If you’re thinking about making your home, rental property or holiday house available for short-term rentals, make sure you know the rules on holiday rental agreements, claiming expenses, whether to declare it at tax time, and more.
With the rise of online holiday accommodation websites like Airbnb and Bookabach, listing a property for short-term let is easy. But there’s more to it than just putting your property out there. Key things to consider include:
Check out your local council rules on short-term accommodation — some councils require you to register properties which are rented out, eg Queenstown Lakes District Council.
When a house you own is used as a holiday rental, you’re not covered by the Residential Tenancies Act. This means standard rental agreements don’t apply.
Some hosting sites, like Airbnb, include booking terms and conditions in your page listing. If terms and conditions aren’t included when you list your rental, you’ll need to create and enforce a written agreement outlining your terms and conditions.
The agreement should cover rules and expectations about:
If you use a template provided by your preferred hosting website, make sure it suits your situation and covers everything you need it to.
You can’t ask tenants to move out temporarily so you can make more money over the summer by using the property for Airbnb or similar.
If your tenants decide to sublet the property while they’re away, they need your permission and must abide by their tenancy agreement. They can’t sublet the property without your permission.
Subletting(external link) — Tenancy Services
Income you receive for providing accommodation, including through websites like Airbnb or Bookabach, is taxable. This includes any payment for one-off or irregular rentals. Special tax rules apply to calculating income and expenditure from short-term rental accommodation (also known as short-stay accommodation) depending on the type of property and its use.
This means you:
GST rules apply if your income is over $60k in a 12-month period. They also might apply if you offer guests meals, cleaners or other services in addition to accommodation. If you’re not sure, check with Inland Revenue — or your accountant, if you have one.
Sharing economy & short-term accommodation(external link) — Inland Revenue
Inland Revenue has a number of publications on short-stay accommodation to help you work out which rules apply depending on the type of property and use, eg, the “standard rules” or “mixed use asset rules” (discussed below). You can start with Inland Revenue’s short-stay accommodation overview, which has a flow chart to work through which rules apply to your type of property and its use.
Short-stay accommodation overview(external link) — Inland Revenue
You can only claim expenses if you declare your rental income in your tax return. The special tax rules may limit the expenses you can claim depending on the type of property the use and how long it is available to rent. These rules provide guidance for working out how to calculate your income, expenses and taxable income that you must include in your income tax return.
The "mixed use asset rules" apply if you have a mixed-use holiday home where:
If you have a mixed-use holiday home and you earn less than $4,000 a year from renting it out, you don't need to include this income in your annual tax return. If you choose not to declare this rental income, you won't be able to claim expenses for the holiday home either.
Income tax rules for mixed-use assets(external link) — Inland Revenue
GST for mixed-use assets(external link) — Inland Revenue
Your usual house and contents insurance might not cover you if something happens while your property is rented out. Speak to your insurer — you may need to pay a higher premium or arrange extra cover, but this is better than finding out too late that damage isn’t covered.
Talk to your insurer about cover for:
As well as cover for the property and contents, consider public liability insurance. This is cover to protect you if a guest gets hurt while staying at your property.
Some hosting websites offer free cover for these types of things, but it’s worth a chat with your insurance company either way.
Check whether there are any regulations you need to comply with — your local council is a good place to start.