Airbnb Manager - I manage properties for owners

Tax planning 231 views 3 replies

Ria

Student

70 Points Joined January 2023

Hello, I have recently started managing Airbnb properties. To clarify - I don't own the properties, but I lease it from owners, and with their permission and a written lease agreement, I run short-term rental on it. I pay my owners monthly lease - for my business, I manage all expenses and after all that, the net amount from the revenue left is my profit.

Now I want to understand how to do tax planning for it. My CA tells me I can claim GST, but I haven't reached that income level yet. What other options do I have? Is there any depreciation for running this business I can claim? Or any other business claims?

Replies (3)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9014 Points Joined December 2011

Congratulations on your new venture! Tax planning for your Airbnb business can be complex, but I'll provide

1. Business Structure: You're operating as a lessee (tenant) with a written lease agreement. This implies you're running a rental business, and your income is subject to taxation.

2. Income Tax: - Your profit (net amount after expenses) is taxable as business income. -

You'll need to maintain accurate accounting records, including expenses, revenues, and lease payments. -

You may need to pay advance tax instalments (provisional tax) on your estimated profits.

3. GST (Goods and Services Tax): - Currently, you're not liable for GST since you haven't reached the threshold limit (₹40 lakhs in most states). -

Once you cross the threshold, you'll need to register for GST and charge it on your rentals. -

You can claim input credits for GST paid on expenses like maintenance, utilities, etc.

4. Expenses and Deductions: - Claim deductions for business expenses, such as: - Lease payments to property owners - Maintenance and repair costs - Utilities (electricity, water, etc.) - Marketing and advertising expenses - Insurance premiums - Keep records of all expenses, as these will be essential for tax filing and potential audits.

5. Tax Compliance: -

File your income tax return (ITR) annually, reporting your business income and expenses. -

Pay advance tax instalments (if applicable) to avoid interest and penalties.

Ria

Student

70 Points Joined January 2023

Thanks a lot sir! This will help me. I want to do the most efficient tax planning otherwise a lot of my profit will go into taxes only

CA Puja Sharma

Chartered Accountant

5010 Points Joined March 2020

You can claim the expenses that you incur for maintaining the property as your expenses for your business.

If your income is below the GST threshold limit then do not take voluntary GST registration. Voluntary registration will increase your burden to manage the business while making GST compliances.