Many hosts who cash in on the Airbnb boom are failing to tell the taxman
Many people who rent out their properties using online service Airbnb are still not declaring their income to the taxman, it's been claimed.
Financial services firm Taxback.com - a partner of Airbnb - insists "anecdotal evidence" leads it to believe many people who earn even average amounts via Airbnb are not telling the Revenue Commissioners about the income "probably because they don't know they have to".
In early 2015, the Revenue Commissioners warned Airbnb landlords they must declare any income generated from their properties.
The taxman determined that income from short-term stays does not qualify for any tax relief as visitors are using properties as guest accommodation rather than residential.
Under the rent-a-room scheme, people can earn up to €14,000 a year tax free if they let out a room in their home.
But Revenue specifically states relief cannot be claimed against "short-term guests, including those who book accommodation through online booking sites".
Airbnb also provides the Revenue Commissioners with all details of properties rented out under its website, the names and addresses of the owners and how much they received in each calendar year.
But Taxback.com director Barry Flanagan said many people who rent rooms or properties out via Airbnb still do not appear to be declaring income.
"Anecdotal evidence leads us to believe that simply not enough people are declaring this income to Revenue quite probably because they don't know they have to," he said.
Anyone who doesn't declare income could be hit with a tax demand and significant penalties. Mr Flanagan said the average tax relief claimed by Airbnb hosts via its service in 2017 was €7,609.
Those tax reliefs are amounts that reduce a tax liability due to the costs of maintaining a room or property rented out via Airbnb. Such costs can include electricity, broadband, gas and cleaning.
However, Taxback.com pointed out that the average Airbnb host in Ireland earned just €3,500 in 2017.
Mr Flanagan said the size of the tax relief claims that it processes would appear to indicate mainly high-earning Airbnb hosts are declaring income.
It could mean thousands of lower-earning hosts - who still have a tax liability - may not be declaring their income to the taxman.
Airbnb also warns hosts that if they rent more than four bedrooms in a house, where each bedroom is used for the accommodation of not more than four persons as overnight guest accommodation, that they may require planning permission.