Are you renting out your New Zealand property on Airbnb or another short-stay platform? Renting out your property as short-stay accommodation can be a great way to generate extra income, but it also comes with specific tax obligations. In this comprehensive guide, we’ll explore Airbnb taxes, your obligations, how to calculate these taxes and how to include them in your tax return.
From 1 April 2024, Airbnb and similar online marketplaces must automatically collect and pay GST on listings. Regardless of if you are GST registered or not.
What are Airbnb Taxes?
Airbnb taxes in New Zealand include income tax on your rental earnings, and Goods and Services Tax (GST) if your earnings pass a certain threshold. You do not need to pay ACC on your rental income.
- Income Tax: Rental income from Airbnb is considered taxable income. This means you need to declare it in your annual income tax return. Any profit made from renting out your property is subject to income tax.
- Goods and Services Tax (GST): Unlike long-term rentals, short-stay rental income and expenses can be subject to GST. If your annual rental income is more than $60,000, you must register for GST and file GST returns.
Examples of Short-Stay Accommodations Subject to GST
- Whole houses or apartments
- Individual rooms within residential properties
- Holiday homes
Do I have to Pay Airbnb Taxes?
Yes, you must at least pay income tax on all earnings from your short-stay rental. This is mandatory, regardless of if you rent out a single room in your home or an entire property.
GST
You do not have to register for GST just because you start earning rental income. However, you do need to register for GST if your total income in a 12 month period is over $60,000.
The $60,000 income limit does not include the following income types:
- Salary and wages
- Benefits, pension and student allowance
- Long-term rental income (short-term rental should be included)
- NZ interest
From 1 April 2024, Airbnb and similar online marketplaces are required to automatically collect and pay GST on your behalf. This means GST will be added to your Airbnb listing, regardless of if you are GST registered or not. However, if you are not GST registered you can get some of the GST back from Airbnb and you do not need to file a GST return.
If you are GST registered you must provide Airbnb with your GST number. To update your GST number in Airbnb:
- Go to Account > Taxes
- Select Add VAT ID number
- Complete the VAT ID form
How to Get GST Back from Airbnb (Not GST Registered)
For Hosts with Airbnb listings who are not GST registered or who have not provided Airbnb with a GST number, Airbnb will collect 15% GST from guests but pass through an 8.5% flat rate credit to you. The flat-rate credit is for you to keep and is considered income. Airbnb will pass the remaining 6.5% of GST directly to IRD.
How to File Your GST Return (GST Registered)
For Hosts who are GST registered, you need to provide your GST number to Airbnb and include your Airbnb income in your GST return, even though Airbnb will collect and pay GST on your behalf. You can also claim GST on your expenses related to running and maintaining your short-stay rental.
If you’re GST registered and providing rental services outside of an online marketplace (e.g. renting directly), the ordinary GST rules apply and you will have to collect and pay GST on this income.
When your GST return becomes due follow these instructions to file your return:
- Log in to myIR.
- Click Returns and transactions under ‘GST’ in your summary.
- Click File return for the due period.
- Select Total sales and purchases (you can also use ‘GST components’).
- Enter your Total sales and income. This is the total amount of rental income you received during the GST period (both through Airbnb and outside of Airbnb) before GST. Not the net amount you receive after deducting any Airbnb fees or commission.
- Enter your total rental income from Airbnb in Zero-rated supplies. Airbnb has already paid GST on your behalf for this income, enter it as Zero-rated supplies so that you do not pay GST on it twice. E.g. if you made $1,000 through Airbnb and $500 (before GST) by renting directly, you would enter $1,500 for ‘Total sales and income’ and $1,000 for ‘Zero-rate supplies’.
- Click Next.
- Enter the Total purchases and expenses relating to your rental and click Next.
- You should now see a Total GST to pay or a Total GST refund figure. Check the declaration box and click Next.
- Adding attachments/receipts is optional, click Next.
- Select if you would like to make payment (generally it’s easier to make payment now rather than later). If you select yes, then follow the steps to make payment.
- Click Submit.
And that’s it, your GST return has been submitted. Your first return might take a while but they will get easier and faster with practice. To make filing GST returns fast and effortless, use Solo’s automatic GST returns.
Including Airbnb Taxes in Your Tax Return
Regardless of whether you are renting out a room in your house or a separate investment property, the income you earn from short-stay rentals must be declared in your annual income tax return. This includes any income earned through platforms like Airbnb or Bookabach.
When your tax return becomes due (after 31 March) you need to login to your myIR account and file your return using the IRD’s online form.
To include Airbnb taxes in your online income tax return, follow these steps:
- At the ‘Build your return’ step, select Income and expenses from residential property/bright-line income. ‘Interest incurred from residential property’ will then be automatically selected as well.
- Select the secondary form This return will include IR3R Rental Income. The IR3R is used by the IRD for statistically purposes only and will not effect the amount of tax you pay.
- Enter your Gross residential rental income. This is the total amount of your rental income (both through Airbnb and outside of Airbnb) before GST for the financial year.
- Enter any Residential rental deductions (expenses) accumulated during the financial year. Then enter the Residential rental deductions claimed this year. As per the ring-fencing rules you cannot claim more expenses than your rental property income.
- At the ‘Rental income’ (IR3R) step, again enter your Total rents (before GST) and enter any expenses.
That’s it, you’ve now included Airbnb income and expenses in your online tax return.
For more detailed information and specific scenarios, visit ird.govt.nz and download their GST on listed services – drivers, deliverers and accommodation owners guide or IR264 Rental income guide.
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