Running an Airbnb or short-term rental property in New Zealand comes with a range of operating costs. The good news is that many expenses connected with earning rental income may be deductible for income tax purposes.

Inland Revenue generally allows property owners to deduct allowable rental expenses from gross rental income when calculating taxable rental income. However, what you can claim depends on how the property is used, whether there is any private use, and the nature of the expense.

So, what expenses can Airbnb hosts potentially claim in New Zealand?

Here are some of the most common categories.

1. Cleaning Costs

Cleaning is one of the biggest ongoing expenses for most short-term rental properties.

Costs associated with preparing and maintaining a property for paying guests may generally be deductible where they relate directly to earning rental income. This can include professional cleaning services and other genuine operating expenses associated with the rental activity.

For Airbnb hosts, this may include costs such as:

• Professional turnover cleaning
• Deep cleaning
• Linen-related services
• Guest-ready preparation
• Cleaning products used for the rental

It is important to keep invoices and records showing that these expenses relate to the short-term rental.

2. Property Management Fees

If you use a professional Airbnb or short-term rental management company, management fees are generally one of the clearest operating expenses associated with earning rental income.

Inland Revenue specifically recognises payments to agents who manage rental properties, as well as fees paid to companies involved in managing short-stay accommodation, as potentially deductible rental expenses.

These fees may cover services such as:

• Guest communication
• Dynamic pricing
• Booking management
• Property inspections
• Cleaning coordination
• Listing optimisation
• Maintenance coordination
• Revenue management

For owners who prefer a hands-off investment, professional management can therefore be both an operating cost and part of the overall strategy used to improve property performance.

3. Professional Photography and Listing Costs

High-quality photography is one of the most important parts of a successful Airbnb listing.

Where photography, advertising or listing-related expenditure is incurred specifically to generate rental income, it may generally be treated as an income-earning expense. Inland Revenue notes that expenses incurred solely to earn rental income, such as advertising, may be fully deductible under the applicable rules.

Potential expenses may include:

• Professional property photography
• Listing creation
• Advertising
• Promotional material
• Online marketing associated with the rental

For short-term rentals, good presentation can also affect click-through rates, nightly pricing and booking conversion.

4. Repairs and Maintenance

Normal repairs and maintenance are another common area where Airbnb owners may be able to claim deductions.

Inland Revenue distinguishes between repairs and maintenance and capital improvements.

Repairs that restore the property to its previous condition are generally deductible. Examples given by Inland Revenue include repairing damage, replacing a broken window or repainting a property.

Examples for an Airbnb property might include:

• Fixing a damaged door
• Repairing plumbing
• Repainting worn walls
• Repairing appliances
• Replacing damaged fittings
• General wear-and-tear maintenance

However, major improvements that increase or substantially upgrade the property may be treated as capital expenditure rather than an immediate expense.

For example, adding an extra room or significantly upgrading the property would generally be treated differently from simply repairing something that has broken.

This distinction can sometimes be complicated, so larger renovation expenses should be checked with an accountant.

5. Furniture, Appliances and Household Items

Furniture is especially important for Airbnb because short-term rentals are normally fully furnished.

But purchasing furniture does not necessarily mean the entire purchase price can always be claimed immediately.

Items such as loose furniture, bedding, appliances, crockery and other rental-property chattels may be treated as depreciable assets. Inland Revenue has specific depreciation categories for many common rental-property items.

Examples can include:

• Beds and mattresses
• Sofas
• Dining furniture
• TVs
• Washing machines and dryers
• Dishwashers
• Small appliances
• Curtains and blinds
• Bedding
• Crockery and cutlery

Some qualifying low-value assets may be eligible for an immediate deduction rather than being depreciated over several years. Inland Revenue currently states that, from 17 March 2021 onward, the low-value asset threshold is $1,000, subject to the relevant tax rules.

Because furniture packages can involve many different assets, it is worth having your accountant correctly classify the purchases.

6. Insurance

Insurance associated with a rental property may also be deductible where it relates to the income-producing activity.

Inland Revenue includes the cost of insuring a rental property among expenses that may be deducted from rental income.

For short-term rental owners, this could potentially include relevant:

• Property insurance
• Landlord-related insurance
• Short-term accommodation insurance

However, owners should make sure that their insurance policy actually allows short-term or visitor accommodation. A normal owner-occupied or long-term landlord policy may not necessarily provide the same cover.

Other Airbnb Expenses Owners Should Keep Records Of

There are several other costs that may also be relevant depending on the property and ownership structure.

These can include property rates, accounting fees, eligible mortgage interest, certain body corporate levies, rental-agent expenses and other costs incurred in earning rental income.

Airbnb and other booking-platform service fees may also form part of the calculation of rental income and allowable expenses. Inland Revenue’s short-stay guidance specifically refers to fees paid to platforms such as Airbnb and to property management companies.

The important principle is that an expense generally needs to have a genuine connection with earning rental income.

What If You Also Use the Property Personally?

This is where Airbnb tax becomes more complicated.

If a property is used exclusively for generating rental income, the treatment may be relatively straightforward.

However, if you also stay in the property yourself, let family members use it, or use it as a holiday home, you may need to apportion expenses between rental use and private use.

That means you may not be able to claim 100% of expenses such as:

• Insurance
• Rates
• Electricity
• Internet
• Repairs affecting the whole property

The exact calculation depends on how the property is used and which tax rules apply.

This is particularly important for holiday homes that are sometimes listed on Airbnb and sometimes used by the owner.

What About GST on Airbnb in New Zealand?

Short-term accommodation is treated differently from ordinary long-term residential rent for GST purposes.

Inland Revenue states that providing short-stay accommodation is a taxable activity for GST. If your total turnover from short-stay accommodation and any other taxable activities exceeds NZD $60,000 in a 12-month period, GST registration may be required.

If you are GST-registered, GST treatment can also affect how certain rental expenses are claimed.

Because GST treatment can depend on your individual ownership structure and other business activities, this is an area where professional tax advice is especially important.

Keep Good Records

One of the easiest ways to make tax time simpler is to keep proper records throughout the year.

Inland Revenue requires rental-property owners to keep records of income and expenses for seven years.

Airbnb hosts should ideally retain:

• Management statements
• Cleaning invoices
• Maintenance invoices
• Furniture receipts
• Photography invoices
• Insurance records
• Platform statements
• Rates and body corporate records
• Accounting records

Good record keeping makes it much easier for your accountant to determine what can legitimately be claimed.

Final Thoughts

Owning an Airbnb in New Zealand involves more expenses than simply paying the mortgage, but many legitimate costs associated with generating short-term rental income may potentially be deductible.

Common expenses can include cleaning, property management fees, professional photography, repairs and maintenance, insurance and eligible furniture or equipment costs.

The key is understanding whether an expense relates to earning rental income, whether it is partly private, and whether it should be claimed immediately or treated as a capital or depreciable asset.

At Kiwi Nest Property Management, we help property owners manage the operational side of short-term rentals, from property setup and professional photography to pricing, guest management, cleaning and ongoing property care.

Want to understand the earning potential of your property?

Contact Kiwi Nest for a free short-term rental appraisal.