How to make money through Airbnb
Moneybags journalist Jessica Anne Wood looks at how you can make money from Airbnb, and investigates any tax obligations you may have as a result of using this platform.
Listing your property
If you got a spare room or an empty granny flat, there’s money to be made. Airbnb is an online platform that allows people to list rooms, apartments and other forms of dwellings with the intention of renting it out. The platform currently offers accommodation in more than 34 000 cities and 191 countries.
Nicola D’Elia, general manager for Africa and the Middle East at Airbnb, says that listing a property on Airbnb is completely free. There is also no charge for browsing through the listings.
“We only take a small cut of the transaction once a booking is made. We have a 3% fee for hosts on each transaction and our guest fees are between six and 12.5% on every booking. There are no additional costs and all fees are visible on the page when you have entered the dates you wish to travel – this could include tourist – or city tax that Airbnb is collecting and remitting as well as potential cleaning fees or deposits that the hosts charge. All payments are made through Airbnb’s secure payment system – so we can guarantee that your money is safe,” explains D’Elia.
There is also a range of property types that can be listed on Airbnb. From a single room available for rent or an entire house, or as Airbnb point out, even a castle (which, according to its website there are over 1 400 listed.)
How much you earn is based on demand. But upon signing up Airbnb claims that a person living in Johannesburg can earn as much as R2193 per week on average.
Pricing your property
How much you price your home for is entirely up to you. However, to assist homeowners, Airbnb has a pricing tool to help hosts workout the ideal price. The tool suggests a price per night depending on the indicators, including seasonality, amenities and demand.
“Prices can be set individually per night so that hosts have the utmost control and flexibility to reflect their personal circumstances as well as per week or month if they want to incentivise long term renters,” elaborates D’Elia.
If the funds received are from a currency offer than the currency of the country you reside in, this is viewed as an international wire transfer. Your bank my charge a fee to exchange this to your local currency, however, this is not a fee charged by Airbnb. Click here for more.
The power of Airbnb
D’Elia highlights: “Airbnb empowers regular South Africans to use their homes as economic assets. In South Africa in 2015, there were 7,500 active hosts sharing their home and the typical host earned an extra R28, 000. Airbnb also increases consumer choice and helps grow and diversify travel across South Africa: 134,000 guests used Airbnb to visit South Africa in the past year and 99,000 South African residents used Airbnb for their travels.”
According to D’Elia, Airbnb is the digital version of the traditional bed and breakfast model which is well known and used in South Africa. Airbnb allows people to make an extra income through a safe, easy and convenient platform.
The platform not only has benefits for the host, but for the guest as well. D’Elia points out that through Airbnb guests get to enjoy and experience the destination like a local. “They benefit from their host’s tips and insider knowledge, get tips on the best things to do off the beaten path, and get to stay in a place that probably has more style, space and character than if they travel in a more traditional way. Instead of just visiting a place you can now live there, thanks to Airbnb. Even if it just for a night.”
Do you have to pay tax?
So do you have to pay tax on the income that you make from Airbnb? The short answer is yes, it is a form on income and therefore is eligible to be taxed.
D’Elia notes: “In most countries income is taxable – and money that you make renting out your home on Airbnb is no exception. That’s why we remind our hosts about their responsibilities and encourage them to seek the advice of qualified local professionals.”
When Moneybags approached the South African Revenue Service it confirmed: “Rental income derived with the assistance of the Airbnb platform is regarded as income for tax purposes, just as any other rental income would be. Every natural person who carries on a trade in South Africa, which would include property rental, is required to submit a tax return. Once a person’s taxable income for a year of assessment exceeds the tax threshold applicable to the person, income tax is payable. If the rental income exceeds R1 million a year, registration for VAT, VAT returns and VAT payments is required.”
To ensure that everything for your tax submission is in order, SARS advises: “Taxpayers are required to retain sufficient documentation and records to demonstrate that they have declared all income received and to substantiate expenditure claimed.”
For more information on Airbnb, click here.
If you have any concerns about tax payments required by SARS for your Airbnb income, you can contact SARS on 0800 00 7277, or visit their website here. Alternatively, contact TaxTim through Justmoney (our sister website) for all your tax related queries.