TAX ON AIRBNB INCOME NZ

By Garreth Collard, Senior Property Accountant | June 20, 2024

How Much Can You Earn From Airbnb Before Tax?

Under $4,000: You Can Choose to Leave It Out

Earned less than $4,000 a year from a holiday home? You may be able to leave the income out of your tax return. It’s an opt-out, though, not an automatic exemption.

IRD lets you opt out of the mixed-use asset rules when your gross income from income-earning use is under $4,000. You then leave the income out of both your income tax and GST returns. The trade-off is that the expenses stay out too, so you can’t claim anything.

Three limits apply:

The opt-out only works if the mixed-use asset rules apply to your holiday home. That means private use plus 62 or more unused days. Otherwise the standard rules apply, and the income is taxable.
It isn’t available to holiday homes owned by companies.
A room in your own home isn’t covered either, because the mixed-use rules exclude it.

Opting out can save admin on small amounts. Work out what you’d give up in expense claims before you decide.

Loss-Making Holiday Homes: The 2% Test

If your allowable expenses under the mixed-use rules exceed your income, the 2% test decides what happens next.

First, work out your property’s value. Use whichever is most recent: the council’s capital or annual value (rateable value), or your purchase price. Bought from an associated person? Use market value at purchase if that’s more recent than the council valuation.

Then compare your gross income from income-earning use with 2% of that value. If your income is lower and you’re loss-making, you have two options:

Opt out. Leave the income and expenses out of your income tax and GST returns. This isn’t available to company-owned holiday homes.
Stay in. You can only claim deductions up to the amount of your income. The excess carries forward.

In a later year, you can use the carried-forward amount only when that year’s income beats that year’s deductions. The most you can claim is the gap between the two. Anything left keeps carrying forward.

A holiday home has a council capital value of $575,000, so 2% is $11,500. It earns $10,000 and has $11,000 of deductible expenses. Income is under $11,500, so the owner can opt out. Staying in means claiming $10,000, with $1,000 carried forward. Next year, income is $14,000 and deductions are $12,000. The gap is $2,000, so the owner claims the $1,000 and is taxed on $1,000.

Opting out is simpler. Carrying the loss forward only pays off if the property turns a profit later.

Quarantined Expenditure

The third situation involves “quarantined expenditure.” These are losses held over to a future tax year, offsetting that same asset’s future profits. Not every asset qualifies for the quarantine rules — check your specific situation before assuming it applies.

Renting a Room? The Short-Stay Standard-Cost Method

Renting out a room in the home you live in? The short-stay standard-cost method can save you tracking expenses. IRD sets a fixed nightly amount, and you treat it as your costs.

You can use it if all of these apply:

the property is your main home
guests stay in your home or its rooms
you rent out for 100 nights or fewer in the year, counting each room as one night (two rooms for one night counts as two nights)
you don’t provide the accommodation as part of a GST taxable activity

Miss any of those, and you use the actual cost method instead. That splits your expenses by the floor area guests use and the number of rental nights.

Anika rents a spare room in her main home for 60 nights and earns $4,500 in total. At IRD’s example rate of $61 a night, her standard costs are $3,660. Her taxable income is $840.

Holiday Home Tax Rules: Mixed-Use Assets

If Your Property Sits Empty for 62 Days or More

You have to use the mixed-use asset rules(opens in new tab) if your holiday home both:

earned you rental income (public use), and was also used by you or an associated person (private use); and
was vacant for 62 days or more. Being merely “available” doesn’t count as vacant.

What Counts as Private Use?

IRD draws the line in two places: who stays, and how much they pay.

Private use is a stay by:

you, your family, or any associated person, even if they pay you
anyone else who pays less than 80% of market rate

Income-earning use is a stay by someone not associated with you who pays 80% or more of market rate.

A few details matter:

Payments you receive for private use are exempt income. You don’t declare them, and you can’t claim expenses for those days.
Your own stay to fix damage counts as income-earning use. The damage must have happened on an income-earning day.
GST works differently. Every day you receive any payment counts as income-earning for GST, whatever percentage of market rate the guest pays.

That last point has a catch. A friend paying 60% of market rate is private use for income tax, but income-earning for GST. This isn’t a full list. The rules have real nuance, so get advice before guessing.

If Your Property Isn’t Used Privately, or Isn’t Vacant for 62+ Days

You use the actual cost method(opens in new tab) instead. That applies if your holiday home either:

earned rental income and wasn’t used by you or an associated person, or
wasn’t vacant for 62 days or more.

GST When You’re Renting Out Your Property

Cross $60,000 in annual revenue (income before costs) from your bookings, and you need to register for GST. That’s true even if it’s just a room in your own home. This applies to your revenue, not what’s left after expenses.

One detail that catches hosts out: the $60,000 threshold covers all your taxable activities combined, not just your Airbnb income. Run a side business or freelance alongside your short-stay hosting? That income counts toward the same threshold. A host assuming they’re safely under $60,000 based on Airbnb income alone can easily be wrong once other taxable activity gets added in.

The threshold is also measured by a rolling 12-month period, i.e. not financial year, not calendar year. Check whether your bookings, averaged out, cross $60,000 within that specific 12-month window.

GST On Sale

Registered for GST, with a property in the GST net? GST rules apply to the sale. That’s true whether or not bright-line tax applies. What happens next depends on the buyer:

Buyer also GST-registered: the sale is zero-rated, as long as they intend to use the property for taxable supplies. It can’t be a home for them or a relative.
Buyer not registered: GST is payable on the sale price. The same applies if a registered buyer intends to live there, because zero-rating doesn’t apply.

You also account for GST if you stop using the property for short stays.

IRD lets you treat the sale as non-taxable in limited cases. You must not have claimed a GST deduction for the property. It must not have been bought or used mainly for taxable supplies. And you must not have bought it as a zero-rated supply, unless you make a debit adjustment before selling.

Not registered? The GST rules generally don’t apply to your sale. The exception is if you expect to make over $60,000 of supplies in the next 12 months.

The GST Marketplace Rules

Since 1 April 2024, platforms like Airbnb and Bookabach collect GST on short-stay bookings. They charge the standard 15% and pay it to IRD.

Not GST-registered? The platform passes 8.5% back to you. IRD calls this the flat-rate credit, and it’s yours to keep. You still receive less than the guest pays, because only part of the GST comes back. Review your nightly rates with that in mind.

GST-registered? The platform still collects and pays GST on bookings through its site. The flat-rate credit is for unregistered hosts only.

Either way, IRD requires you to give the platform your name, IRD number and GST registration status. Tell it again if your status changes. Bookings through your own website follow the ordinary GST rules, so you may need to pay GST on that income. Large GST-registered accommodation owners can opt out of the marketplace rules, so ask us if that’s you. We cover this in full in GST App Tax Rules NZ.

Common mistake replacement: Not telling the platform your GST status. IRD requires you to give the platform your GST registration status, and to update it if it changes.

Interest Deductibility

Interest deductibility on residential rental property went through several years of restriction before being fully restored. From 1 April 2024 to 31 March 2025, interest deductibility was 80%. From 1 April 2025, 100% of your mortgage interest is deductible again, regardless of when you bought the property. (Note that this article has been updated in 2026 to reflect the latest rules)

Common Mistakes

Assuming the $60,000 GST threshold only counts Airbnb income. It counts every taxable activity you run, combined.

Missing the mixed-use asset rules on a part-time holiday home. Family and friends using the property too, plus 62+ vacant days a year, rules out the standard actual-cost method. Mixed-use apportionment applies instead.

Not telling the platform your GST registration status. GST-registered and the platform doesn’t know? You may still have GST deducted from payments that shouldn’t have it deducted.

Assuming income under $4,000 still lets you claim expenses. It doesn’t. Below that threshold, you neither declare the income nor claim anything against it.

Worked Examples

Let’s see how this might work in the real world.

Sharon rents a room in her house for 60 nights a year. Sharon’s Airbnb income sits at $6,000 for the year so she needs to declare it. She’s rented for fewer than 100 nights, so she checks with her accountant whether she qualifies for the standard-cost method. That would be easier than tracking every actual expense. Her accountant checks the rules and advises that she does qualify. It simplifies her return considerably.

Joseph owns a holiday home used by family and rented out the rest of the year. Daniel’s family stays at the property for several weeks each year. It’s actively rented for the remainder, but it also sits vacant for 70 days across the year — past the 62-day threshold. The property has both private and income-earning use, and sits vacant beyond 62 days. So Joseph has to apply the mixed-use asset rules and apportion his expenses accordingly, rather than simply claiming them in full.

Checklist

✅ Work out whether your Airbnb revenue sits above or below the $4,000 declaration threshold
✅ If running a loss, check whether your income sits under 2% of your property’s rateable value
✅ If renting a room for 100 nights or fewer, ask whether the standard-cost method suits you
✅ Confirm whether the mixed-use asset rules apply — private use plus 62+ vacant days triggers them
✅ Track your GST turnover across all taxable activities, not just Airbnb, against the $60,000 threshold
✅ Confirm your GST registration status is correctly recorded with every platform you list on

Common Questions

Do I have to declare Airbnb income if it’s a one-off, small amount? Not if it’s under $4,000 for the year. You also can’t claim any expenses against it below that threshold, though.

Does renting to family count differently for tax purposes? Yes. Under the mixed-use asset rules, a stay by family or any associated person is private use. That’s true even if they pay full market rent. Other guests only count as private use if they pay less than 80% of market rate. (Don’t confuse this with renting long-term residential property to family; that’s different.)

Do I need to register for GST if I only rent occasionally? Only once your total taxable turnover, across everything you do, crosses $60,000 in a financial year.

What if I stay in the property myself to do repairs? It depends on why you’re there. If you’re fixing damage that happened on an income-earning day, your stay counts as income-earning use. That also means those days aren’t “unused”, which helps keep you under the 62-day threshold. Other repair visits aren’t covered by that rule, so get advice first.

Summary

Tax on Airbnb income NZ is fairly straightforward in principle — it’s all taxable. The mechanics get genuinely complex fast, though. Income under $4,000 doesn’t need declaring. A loss under 2% of rateable value doesn’t either. A room rented for 100 nights or fewer may qualify for a simpler standard-cost method. Once your property has both private and income-earning use and sits vacant 62 days or more a year, the mixed-use asset rules take over, and they demand real care. Cross $60,000 in combined taxable turnover, and GST registration becomes compulsory. Get the thresholds and the apportionment right, and Airbnb income can be a genuinely good earner. Get them wrong, and it’s an easy way to end up with a bigger tax bill than expected.

Talk to EpsomTax.com About Your Airbnb Income

Short-stay accommodation can be a great income stream, but it’s one of the more complex corners of New Zealand property tax. The right treatment depends heavily on your specific mix of private and rental use.

Contact EpsomTax.com to make sure you’re applying the right rules to your Airbnb income. We’ll confirm you’re claiming everything you’re entitled to, and not caught out by GST or mixed-use asset requirements you didn’t know applied.

Posted in Property, Tax and tagged advice, airbnb, compliance, how to, howto, investors, property, taxes, trickyquestions