Introducing Airbnb Rooms: In Airbnb’s recently unveiled 2023 Summer Release, which includes an array of exciting platform features, a new category has emerged: Airbnb Rooms. This addition holds great potential for South Africans grappling with the rising cost of living, providing them with an excellent means of generating additional income.
Private rooms have already established themselves as Airbnb’s third most popular category, indicating that travelers are actively seeking ways to minimize accommodation expenses. Many individuals are more than willing to pay for a night or two, or even an extended stay, in a local resident’s spare room. According to Airbnb, the average rate for a room in South Africa is currently R675 per night.
This presents a promising opportunity for hosts, offering some relief from financial burdens. Moreover, leveraging a platform like Airbnb provides certain advantages, such as guest screening, guest ratings, and insurance coverage against potential damages or losses, as highlighted by Paul Stevens, CEO of Just Property. However, he cautions that there are risks associated with welcoming guests into one’s property.
Here are three important points for hosts to consider:
- Ensuring Departure: While many homeowners may focus on the benefits of Airbnb’s short-stay rental model, they often overlook the possibility of tenants overstaying their welcome or engaging in theft. Regrettably, such situations are not uncommon. Stevens emphasizes the importance of adequate insurance coverage and a clear understanding of the legal aspects associated with hosting guests.
- Tenant Vetting: It is crucial to conduct thorough tenant vetting, regardless of the short-term nature of the rental. Stevens dispels the assumption that credit ratings and payment history are irrelevant in short-stay rentals. On the contrary, in-depth tenant screening is just as important in this context as it is in any other form of rental agreement.
- Comprehensive Lease Agreements: Cilna Steyn of SSLR Inc. Attorneys, Notaries, and Conveyancers explains that while the Prevention of Illegal Evictions from and Unlawful Occupation of Land Act, 19 of 1998 (“PIE”) would not apply to short-term rentals, it is advisable to establish a detailed lease agreement to safeguard both parties involved. Such agreements can specifically exclude certain provisions of the Consumer Protection Act and the PIE. Investing in a comprehensive lease agreement promotes a successful and stress-free transaction.
Stevens advises hosts to seek professional legal advice, consult with experienced letting agents for tenant vetting, and have their lease agreements reviewed by experts. Alternatively, appointing a capable agent to manage short-term rentals can also alleviate potential concerns.
Tax Considerations: The South African Revenue Service (SARS) has previously cautioned hosts that they must declare rental income in their tax returns. Airbnb mandates tax-related declarations before making payments to hosts, and attempts to circumvent the system will not go unnoticed.
SARS can request limited transaction data from Airbnb to ensure compliance. Sohail Govender, Finance Director of Just Property, advises hosts who have not been declaring their Airbnb income to rectify their tax obligations promptly.
Furthermore, Govender raises concerns about homeowners in the informal sector who may be unaware of income tax requirements and the potential implications of capital gains tax when renting out parts of their property. Govender explains that selling a primary residence typically allows for a capital gains tax exemption on the first R2 million of profit. However, if any portion of the property has been rented out, this exemption is forfeited, and capital gains tax becomes applicable to the entire profit.
On a positive note, Govender highlights various deductible expenses that hosts can claim, such as rates and taxes, bond interest, advertisements, estate agent fees, homeowner’s insurance, garden services, repairs related to the rented area, security and property levies, cleaning costs, Airbnb fees, and other relevant services. Seeking guidance from a reputable rental agency can help hosts navigate these financial considerations effectively.
In conclusion, those considering renting out a room or their entire home to supplement their income should fully comprehend the implications involved. Engaging in open discussions with professional property practitioners or reputable rental agencies will provide invaluable guidance and support in maximizing the benefits of short-stay rentals.
Provided by Just Property, revised by ShowMe Online Media
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