There is much uncertainty in the current COVID 19 Outbreak and Airbnb accommodation has been hit hard.
For many it might now seem preferable to change the Airbnb to ordinary residential accommodation as with the current and forecast travel restrictions in place having long term residential tenants could be seen to be the better option.
There are a few pitfalls to be aware of if you have been providing Airbnb accommodation and are GST registered.
- Changing from Airbnb to long term residential accommodation is a change of GST activity. Residential accommodation is exempt from GST and so potentially there may no longer be a GST taxable activity
- A GST registered entity that ceases to carry on their GST taxable activity must inform the IRD within 21 days of ceasing that activity and the GST registration will be cancelled.
- If the entity owning the Airbnb property has to cancel their GST registration then GST will need to be repaid to the IRD on the market value of the property.
- If the residential lease is signed up for a period of less than 12 months and there are reasonable grounds to believe the property will at the end of the lease go back to being short term Airbnb type accommodation, or if the entity has another GST activity then the GST registration does not need to be cancelled. There would however need to be a GST apportionment made in the 31 March 2020 GST return to reflect the change of use.
If you are considering changing your Airbnb to a residential rental then it would a good idea to have a chat to us first to check whether there are any GST implications that could catch you out.