Airbnb update: rules, tax and short-stay rentals
Despite Amsterdam city council’s efforts to legalise and clarify holiday rentals such as Airbnb, many property owners continue to flaunt the rules, and tax implications for such enterprises remain a grey area.
Here is an update on the short-stay situation and a basic outline of financial obligations.
Last January, the city of Amsterdam introduced new rules for short stay rentals.
The rules stipulate short-stays can only be conducted if the following requirements are met:
- The resident owns the property
- A maximum of four guests at any one time
- The owner pays 5,5 per cent tourist tax
- The body corporate (VVE) must approve
- Guests must not cause any disturbance
- The total rental period is no more than 60 days a year
- The property must comply with fire safety regulations
New rules not working?
Despite this groundbreaking initiative, a recent investigation by the Volkskrant revealed that Amsterdammers are continuing to break the short-stay rules set out by the city council.
The Volkskrant found that, since the start of August, Amsterdam officials have closed down 30 illegal hotels and fined owners 216.000 euros. The worst offenders appear to be poorly maintained, inner city properties which are rented out entirely to multiple groups of tourists.
Massive growth in holiday rentals
Airbnb, which started out in the Netherlands on a small scale in 2012, has now grown to more than 7.000 listings in Amsterdam and around 14.000 in the whole country, more than double the amount of listings from a year earlier.
Amsterdam's short-stay landlords earn an average of 3.800 euros per year, although some property operators are reported as earning as much as 14.000 euros a week for entire multi-apartment canal belt properties.
Mortgage and insurance
Reinout van der Heijden, editor of de Geldgids, outlines below some important factors that homeowners need to take into consideration when operating short-stay rentals.
Parties such as the bank or mortgage lender, and the insurer, may disagree and interfere with short term rental as it can cause the house to go down in value, and longer-term tenants may take advantage of rent control (huurbescherming) to gain permanent or cheaper rent.
Insurance companies can also refuse to cover any damage caused by, or during, a short-term tenancy, especially if they were not previously informed of lease arrangements.
Some insurers do not cover properties with short-term rentals and others may increase the monthly premium to cover the higher risk.
Declaring income from Airbnb
In principle you must pay income tax for the rent you receive. You do this by declaring the amount you earn as "income from temporary rental" in your annual tax declaration’s Box 1 (income from work and residence).
From this income you may deduct expenses such as gas and electricity usage and cleaning and laundry. For this reason van der Heijden recommends renting your property with fresh sheets, cleaning and breakfast included, to reduce the amount you need to declare.
Maintenance, depreciation or insurance costs cannot be deducted from your rental income.
Income from longer rentals
If you rent out your entire property, and no longer live there, then your declared income will be placed in Box 3 (income from investments).
The Dutch tax office will then consider your house as an investment property rather than your place of residence, which means that you must pay capital gains tax (on property value minus your mortgage value) and you will lose eligibility for mortgage tax relief (hypotheekrenteaftrek).
If you permanently rent out part of your apartment, such as a spare bedroom, then the tax department will consider that part of your house as an investment, and a corresponding percentage of your property value will be taxed under Box 3. This will also affect your mortgage tax relief.
For all of the above situations it is wise to seek advice from an accountant or tax advisor.