In bed with Airbnb? It pays to get your taxes right!

The meteoric rise of Airbnb has resulted in vast numbers of Irish people supplementing their incomes with a little extra money from renting out their home from time to time.

If you are an Airbnb host it is important that you report this income to Revenue, but more importantly, that you are not paying more tax than you have to!

When Airbnb first hit the Irish market there was some confusion as to whether the income earned qualified for a relief known as Rent a Room Relief. This relief entitles people to earn up to €12,000 in tax free income from renting out a room in their home.

Revenue have since clarified that “short term lettings advertised through online accommodation sites do not qualify for this relief”. This means that you need to declare for tax any extra income earned through Airbnb regardless of how much you earn.

It’s not all bad news though as you will not pay tax on the gross income you receive rather you will pay tax on the income after deducting the expenses associated with the letting.

These expenses are numerous but the main ones would be Light & Heat costs during the stay, food costs, costs of laundering linen, Airbnb commission, accounting fees for preparing the tax return etc.

The best advice is to ensure that you keep all receipts/invoices for any costs associated with the letting so that they can be used to reduce your tax bill. You need to file your tax return and pay any additional taxes due by 31 October each year for the previous calendar year i.e. income generated in 2015 will be reported by 31 October 2016.

Lastly a warning for those of you thinking “Revenue will never come looking at me!” and who turn a blind eye to the tax man. Airbnb have confirmed that they now regularly provide Revenue with their database of hosts and the income that they have earned for each year.

Date published 22 Sep 2016

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.