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THE REVENUE COMMISSIONERS’ decision this week to clarify Ireland’s ‘Rent-a-Room’ tax relief has meant that hosts on rental sites like Airbnb are now officially liable for tax on that income.
Home-rental sites like Airbnb have become increasingly popular in recent years, with the added character and experience (not to mention low expense) of a home stay ticking a lot of boxes for foreign tourists.
TheJournal.ie spoke to several Dublin Airbnb hosts to gauge their take on Revenue’s decision and what impact it will have on their business. All names have been changed.
Noel, a very recent member, rents a four-bed apartment in Dublin 4. He’s in the hospitality business full-time so in the short time he’s been on airbnb he has declared all earnings.
“I agree with the decision completely,” he says.
It’s only right as hosts on the site are taking business from legitimate enterprises who have to pay rates, staff, VAT etc.
You have to ask, do these people have insurance, like public liability? What happens if someone gets hurt? It’s a lawsuit waiting to happen.
Sandra has likewise only been hosting for a short period of time. She rents the ground floor of her townhouse, close to the city centre.
“I had told my friends: ‘lads, this is easy money’,” she says.
I had set myself a figure of 10 grand for the year as the tax ceiling hadn’t been clear previously.
I can absolutely see where Revenue are coming from, we’re taking business away from hotels that are paying rates. It was such a good situation I had told myself it was really too good to be true.
At the same time Sandra has a few quibbles with the decision.
Well there’s sundry expenses for the hosts as well. We have to pay for cleaning, laundering, furniture, I mean there are standards that have to be met.
Revenue’s decision doesn’t make it clear how those kind of things can be claimed back.
Martin, host of a family accommodation in Christchurch was the most critical of Revenue’s decision of all our interviewees.
“I’m a full-time landlord so it won’t change anything for me – nevertheless it is pretty sharp considering the work and effort involved,” he explained.
I think it’s very shortsighted to be honest. It will make Airbnb not worth doing for the non-professional, taking away the hosts our tourism needs most.
They should be encouraging it not clamping down – Airbnb and its kind are the future for the industry.
Linda is one of the more experienced hosts we spoke to. She’s been renting her double-room on the northside of the city for three years. “I can see arguments for both sides,” she told TheJournal.ie
I mean there’s the housing crisis and Airbnb has to be making it worse. It’s hurting the student market because they can’t find anywhere, and I’ve had some really desperate people in touch with me and that’s upsetting.
But the financial implications aren’t really clear, it’s very complex. The decision will free up some accommodation but maybe shut down others. Likewise with Airbnb, maybe it had become too big a beast, this might make it better but it could destroy it either.
Which is a pity because it’s a fantastic resource for a tourist country.
Daniel has been hosting his Temple Bar apartment for two years. He has few issues with the announcement, seeing it as ‘always the way they were going to treat Airbnb once they got on top of it’.
Even with that declaration it’s still an amazing way to supplement income and to meet people from all over the world.
You may wonder, if so many hosts can see why Revenue have made their clarification how they are able in good conscience to affect the accommodation bubble by renting via Airbnb, and Daniel’s point seems to be the kicker.
“It’s just a lovely way to rent,” says Sandra.
Renting long-term you could struggle to be rid of the person if they were unpleasant, and you had to live with their moods.
Airbnb customers come with no baggage. They’re on holiday so they’re always in good form, and they’re so interesting. The positive energy you get from it is really special.
“The social aspect is what makes it,” agrees Linda.
Meeting someone knew every week and having full control over the room at the same time – it’s a brilliant resource and perfect for the kind of tourism the Irish like to promote.
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What about tax relief for expenditure on repairs?
Set it up as a businness in that case and do all the red tape and tax returns that a business has to deal with.
Set up a business and pay someone to manage it you mean. A non profit making business…
Of course,
Thanks to the knowledge box and single director companies, we can all become our own IKEAS.
http://mentalfloss.com/article/18575/ikea-worlds-largest-charity
When I first encountered airb&b I thought if it as a bit like couch surfing where you pay. It seems now that many people are doing it professionally. So what’s the difference between that and a regular b&b or a holiday rental apartment?
Sounds fair enough to me.
Tax at what percent? it should be the same rate as a hotel pays in tax which is a lot less than the income tax rate.
Nonsense arguement. Hotels will have huge rates bills and also pay employers PRSI for employees. Corporation tax is just a tax on profits. Anyone who owns a hotel will pay the same income tax rates as everyone else. If fact they will pay more than normal employees as they are not entitled to the PAYE tax credit.
I look forward to see how the revenue will get this tax from them. The only way to do it is to get an agreement with AirBnb so it would collect taxes automatically, like they do in San Francisco and some other bigger USA cities. But if AirBNB says “no” – there is no way for revenue to find out how much money a certain household has made with renting their rooms out.
Unless you’re audited. The best way around this one is to “employ” one of your many unemployed friends/ relatives to manage it for you. All payments go into their account and that’s their wage, they don’t pay tax because they’re making so little. This isn’t tax evasion. Job done.
If the income eventually goes to the property owner, it most certainly is tax evasion.
How would that happen.
The arguments here are shallow. The whole point of airbnb is to make a room/bed available and make it like couch surfing. If you are offering a private place for an extended period of time, then yes it is renting, but otherwise revenue should not interfere.
This article though is very one sided – like the airbnb hosts interviewed being very much in favour in being taxed. Nothing to do with a certain website that makes it’s money out of the private letting business?
All income is taxable, whether it’s couch surfing or long term renting.
Not if its under €12k from rent a room schemes… Did you read the revenue report?
The alien, what’s the difference between airbnb and a regular bnb? A genuine question.
The headline is so misleading and I think you’re point about the influence of a certain letting business on the slant of the article is bang on. The ‘housing crisis’ is (in terms of rentals) being caused by a lack of rent control which the gov seem to have no interest in tackling. Seeing property as an investment rather than a place where people live contributes to this cycle of madness (I think). For most people I know doing AirBnB it was in reponse to being absolutely on their knees trying to keep up with hiked interest rates on mortgage repayments, property tax, USC, pensions levies (where applicable) and on and on it goes. For some people with no alternative, AirBnB was a way to keep their head above water. If someone is renting out a block of apartments through AirBnB maybe some other form of categorisation needs to be looked at but for the average person who is just renting out their spare bedroom the odd few nights a week to generally lovely people on their holidays who just want a more homely experience, I think penalising them (when they are already up to their neck in taxes and debt) is unfair. How quickly the wheels can turn when the average citizen is managing to make a few quid on the side! If only they were able to do the same in order to offer tenants some modicum of protection from greedy landlords hiking prices on a whim and putting people out on the streets never mind the bankers, bank-had deals with Denis O’Brien and on and on…. makes me so mad.
Ok I may be an idiot but .. what are the limits of what you can earn before you’re taxed?
I Airbnb my place and was under the impression I could earn €10k before I had to pay tax?
Can someone tell me?
All income is taxable. Tax credits may be available depending on your circumstances. Look up http://www.revenue.ie.
I did look it up. It didn’t say.
You pay tax on the first euro. You don’t have a10k rent a room scheme allowance, as revenue has just clarified.
If you make an annual
tax return (form 11), then you have to apply for the €12k income relief from revenue.
If you’re a normal PAYE employee and don’t make annual returns you don’t have to do anything (as long as you remain under the €12k threshold).
“Rent a Room relief, which allows individuals up to €12,000 per year for letting accommodation in their home without a charge to tax, doesn’t apply to guest accommodation, according to eBrief No. 21/15.
According to the eBrief, income from the provision of accommodation to occasional visitors for short periods does not qualify for the relief as, in this scenario; the visitors use the accommodation as guest accommodation rather than for residential purposes. However, the relief can apply in the case of lettings to students, but not in the case of guest accommodation, including where such accommodation is provided through online accommodation booking sites. “
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