How do you deal with cleaning fees and taxes

[Joel396]

Hi All,

I have been an Airbnb Host since 2018 in Paris, France.

Here in France, we get taxed on our Gross Airbnb income. Airbnb actually does report our gross rental income to the Tax authorities.

It's perfectly normal to pay taxes. But my concern is that I'm giving 100% of the cleaning fees (50€) to the building manager, this lady take care of greeting the guests, and cleaning the apartment, doing laundry, etc upon their departure. 

The issue is that while I'm giving her 100% of the amount collected, the French Tax authority collects almost 40% in taxes.

Looking for advice/guidance on the best approach, considering 2 options:

1. Increasing the cleaning fees to 80€ so the net comes to 50€ (what I pay directly to the cleaning lady)
2. Setting the cleaning fees to 0€, and just ask the guest to pay the 50€ directly to the lady on the day of arrival.

The difference over the course of a year comes up to several thousand euros, so it does make a difference.

The ideal mechanism would in my mind for Airbnb to allow a co-host to enter their banking details, and to have the option to direct the cleaning fees collected by the Airbnb platform to the co-host and let the primary host just keep the actual rent.

Is anyone else dealing with a similar situation? Very interested in advice/guidance/insights on how to best approach the issue.

Thanks in advance,

[Lorna170]

@Joel396   I am in the US, so my taxes and experience may not be the same as yours, but:

I charge a cleaning fee which is paid to my cleaner.  
when a guest books, Airbnb collects a tax on my rent and cleaning fee from the guest.  
the tax is not paid to me, but is included in my gross earnings.

when I file my state and federal taxes, I must report my gross earnings from my rental property.  Airbnb sends a form 1099 to the government which includes my bank deposits, the taxes collected from the guest, the Airbnb service fee paid by the guest and the service fee paid by me to Airbnb for processing fees.  The gross earnings are always in excess to what was paid into my bank account.  (Not too many hosts understand that.)
BUT … on the tax form (either schedule E or C) I also list my expenses, which includes the taxes paid by the guest, collected by AirBnB and disbursed by AirBnB to the state, county and local municipality.

likewise, you should show the expense of your cleaner, reducing your tax burden as she will also pay taxes on her earnings.

I think you may want to review your situation with an accountant.  You should not be paying taxes twice, nor should you be paying taxes on money that is for someone else who will pay the taxes a second time on their tax return.

[Mike-And-Jane0]

@Joel396 Unless France is different to any other country I have lived in you can surely offset costs against your revenues before you pay tax. Yes the gross revenue has to be declared but then you should pay tax only on gross revenue minus allowable costs. Now your cleaner will need to declare their income but that is not your problem.

[Joel396]

Didn't want to get technical, but the URSAFF component is a Flat 18% based on the Gross income, and no deductions can be claimed.

For the Income tax, we can either play the deduction game, and keep track, or opt for a 30% deduction, without having to keep track of anything. I always found it easier to for this more simple approach.