Date: 28th December 2017
If you’re one of the many home owners in the Queenstown Lakes District taking advantage of the buoyant short-term holiday house rental market, you’ll know that there are good returns to be made. But is it as easy as taking a few photos and loading your property on Airbnb or Bookabach? Not really. You may like to take a moment to check that you’re ticking all the boxes when it comes to your legal obligations.
Here’s a short (but not all-inclusive) list of what to consider before diving into this market.
Like most types of income streams, income you earn from your holiday house rental may be subject to income tax.
This means you:
There are different tax rules 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. However, if you choose not to declare this rental income, you won’t be able to claim expenses for the holiday home.
Things get a little more complicated if taxable income from your holiday house exceeds $60,000, as GST registration is required. In this case, other GST implications come into play when the property is sold. If you are likely to be in this situation please get in touch for further advice.
Your usual house and contents insurance may 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.
As well as cover for the property and contents, consider public liability insurance 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.
More information here: Bookabach holiday home-owner’s guide to health and safety
The Queenstown Lakes District has it’s special restrictions on short term rentals. Depending on your situation you may need to:
More information here: QLDC Guide to Short Term Accommodation.
With the many tax and legal considerations that come into play when using your home or holiday home as visitor accommodation, we encourage you to do your research (see resources below) and contact us for more information.