AIRBNB and Tax Impact

Revenue has dashed the hopes of homeowners who let their room out through Airbnb or other similar sites. Reason being is that Revenue have said that the Rent-a-Room relief which enables homeowner to earn up to €12,000 tax free does not cover short term lets.

In Revenue’s ebrief in February amendments to the long-standing Rent-a-Room relief clarify that short term lets to guests, “including where such accommodation is provided through online accommodation booking sites”, do not fall within the terms of the relief.

The Rent-a-Room scheme, introduced in 2002, allows people to receive income of up to €12,000 in any tax year without that money being liable to income tax, PRSI or the universal social charge (USC).

Revenue said that short-term lets had never fallen within the scheme, which is designed for “residential purposes”.

The main amendment to the scheme was to increase the threshold to €12,000 per tax year from €10,000 previously. This change was signalled in the budget.

If the gross income from renting a room or rooms in any year exceeds the €12,000 threshold, all the rental income is subject to tax, PRSI and USC.

Money paid by someone who is either a boss or employee is also excluded, such as income from work colleagues.

Anyone letting out their home on Airbnb or similar websites is required to treat any rental received as trading income, just as if they were running a guesthouse. It should be noted that Revenue have access to the Airbnb data and as we all know have been in the habit of trawling through historic data and stinging tax payers for interest and penalties on old tax charges. The interest and penalties often far exceed the original tax evaded.

There may also be issues with CGT on the sale of your home but this depends on the specific circumstances in each case.

Need any help to clarify this matter, then please contact us here at Bradán Consulting in Eyre Square @ 091450698 or email us at [email protected]