HOW MUCH TAX MUST I PAY ON AIRBNB EARNINGS?

QI earn extra cash by renting out rooms in my home through Airbnb. I earn around €36k at work and my Airbnb income is €4,000 on top of that. How much tax would I have to pay – if any?

AAirbnb is a really handy and lucrative source of income for Irish homeowners. But you will have to pay tax. Airbnb is considered the same as a B&B. It doesn’t qualify for the rent-aroom scheme as it’s not a long-term letting.

You must declare this income to revenue every year by completing a tax return. Those with non-PAYE income over €5,000 a year must fill out a Form 11.

Below that and it’s a Form 12 you’ll need to submit.

What you can write off against tax depends on whether you’re classed as a trader or not by revenue.

According to its guidelines, a trader rents out a room more than six times a year or for more than 30 nights over 12 months.

Non-traders can write off expenses only directly incurred in the letting, such as heat, light and laundry costs.

Traders can write off capital expenses such as mortgage interest, capital investment and ‘wear and tear’ on fixtures and fittings.

Based on your figures, you appear to be a trader and would have a fair few expenses to write off.

After you deduct these, you would pay 40% income tax plus 4% PRSI and 5% USC. A full guide to Airbnb taxation can be found on revenue.ie and taxback.com

QI’m sick of getting so little for my savings on deposit. I’d like to buy into property but I don’t have the money or time to be a landlord. What property shares are invested in Irish property and might be worth a look? I want to draw down a regular income from my investment.

AThere are three main property vehicles listed on the Irish market. Green and Hibernia are mainly involved in commercial property, with Irish Residential Properties REIT (real estate investment trust) specialising in apartments. Also worth a look is Kennedy Wilson, a property company with a lot of investments in Ireland, which is quoted on the London stock market.

You’re interested in an income, so you must look at the dividend yield. This is the amount of annual dividends you earn on a share relative to its price – it’s the equivalent of the interest rate on a deposit account. Irish Residential Properties REIT is the best of the Irish REITs from a dividend yield point of view – but even better is London-quoted Kennedy Wilson, which has a strong Dublin portfolio and was tipped as a ‘buy’ recently by investment firm GillenMarkets.

In a recent bulletin it explained why: ‘Property stocks with exposure to Dublin and/or London have suffered in the past nine months following Brexit and then Trump’s election, as investors fret over the impact on property values in these two cities.

‘We don’t know the knock-on effects but we do know what’s priced into Kennedy Wilson plc at this stage. Its shares trade at a 21% discount to balance-sheet value (or net asset value) so that a circa 15% decline in property prices has already been priced in. In addition, the company offers an initial dividend yield of near 5%. Given that its debt is mostly fixed at 3% and none is repayable before 2022, we think financial risks are low.’

Another factor to consider is the priceearnings ratio, which shows the share price relative to the profits it makes. As you can see in our table, Green and Hibernia REITs have much lower p/e ratios and are therefore better value on that score if not for dividend yields.