Own an AirBnb or Book a Bach? You need to know the new rules.

Due to the ease of earning additional income through short-term property rental, the IRD have implemented strict rules to monitor this activity and these could have major implications for you as a tax payer if you undertake such rental activity.


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Keys to your future Published on:
Tags: Property

The key considerations are listed below:

1. Income and Expenses

Any rental income is taxable, with only very minor exceptions. Expenses can be off-set against income, bu there are strict assessment rules around expenses and how they are quantified and claimed.

2. GST

Some short-term rentals are quite lucrative and once you have earned more than $60,000 in a financial year you are required to register for GST. This impacts on future rental prices and cash-flow, but more importantly, may lead to a large GST liability if you stop renting your holiday home. Use of your property by yourself as an owner, or friends and family may also be suibject to GST on a market-value rental regardless of whether this has actually been recieved or not.

3. Ownership

The structure of the property ownership has diferent implications for both income tax and GST and it is important to set this up correctly. Properties owned in a Trust may inadvertently include other assets in the GST regime should you be required to register for GST.

4. Other considerations

There are other important factors to consider if you undertake short term rentals. These include making sure that you are correctly under your insurance policy for such activity. Some regions require resource consent for short-term rentals, please check your areas, other regions require a development contribution to be made. These factors may also impact your cash flow from rental income.