Airbnb Rules in New Zealand | Airbnb Laws, Taxes, and Regulations

New Zealand, celebrated for its breathtaking beauty and rich history, has become a top destination for travelers from around the globe. From Auckland to Queenstown, tourists flock to experience the country’s stunning landscapes, vibrant culture, and world-class attractions. This popularity has fueled the growth of vacation rentals, with platforms like Airbnb providing guests with unique accommodation options that often feel more personal than traditional hotels.

For Airbnb hosts, New Zealand’s thriving tourism industry presents an excellent opportunity to earn income. However, hosting on Airbnb comes with responsibilities—understanding laws, taxes, and regulations is essential for compliance and long-term success. This article explores the key rules and requirements for Airbnb hosts in New Zealand, offering clarity on what you need to know before listing your property.

Tourism and Vacation Rentals in New Zealand

Airbnb continues to grow rapidly, significantly contributing to New Zealand's tourism industry. Renowned for their friendliness, Kiwis offer welcoming stays that attract numerous travelers. According to the United Nations 2020 World Happiness Report, New Zealand is the 9th happiest country, enhancing its appeal to visitors.

In New Zealand, 25% of Airbnb bookings are in Auckland, with Queenstown, Christchurch, and Wellington also being top destinations. Stats NZ's 2019 report on the accommodation and sharing economy revealed that home sharing accounted for 18.3% of guest nights in 2018, up from 8.3% in 2013, contributing over NZ$300 million to the economy.

Legality of Airbnbs in New Zealand

Are Airbnbs legal in New Zealand?

Yes, operating an Airbnb in New Zealand is completely legal and a great way to generate extra income. However, it’s not as simple as listing your property online. Hosts must adhere to various local, council-specific regulations, tax obligations, and safety standards. Familiarizing yourself with these rules is crucial to avoid fines or legal issues.

Local council regulations

In New Zealand, Airbnb regulations vary by region, as local councils have the authority to implement their own rules. Here’s an overview of key regulations in popular areas:

• Auckland: If you rent your property for more than 28 days per year, you may need to obtain resource consent depending on the type and location of the property. This consent ensures your property meets zoning and local planning regulations.

• Queenstown Lakes District: This council has stricter rules. If you plan to rent out your property for more than 90 days annually, you’ll need resource consent. Additionally, there are registration requirements and rate adjustments to account for commercial use.

• Other Regions: Councils like Wellington and Christchurch have fewer restrictions but may still require hosts to register or meet specific bylaws. For example, some councils regulate the maximum number of guests allowed, enforce noise restrictions, or require properties to meet certain parking or accessibility standards.

If you’re unsure about your local council’s specific requirements, it’s a good idea to contact them directly or consult a professional to avoid missteps.

Licensing and subleasing considerations

If you don’t own the property outright, licensing and subleasing agreements may affect your ability to host on Airbnb.

Licensing: 

A property license gives someone permission to use a property for a particular purpose. However, not all license agreements automatically allow short-term rentals like Airbnb. If you’re operating under a licensing contract, review it carefully to confirm that hosting is permitted. If the terms are unclear, consult a lawyer to ensure compliance.

Subleasing: 

Subleasing occurs when a tenant rents out a property (or part of it) to another person. Subleasing for Airbnb purposes requires explicit permission from the landlord. If you are a tenant considering hosting, check your lease agreement and have a written agreement with the landlord that specifies the terms and conditions of your Airbnb activity.

Health and safety compliance

New Zealand law requires Airbnb hosts to provide safe and hazard-free accommodations for their guests. This means that both the physical environment and any amenities offered must meet basic safety standards. Here are the key areas to focus on:

Smoke alarms:

• It is legally required to have working smoke alarms installed in every property.

• Test smoke alarms every three months to ensure they are operational, and replace batteries as needed.

• Consider installing long-life battery models to minimize maintenance.

Fire safety:

• Provide a fire extinguisher in an accessible location, and include clear instructions on its use.

• Include an evacuation plan in your welcome guide, detailing how guests can safely exit the property in case of an emergency.

Hazard prevention:

• Regularly inspect your property for potential hazards such as loose floorboards, faulty appliances, exposed wires, or broken furniture.

• Secure hazardous items such as cleaning supplies, sharp tools, or flammable materials in locked cabinets or out of reach.

• If you provide amenities like kayaks, bikes, or boats, ensure they are in good working condition and supply safety equipment such as helmets or life jackets.

Pools and decks:

• Any pool deeper than 400mm must be fenced in compliance with New Zealand’s pool safety regulations.

• Decks higher than 1 meter must have railings at least 1 meter tall to prevent falls.

Clear instructions for amenities:

If your property features popular amenities like a hot tub, barbecue, or high-tech appliances, provide clear instructions for safe use. Misuse of these items can lead to accidents or damage.

Proactive safety measures

While meeting legal requirements is essential, going the extra mile for guest safety can elevate your reputation as a host.

• First aid kit: Equip your property with a well-stocked first aid kit and inform guests of its location.

• Emergency contact numbers: Provide a list of local emergency contacts, including police, fire services, medical facilities, and your own contact information.

• Non-slip surfaces: Add non-slip mats in bathrooms and near pools or decks to prevent falls.

• Regular maintenance checks: Schedule regular property maintenance to address wear and tear before it becomes a safety concern.

Short-term rental agreements

Airbnbs fall under the category of short-term rentals, which are not governed by New Zealand’s Residential Tenancies Act. This means standard rental agreements don’t apply, and hosts are encouraged to create a custom Short-Term rental agreement. Key terms to include in this agreement are:

• Payment terms (e.g., deposits, refunds).

• Guest limits and occupancy rules.

• Smoking and pet policies (e.g., pet-friendly properties).

• Liability disclaimers for accidents or damage.

Some hosting platforms, like Airbnb, may offer basic agreement templates, but it’s wise to review and customize these to suit your property and hosting goals.

Taxation for Airbnb Hosts in New Zealand

If you’re an Airbnb host in New Zealand, understanding your tax obligations is crucial. While hosting can be a lucrative venture, failing to comply with New Zealand’s tax laws can lead to penalties and unnecessary complications. In this section, we’ll cover key aspects of income tax, the Goods and Services Tax (GST), and how you can make the most of allowable deductions to reduce your taxable income.

Income tax obligations

The income you earn from renting out your property on Airbnb is considered taxable under New Zealand law. This applies whether you host short-term stays in your primary home, a secondary property, or even a single room. You’ll need to declare this income on your Individual Tax Return (IR3), which is typically due by July 7 each year.

Here are the key points to keep in mind:

• Declare all income: Regardless of whether hosting is a one-off occurrence or a consistent source of income, it must be declared. The Inland Revenue Department (IRD) actively monitors income generated through platforms like Airbnb.

• Rental types: If you host guests for stays shorter than four consecutive weeks (classified as short-term accommodation), different tax rules may apply compared to long-term rentals.

• Keep records: Detailed records of your rental income and expenses are essential. Not only do they make filing your return easier, but they also serve as proof in case of an audit.

The Goods and Service Tax

One of the biggest changes to tax laws impacting Airbnb hosts is the introduction of new Goods and Services Tax (GST) rules. Whether or not you are GST-registered, these changes will affect how GST is handled on your Airbnb earnings.

What’s changed?

• Before April 2024, hosts earning less than $60,000 annually were exempt from GST. However, under the new legislation, platforms like Airbnb must now collect and remit 15% GST on all short-term accommodation services provided through their platform.

• Airbnb collects the GST from guests at the time of booking, so the platform, not the host, is responsible for remitting GST to the IRD.

How this affects hosts:

• Non-GST-registered hosts: Airbnb will withhold 15% GST on bookings and remit it directly to the IRD. However, Airbnb will credit you 8.5% of the base price (excluding fees and taxes) as a flat-rate reimbursement. For example, if your nightly rate is $200, Airbnb collects $30 GST from the guest but pays you $217 ($200 + $17 flat-rate credit).

• GST-registered hosts: For hosts already registered for GST, income from Airbnb bookings is now treated as zero-rated, meaning you don’t pay GST on the revenue Airbnb collects. However, you can still claim GST on related expenses, such as cleaning and advertising.

Note: If you are not GST-registered, you don’t need to worry about paying GST directly. However, you’ll notice a slight reduction in your payout due to the 6.5% GST retained by Airbnb.

Do you need to register for GST?

You are required to register for GST if your total annual income from all taxable activities (including Airbnb hosting) exceeds the $60,000 threshold. If your Airbnb income is below this threshold, you don’t need to register, but you may still choose to voluntarily register for GST if you think it’s beneficial.

Pros of GST registration:

• You can claim GST on hosting expenses, such as maintenance, utilities, and professional fees.

• You’ll have more control over how GST is calculated and reported.

Cons of GST registration:

• Increased administrative burden, as you’ll need to file regular GST returns.

• Potential GST liabilities if you sell the property, as GST may apply to the sale price.

If you’re unsure about registering for GST, it’s a good idea to consult an accountant or tax specialist.

Claiming expenses

One advantage of Airbnb hosting is the ability to claim expenses related to your rental activities, reducing your taxable income. However, deductions are only available for expenses directly associated with hosting.

What expenses can you claim?

What about mixed-use properties?

If you live in the property or use it for personal purposes, you can only claim expenses for the portion of time it was rented out. For example, if you rent out your holiday home 120 days a year, you can claim 33% of its annual expenses (120 days of 365 days).

This ebook will help you understand how taxes work for mixed use properties.

The Bright-line Rule

The Bright-line Rule applies if you sell a residential property within a certain timeframe and make a profit. While this rule primarily impacts property investors, Airbnb hosts should also be aware of it.

• For properties purchased after March 29, 2018, profits are taxable if the property is sold within 10 years.

• From July 1, 2024, this timeframe reduced to 2 years, making it easier to sell short-term rental properties without incurring taxes on capital gains.

It’s important to note that the Bright-line Rule only applies to properties not considered your primary residence.

Avoiding penalties

Failing to comply with New Zealand’s tax regulations can result in serious consequences for Airbnb hosts, including fines and interest charges. The Inland Revenue Department (IRD) closely monitors income generated through platforms like Airbnb, making it crucial for hosts to ensure all earnings are declared and taxes are paid on time. If you neglect to report your income, file late, or fail to register for GST when required, you could face penalties that negatively impact your financial situation.

The IRD may impose interest charges on unpaid taxes, which accumulate daily until the outstanding amount is settled. Additionally, fines may be levied for filing late tax returns or failing to register for GST once your income exceeds the $60,000 threshold. These penalties can quickly add up, putting a significant dent in your profits.

To avoid these issues, it’s important to adopt proactive measures to stay compliant. Start by filing your tax return on time — for most individuals, the annual tax return is due by July 7. Maintaining detailed and accurate records of your Airbnb income, expenses, and GST (if applicable) is equally important. This includes keeping invoices, receipts, and documentation of bookings to substantiate your income and deductions in the event of an audit.

Pro tips for managing Airbnb taxes

1. Use accounting software: Tools like Quickbooks can help track income and expenses.

2. Plan for GST withholding: If you’re not GST-registered, account for the 6.5% GST Airbnb withholds when setting your nightly rates.

3. Budget for taxes: Set aside a portion of your income for tax purposes to avoid unexpected bills.

Hosting Responsibly in New Zealand

Airbnb hosting in New Zealand is a rewarding way to share the country’s stunning landscapes and culture, but success requires understanding key rules and responsibilities. From local council regulations and short-term rental agreements to taxes, insurance, and safety standards, compliance is crucial. Staying informed about changes like GST updates and prioritizing guest safety ensures a smooth hosting experience. Whether you’re offering a cozy cottage or a modern apartment, managing your Airbnb responsibly enhances your reputation and contributes to New Zealand’s vibrant tourism industry. With diligence and preparation, you can create memorable stays for guests while achieving long-term hosting success.