Do I have to pay tax on my Airbnb income?

With the deadline for filing your tax return fast approaching, you may be wondering if you should file a tax return this October if you’ve let out a property via Airbnb during 2017?

The Revenue Commissioners have issued guidance saying that letting out your property via the Airbnb was not a one-way route to a tax-free windfall. Rather, those letting a room or a property on the site would be liable to Income Tax, Universal Social Charge and PRSI after the deduction of allowable expenses.

I thought I could earn €14,000 tax free renting a room in my house?
It was previously thought Airbnb would qualify for the rent-a-room scheme, which allows homeowners to earn €12,000 for 2016 and €14,000 for 2017 tax-free annually by letting out a room in their own home.

However, the distinction was made between “permanent” lets – i.e. to students or long term tenants and temporary short-term lets, such as those organised via Airbnb.

I have been renting out my property through Airbnb since 2014 and haven’t declared the income to the Revenue – what should I do?
Airbnb confirmed in 2015 that it had supplied Revenue with the details of income generated by those hosting their properties on the site. So in most cases it’s just a matter of time before the Revenue will come knocking. Our advice is to always engage with the Revenue before this happens by completing a tax return ensuring that you declare your income from all sources. In some circumstances it may be beneficial to seek professional advice.

How can I reduce my tax liability on my Airnbnb income?
It’s not all bad news! Given that Revenue considers income from your Airbnb rentals as ‘trading income’, it is only reasonable that allowable trading expenses should qualify as deductions. These are expenses like the cost of providing meals, light, heat or laundering costs – as well as repairs and maintenance to guest accommodation areas etc.

Therefore, it is imperative to keep your receipts for these items so they can be offset against your income to reduce your overall tax bill.

WWW.THETAXCLINIC.IE was founded in February 2010 by Michael Coll & Mabel McHugh. The Tax Clinic is the only business in the Northwest that specialises in completing Tax Returns for small businesses and Paye workers with additional income. As Chartered Tax Advisers we have the knowledge and experience to assist you with all your taxation needs. Our offices are based at the High Road Letterkenny and Main Street Killybegs.