Accounting and Tax

Renting out your house or spare room?

22 March 2019
2 min read

You may have taken the opportunity over the Christmas period to rent out your house or holiday home, or a spare room to make some extra money or help cover the cost of your own holiday. Just a reminder that any amount you receive from renting out your house or holiday home is taxable income that you need to include in your tax return.

Inland Revenue is continuing its focus on ensuring those using Airbnb and similar platforms are meeting their tax obligations. Airbnb makes it easy for you to rent your property or spare room, but it also makes it easy for Inland Revenue to identify those who are doing so, and to check that they are meeting the tax obligations that arise from that renting.

As noted above, the rent you receive is taxable income, but you will be entitled to claim a deduction for expenses incurred in earning that income. Where you also use the property, an apportionment of the expenditure between the income-earning activity and your use will be required. It is likely you will need to comply with the mixed-use asset rules when making this apportionment.

Often the GST consequences are overlooked. Letting a room or home on Airbnb for short-term stays is potentially subject to GST. If you are not registered for GST, income you earn from Airbnb, either on its own or in conjunction with other income you earn, may take you over the threshold for compulsory GST registration. If you are already GST-registered you will need to account for GST on the money you receive from letting through Airbnb. Furthermore, if you are required to register for GST, the property has now been brought into the GST net, meaning you may need to account for GST on the sale of the property.

If you are renting out a room or home on Airbnb or thinking of doing so, contact your Findex adviser to discuss your tax obligations.