Airbnb: An easy money maker??

Queenstown AirbnbAirbnb: An easy money maker? You may want to read this first…

There is no doubt that Airbnb has been a contributor to the ‘accommodation crisis’ in Queenstown, New Zealand. With in excess of 880 Airbnb listings between Queenstown and Wanaka, overseas and New Zealand visitors  have access to more accommodation options than any single hotel in the region. From renting out a room in the family home (or rental property!) to renting out the whole house, us locals all know someone who earns income through Airbnb.

To ensure you are not viewing Airbnb through rose-tinted glasses, it is important to consider your obligations in respect of your bank, your insurer, the Queenstown Lakes District Council and the Inland Revenue Department (IRD) with regard to any tax obligations that may arise out of your use of a property for short term accommodation purposes via the Airbnb website.

Your Bank: If you obtained finance from a bank to purchase a property and the original intention was that the property would be used for residential purposes, your bank’s terms and conditions may include a requirement that you advise the bank if your use of the property changes i.e. from residential use to short term accommodation. If a bank was to find out that their terms had been breached in this way, it could choose to demand early repayment of the funds advanced.

Your Insurer: If you originally intended to use the property for residential purposes, your insurance policy may cover you for this purpose only and the policy could become invalidated if you begin using the property for short term accommodation.

The Council: Every property in the region is located within a zone, as determined by the Council’s District Plan. In certain zones, the Council’s consent is required before a property can be used for short term accommodation (due to the extra pressure placed on the Council’s infrastructure). In other circumstances, registration of the property with the Council may be required before a property can be used for short term accommodation. To find out what the requirements are for your property, see the Council’s questionnaire here: http://www.qldc.govt.nz/services/rates/visitor-accommodation/visitor-accommodation-questions/ 

The IRD: For an in depth explanation of the tax obligations that may arise out of your use of Airbnb, please see Conor Gates’ (Deloittes) article: https://www2.deloitte.com/nz/en/pages/tax-alerts/articles/no-tax-holiday-for-short-term-rental-accommodation.html

Airbnb New Zealand

Airbnb has over 3,000,000 listings worldwide. Source: Airbnb website