Running a vacation rental property presents lots of challenges – not the least handling VAT on short-term rentals.
When it comes to the details of the finances and VAT requirements of your Bahamas vacation rental home, it can be difficult to know where to start if you are not an expert.
The rental of a commercial rental establishment in The Bahamas for a stay of less than 45-days is subject to VAT at the standard rate of 12%.
In the most recent Budget, it was announced that temporary accommodation platforms are now required to charge VAT on rentals and commissions. To iron out confusion, the law is being amended to clarify that VAT will be due not only on commissions but on the full value of the rental.
In addition, property owners are now obliged to inform the tax agency when changing usage to a residential or commercial rental property.
Online Travel Agents or OTAs such as Airbnb allow you to collect VAT as part of the fee your guest will pay. You will see the VAT in the breakdown of your payout.
If you handle direct bookings yourself, you must keep a record of the taxes collected and send revenue to the tax authority. However, it is possible to claim some money back from Inland Revenue through your expenses, which can be very interesting financially, allowing you to save VAT on any expense related to your short-term rental property.
If all this sounds confusing or is a lot of information to take in, you are not alone. Thankfully, Shore Concierge can take care of all this for you. We offer a complete suite of vacation rental management services covering all owners' needs, including finance and VAT. This includes having an accountant take care of the finances for your home, making sure the forms sent to Inland Revenue are filled out correctly and on time to maximize your revenue, and promptly receive VAT back through your expenses. If you prefer to look after tax issues yourself, here are four simple steps to take to handle VAT on short-term rentals:
1. Register with Inland Revenue. If you have already done this, you can log in to your account online- https://inlandrevenue.finance.gov.bs/
2. When completing your quarterly tax returns, add VAT under OTAs in the tax section on your form.
3. Pay your collected VAT quarterly to the Inland Revenue.
4. Claim back VAT on any expense that is related to your vacation rental on the same document sent quarterly. This includes the OTAs VAT on fees.
For more information on the all-inclusive vacation rental management services that Shore Concierge offers to owners, check out https://www.shore-concierge.com/ or contact us at contact@shore-concierge.com.