The popularity of Airbnb and other similar providers has significantly increased of late. This is largely because it is a relatively simple online platform to market and rent your property to a wide audience. However, while easy to use, there are some potential pitfalls that people need to be aware of.
It is important to understand that, in most cases, the rental income will be considered taxable income. There will usually be costs that can be claimed; however, as most properties also have private use, some form of calculation is required to apportion between costs that are private and those that relate to the rental.
On top of this, an Airbnb rental could be subject to GST, particularly if rented on an ongoing basis. This is significant because if subject to GST, the property used in the rental could be subject to GST upon sale which would amount to 15% of the sale value.
In addition to tax, there are other factors that need to be considered. For instance, whether your insurance policy for your property covers Airbnb rental. Further, there can also be council requirements (notification/consenting) that may need to be looked into in relation to visitor accommodation.
It is also important to remember that, as easy as it is to rent a property on Airbnb, it is just as easy for local authorities to monitor your activity.
But don’t let this put you off. Holiday rentals are still an excellent investment and utilising the expertise of financial professionals will make management incredibly easy and profitable for you.
So get in touch with your local Crowe Horwath office — we’re here to help.
Crowe Horwath provides a complete range of practical accounting and business advisory services from a network of 24 offices nationally including Otago offices in Alexandra, Dunedin, Milton, Oamaru, Queenstown and Wanaka. For information and advice regarding property tax, call into an office near you or head to crowehorwath.co.nz for more information.