Airbnb Hosting - Irish Tax Guide
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Nov 29, 2022
Airbnb hosting can be a lucrative side income. Here is everything you need to know from a tax perspective of operating a letting in Ireland. Here is a link to the full blog post: http://irishfinancial.ie/2022/01/09/airbnb-hosting-ireland-a-complete-tax-guide/ This video is for informational and educational purposes only and is not to be construed as financial advice.
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0:00
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
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Worldwide there is about 5.6 million listings on Airbnb and about 10,000 or so of them are in Ireland
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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
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So that is what I'm going to give you a bit of information on and cover in this video
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The first important thing to note here for an Airbnb is if you are renting out one of your rooms
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as an Airbnb, this does not qualify you for that rent-a-room relief which everybody knows about
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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
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Secondly, there are slightly different rules depending on whether your Airbnb income is deemed
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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
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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
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And if it is deemed to be just occasional income, then that is case 4, which is a bucket for
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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
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and how often it is actually used by guests. The property should be available for rent on a regular basis
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rather than months off or occasional. The owner should be actively letting out the property
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with a view to making a profit and they should be actively involved in
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advertising the property, taking bookings, dealing with payments, arranging cleaning, laundry and also dealing with repairs and maintenance in between and during lets
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The owner would also be doing things such as providing breakfast and dealing with questions
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on tourist information or else hiring out all of these jobs to somebody else
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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
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taxback.com have an actual list where you can check against to see if you are carrying on
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a trade or occasional income. Basically, if you meet any of these criteria, then you are carrying on a trade
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out the room or property on six or more occasions annually. You host for 30 or more nights a year
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Your Airbnb income is 5,000 euro or greater. And lastly, your property is available for occupancy
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all the time. So now you are able to determine whether it is a trade or occasional income
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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
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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
2:55
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
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advertising cost and cleaning and laundry. You cannot make taxable deductions for annual costs related
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to the property, unlike when you have a trade where you can actually deduct these expenses. So for a
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trade you can deduct your repairs and maintenance, your TV licence, your legal and accounting fees
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if you have mortgage interest on the property, your capital allowances. So this relates to things such as
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beds or furniture and other fixtures and fittings. If you buy a bed, for example, you can deduct
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this over eight years. So it's 12.5% every year of the cost
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offset against your income. Also certain pre-trading expenses are allowable under a trade where they're not
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allowable under occasional income and you're also allowed to deduct your insurance. I will leave a link
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to this blog post down in the description section if you want to check it out later on and go through
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this table and a bit more detail. Another added benefit of carrying on a trade is that you can make
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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
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An Airbnb host that is carrying on a trade will be eligible to register for VAT whenever they
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want but will not be required to do so until their income exceeds or is likely to exceed
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37,500 euro in a trading year. So you have the option you can register before that
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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
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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
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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
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You would probably have to apportion the gain based on the square meters of the house
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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
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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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And if you found the video useful, please drop a like on it and please make sure to see
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