IRD proposes simplified tax rules for Airbnb hosts

The Inland Revenue Department (IRD) has just proposed a simplified method of claiming expenses for Airbnb hosts throughout New Zealand, which could save you time and money. This comes following huge growth for the short term rental company, with 11,300 listings in Auckland alone, according to data provided to the New Zealand Herald.

To make sure you know where you stand we’ve put together a quick run through of the proposed changes and discussed how you can make the most of them.

What do the proposed changes look like?

The IRD has proposed a new rule that would allow certain Airbnb hosts and other short term accommodation providers to claim a standard amount of $50 per night as expenses if they own the property, and $45 if they’re renting it. Hosts who rent their property or part of their property for up to 100 days per year may qualify.

Put simply, if you qualify you won’t have to record or calculate the expenses associated with your Airbnb to file your tax return. You’ll simply be able to multiply the standard amount by the number of nights you hosted and use that number as your total claimable expenses for the year.

It’s important to note that at this point the IRD is still considering the changes and they haven’t been passed into law yet.

Proposed Airbnb law changes could make life easier.

What does that mean for me?

If the new rules come into effect and you don’t qualify you will have to continue recording and calculating your expenses. If you do qualify, however, things get a little interesting.

Regardless of what your actual expenses are you can use the standard per night amount when filing your tax return. It makes sense to do this if your real expenses are lower than the standard amount, as that will allow you to claim a higher amount of expenses to reduce the taxable income on your Airbnb.

On the other hand, if your expenses are more than the standard amount it may make sense to continue recording and calculating them as normal.

Whether or not the proposed rules are made into law, you should always be sure that you’re not paying a dollar more tax than you need to. For peace of mind get in touch with the team at Property Tax Returns today.



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