Airbnb - Tax question

[Dooky!]

Hi all, I wonder has anyone any advice on what expenses can be deducted when calculating tax on the Form 11. We refurbished a house in 2015 and last year made almost 7K for under under 30 days here and there. We have a big mortgage. I see from the EY advice that mortgage interest relief is deductible, I take it though this would be pro rata, one month only? Also, my cleaner gets paid in cash, if it is unvouched is that a problem? What is reasonable in terms of wear and tear for only one month? Sorry if my questions are basic, I am PAYE and have never looked at this before.

 

[cremeegg]

Where to start ?

The tax advice issued by EY to Airbnb in September 2015 says :

"mortgage interest allowed as a deduction in calculating taxable rental income is restricted to 75% of the interest accruingduring the year"

and

"In addition, in order to claim a deduction for mortgage interest, the host must ensure they are compliant with the requirements of the Residential Tenancies Act in relation to the registration ofa tenancy with the Private Residential Tenancies Board"

In my opinion the EY advice is completely misguided and wrong in every respect. Of course EY is a well respected international professional services firm and I am an anonymous internet poster, that doesn't change the fact that I am right and they are wrong. I have written to tell Airbnb and EY of my opinion and I appears from a quick search just now that the advice has been taken down.

The correct position, in my opinion is that:

Airbnb income is taxable at schedule D case i and as such

Mortgage interest is deductible 100%, pro rata to the number of days where Airbnb income arises.

Money paid to the cleaner is a deductible expense. [If you Have paid that in cash without deduction of PAYE, PRSI, USC and calculating employer's PRSI then you have a serious issue there, but that is a separate matter.}

There is no wear and tear allowance against Schedule D income, a capital allowance could in theory be claimed again on a pro-rata basis. In practical terms that would not be an easy calculation.

You should know that all Airbnb income earned by hosts is reported by them directly to Revenue. If you do not make a return of the income you will be hearing from Revenue.

 

[Dooky!]

Thanks very much for the clear analysis. It is difficult too to quantify light/heat too as when we Airbnb we would have the heat on in the entire house 24/7; when we are there we are much more frugal and are only in late from work in any event. Anyway I am not complaining, it was easy earned. Thanks.