GST considerations for converting your Airbnb property to long-term residential rental

Date: 15th April 2020

holiday house deck chairs

With the large stock of short term rental properties in the Queenstown Lakes District, owners are now facing the prospect of either leaving their properties vacant, or changing them to long-term residential rentals. If you are in that position, take a moment to consider the GST implications.

Here is what the IRD say regarding the GST treatment where you have claimed GST on your property purchase:

  • Long term residential accommodation is not subject to GST.
  • AirBnb accommodation revenue (or revenue through other booking channels) can be subject to GST if revenue is over $60,000
  • If you are registered for GST and change your activity to a non-GST activity, then you need to consider whether you will carry on another GST activity within the next 12 months.

If you are carrying on GST activity in the next 12 months

You do not need to cease your GST registration, however, you will be required to:

  • Make a GST apportionment in the tax year that you change your activity to a non-GST activity. This reflects that the property was not used for a GST activity for a period of months.
  • When you revert back to the GST activity again, you will be able to claim back the GST paid above. However, this will cross multiple tax  years.

If you’re not carrying on GST activity in the next 12 months

Then you are required to:

  • Inform the IRD within 21 days of ceasing
  • Repay GST on the properties market value at time of ceasing GST. This could be a massive cost to you!

An example of where you would not be conducting a GST activity in the next twelve months is where you have signed tenants on a lease of more than 12 months.

Get advice

Findlay Sidekick recommend you talk to us to get further advice, options might include that you remain conducting short-term stay accommodation of less than 4 weeks.

If you have any questions, get in contact. Remember life is easier with a Sidekick!

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