Simpler tax obligations for short-term rentals

Simpler tax obligations for short-term rentals

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Inland Revenue Department (IRD) is seeking feedback on a proposal to simplify tax obligations for people who rent out their property as short-term accommodation.

IRD Director Public Rulings Susan Price said that if someone gets money from renting out their house, a room, holiday home or a sleep-out, that is classified as income, and they have to file a tax return.

Standard, nightly amount

“People renting out a room in their home can claim costs like advertising and a proportion of the expenses for the time the space is rented including things like rates, insurance and cleaning. What we are proposing in our draft Determination is a standard, nightly amount to claim as costs,” she said.

Ms Price said that the proposed amount is $50 a night if the host is the home owner and $45 a night if the host rents the property. they may qualify if the space is rented for up to 100 days each year.

Some conditions

“Qualifying hosts may be able to use the standard costs from the Determination and do not have to work out their actual costs. If they don’t meet the criteria, or choose not to use the standard costs, all income must be returned and the actual costs calculated to claim as deductions,” she said.

Ms Price said that IRD has drafted new rules to simplify the tax obligations for people who occasionally host short-stay accommodation guests in their home, using websites such as Airbnb or Bookabach.

Public Consultation

“We are also consulting on draft guidance about how the existing rules apply for other short-stay accommodation hosts who can’t use the proposed standardised deductions, either because they rent space out for more than 100 nights per year or because the accommodation isn’t in their home. We are releasing the proposed Determinations and guidance in “Questions We’ve Been Asked” (QWBAs) for public consultation,” she said.

Updating Determination

IRD is also updating the Determination that applies to taxpayers who have a boarder in their home. The refreshed Determination is also now out for public consultation.

The draft Determination and questions will be open for submission for six weeks and are available here:

Following consultation, IRD will review and consider any comments received before finalising and publishing the items.

Taxes help pay for essential important public services like hospitals and important social services. Please check our webpage to make sure that you are paying your fair share.

Source: Inland Revenue, Wellington

Image from IRD website

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