5 considerations for short-term holiday house rental

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.

wanaka township looking towards lake

Here’s a short (but not all-inclusive) list of what to consider before diving into this market.

1. Income tax compliance

Like most types of income streams, income you earn from your holiday house rental may be subject to income tax.

This means you:

  • must include the income on an Individual tax return (IR3). This can be filed online — for most people it’s due 7 July
  • can claim expenses for the time you rented out the space, eg rates, insurance, cleaning, commission and advertising
  • must keep clear records to confirm all income and expenses.

There are different tax rules if you have a mixed-use holiday home where:

  • you stay in the holiday home yourself sometimes
  • you rent it out to others sometimes
  • it’s not used for a total of 62 days or more during the tax year.

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.

2. GST obligations

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.

3. Insurance Cover

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.

4. Health & Safety

Check whether there are any regulations you need to comply with — your local council is a good place to start.

Examples include:

  • Fit smoke detectors throughout the property and check these are in working order every three months.
  • Any deck more than 1m high has a fence of at least 1m high right around it.
  • Any pool deeper than 400mm is fenced.
  • Hazardous items like chemicals and poisons are properly stored and kept out of sight.
  • Any kayaks or boats provided for use are seaworthy and life jackets are provided.

More information here: Bookabach holiday home-owner’s guide to health and safety

5. QLDC Holiday House Registration

The Queenstown Lakes District has it’s special restrictions on short term rentals. Depending on your situation you may need to:

  • Register as a Homestay
  • Register as a Holiday Home
  • Apply for Resource Consent

More information here: QLDC Guide to Short Term Accommodation.

Read more

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.

Business.govt.nz – Short Term Rentals – What You Need to Know

QLDC Guide to Short Term Accommodation

Earning Income from Airbnb, Bookabach and other Accommodation Sites

Posted in: Latest News, Queenstown, Wanaka