In recent days the Revenue Commissioners have sent “reminders” to some 12,000 people, warning them that they must declare and pay tax on any income they have earned on Airbnb since 2014.
Previous Revenue guidelines confirm that income from Airbnb and similar short-term accommodation is subject to income tax, USC, and PRSI. VAT may also apply, but only if your total gross income earned from this activity in a given year exceeds €37,500.
The good news is that only the trading profit is taxable – not the gross income received – so the host can deduct expenses before calculating the tax they must pay on their profit.
Expenses will normally include direct costs such as:
- AirBnB booking fee,
- meals provided,
- cleaning
and also a percentage of any indirect household costs that relate to the accommodation, including
- insurance,
- electricity & phone
- repairs & maintenance
- mortgage interest
- wear & tear on household furniture & fittings.
The amounts you can claim for these indirect costs costs depend on how much of each cost relates to business as opposed to personal use.
Usually, if you provide accommodation in your own home, I would expect that you can only claim a deduction for a small percentage of indirect costs.
That said, I would expect that for most people, their net taxable Airbnb income will be a fraction of the gross amount received. But it’s important to get it right.
In many cases, unfortunately the cost of doing a tax return and supporting computations will outweigh a lot of the income earned.
It’s a pity that the Rent a Room Relief cannot extend to cover such minor income earned in one’s own home.
If you’re an Airbnb host, I suggest:
- if you haven’t filed tax returns, make sure you correct this.
- if you have, make sure to keep your tax affairs in order for past, current and future years – for example your 2017 Pay & File tax return will soon be due for filing with Revenue.
- if you feel confused or stuck, get professional assistance if you need it.
Thomas McGibney & Company 