the purposes of the trade does not qualify for CGT, principal private residence relief

You would probably have to apportion the gain based on the square meters of the house

So they are pretty much the main things that you need to be aware of from a tax perspective if you are planning on running an Airbnb

If I have missed anything that you are curious about, please let me know in the comment section and I will try and address it

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