Airbnb Rules in New Zealand | Airbnb Laws, Taxes, and Regulations

New Zealand, with its stunning landscapes and vibrant culture, is a popular destination for travelers from around the world. This has led to a significant rise in short-term rentals especially through platforms like Airbnb. For hosts understanding the rules, laws, taxes and regulations governing Airbnb in New Zealand is crucial. This article provides an in-depth look at these aspects to help current and prospective hosts navigate the regulatory landscape effectively.

Are Airbnbs Legal in New Zealand?

Signing up as a host on Airbnb in New Zealand is completely legal and can be a great source of additional income. However, it’s important to familiarize yourself with the various rules and regulations before listing any properties to ensure compliance and avoid potential issues (more on this later).

Airbnb and New Zealand's Tourism Industry

Airbnb continues to grow rapidly, significantly contributing to New Zealand's tourism industry. Renowned for their friendliness, Kiwis offer welcoming stays that attract numerous travelers. According to the United Nations 2020 World Happiness Report, New Zealand is the 9th happiest country, enhancing its appeal to visitors.

In New Zealand, 25% of Airbnb bookings are in Auckland, with Queenstown, Christchurch, and Wellington also being top destinations. Stats NZ's 2019 report on the accommodation and sharing economy revealed that home sharing accounted for 18.3% of guest nights in 2018, up from 8.3% in 2013, contributing over NZ$300 million to the economy.

Airbnb Rules in New Zealand | Airbnb Laws, Taxes, and Regulations

Many investors are eager to get in on Airbnb. However, some councils have passed legislation to introduce higher rates and tighter regulations, which means you need to consider legal implications if you plan to purchase a property or use your existing property as a short-term rental property.

Local Council regulations 

Regulations for short-term rentals in New Zealand are primarily determined by local councils, resulting in varying rules depending on the location. For example in Auckland, properties used for short-term rentals for more than 28 days annually must adhere to local bylaws and may need resource consent based on the property’s location and type. Conversely, the Queenstown Lakes District Council takes it up a notch going as far as requiring resource consent for properties rented out more than 90 days a year.

Short-term rental agreements 

Airbnbs are classified as short-term rentals and are not covered by the Residential Tenancies Act. As an Airbnb owner, you will need to have a short-term rental agreement. This agreement should ideally cover key matters such as payment terms, the number of guests permitted, smoking rules and liability.

Health and safety standards

If guests are staying at your property, it's crucial to ensure their safety by taking reasonable precautions. Additionally, you must meet safety standards, which include having a working fire alarm (a legal requirement for all properties), a fire extinguisher, and clear instructions for operating or caring for appliances and other amenities.

Insurance

Hosts need to have appropriate insurance coverage. Regular home insurance policies may not cover damages or liabilities incurred during short-term rentals, so specialized short-term rental insurance is advisable.

Taxes

Income from hosting through platforms like Airbnb is taxable, including one-off or irregular rentals. Special tax rules apply for calculating income and expenses from short-term rentals, depending on the property type and use.

Here's what you need to know:

• You must include this income on an Individual tax return (IR3), which can be filed online via your myIR account.

• You can claim expenses for the time the property was rented out, such as rates, insurance, cleaning, and advertising. Refer to the special tax rules for your property type and use.

• Keep clear records of all income and expenses.

• Anyone providing lodging services through online platforms like Airbnb in New Zealand will be impacted by new Goods and Services Tax (GST) changes effective April 1, 2024. (more on GST under FAQs)

Final Thoughts

Navigating the Airbnb landscape in New Zealand requires a thorough understanding of various rules, laws, taxes, and regulations. With local council regulations varying by location, stringent health and safety standards, and specific insurance requirements, hosts must be diligent in ensuring compliance. 

The introduction of new GST rules in April 2024 adds another layer of complexity, particularly for GST-registered property owners. By staying informed and adhering to these guidelines, Airbnb hosts can successfully manage their short-term rentals, contributing positively to New Zealand's vibrant tourism industry.

FAQs on GST

What is the new legislation on GST?

Before April 1, 2024, service providers in New Zealand were exempt from GST if their turnover was below $60,000. The new legislation, however, mandates GST on accommodation and transport services facilitated through electronic marketplaces, regardless of the provider's GST registration status.

The legislation covers 'listed services' such as Airbnb which must now collect and remit 15% GST on all services provided to end-users through their platforms.

What are the implications for GST-registered property owners?

GST-registered property owners will no longer pay GST on their rental income, as Airbnb will handle it. For example, if Airbnb charges $230 per night (including $30 GST), the property owner receives $200 net, which is treated as "zero-rated" revenue, meaning no GST is paid on the $200. GST-registered owners can still claim GST on their expenses as usual.

Are there any other complexities?

Yes, there are. If you rent out your property both directly and through a platform like Airbnb, you must follow both the new and old rules. If you are registered for GST, you need to collect and pay GST on rent received directly, while treating income from Airbnb as zero-rated, meaning no GST is paid on that income.