Airbnb Taxation Explained. A little Bit at Least!
Making money through Airbnb is awesome. Let’s face it.
But, without proper advice and preparation come April time, when the Tax Authorities want their pound of flesh, you could be facing a hefty tax bill.
If you have followed my other tutorials on how to:
You should be starting to churn some serious coin from your Airbnb Investment.
Don’t dig your head in the sand.
Take action, get organized and don’t get stung when it comes to Tax Return time!
What Expenses are Tax Deductible on Airbnb?
Tax Deductible Airbnb expenses derive from any expense incurred through the operation of your Airbnb rental.
Some examples of tax deductions for your Airbnb property include:
- Mortgage Payments
- House Insurance
- Landlords Insurance
- Cleaning Fees
- Utilities eg. Gas, Water, Electricity
- Netflix, Amazon Prime etc.
- Maintenance work
The more tax-deductible expenses you can legitimately rack up, the better.
Is it even legal to rent my property in my City?
Before you jump straight into renting your property with Airbnb it is a very good idea to check with your local authorities beforehand or you could be in for a nasty shock.
Airbnb has been banned (or severely restricted) in:
- Amsterdam and London.
- New York.
- San Francisco.
- Santa Monica.
Run a Google search for your local area and you should be able to find out most of the info you need to know.
Some Hosts have been fined substantial amounts for failing to comply with their local regulations. So don’t be a mug, and check it out.
How to plan for your Airbnb Tax Bill.
Every transaction that goes through Airbnb is traceable, so this is not an area to try and be sneaky or cut corners.
The most important thing is to keep organized documental evidence of all of your Airbnb expenditures.
I have been trying to a find a decent app to help keep my tax affairs in order and I can’t recommend Hurdlr App highly enough.
The app lets you scan all of your expenses, organizing them into neat folders. It gives you heaps of handy graphs etc. to visualize your expenses so that you never miss a beat.
Using an app like this will save you a serious headache come tax return time.
Will income from Airbnb be taxed like a second job?
Airbnb income will not be classed as a second job, so you won’t need to pay PAYE tax on your earnings.
You will need to pay tax on your income (supposing you make a profit), but this tax can be deferred until you file your tax return, after you have deducted all eligible expenses.
Many Countries and even States have very different ways of taxing income generated through Airbnb, so it will pay off big time to do a bit of research in your area to make sure you’re maximizing your returns.
“A Stitch in time, Saves Nine”
I think someone, somewhere said some shit like that anyway.
Is it hard to do a tax return for your Airbnb property?
So long as you are organized, it should be a breeze.
But if you are like me, and feel sick at the thought of wasting your time filling out Tax forms then just get an accountant to do it for you.
The price of your accountant is tax deductible, plus they’ll be on hand to offer advice along the way.
So, now that you are making a killing on Airbnb, you’ll need to get your proverbial house in order to ensure an easy ride.
If you have any questions hit me up in the comments.
I answer them all personally!