New fee structure

[Mary7255]

Hi! I am hearing that all hosts will

be moved to the same fee structure as the hosts using PMS systems by December.   Is that true 

[Lonna13]

Hi, Mary! According to this article, yes. 

https://www.airbnb.com/help/article/1857

[Joan2709]

@Mary7255 @Lonna13 

Actually, if you are currently on the split fee structure and NOT connected to a PMS, it doesn't appear that will change on December 1st.

Lots of confusion on this though:

Airbnb Service Fees

https://www.airbnb.com/help/article/1857

[Lonna13]

Customer service just confirmed that my listings (not managed by a PMS) and all others will transition to single fee on December 1st. I will be checking back in with them periodically to make sure they're sending out clear messaging to all hosts about this.

[Joelle43]

Hello @Lonna13 @Mary7255 

From personal experience and from years on the community center, I would be careful about accepting what you have been told by a customer service rep.

Help please 🙏@Quincy @Bhumika @Emilie - could we have an official statement please on whether ALL hosts will be going over to the single fee of 15.5% as of December 1st - there is SOOOO much controversy over this change and with two different interpretations of the wordage used. 🤯

Oddly enough, last night I received a booking for Dec 1st and the booking reservation shows the split fee commission so if I really am going to be charged 15.5% I would dearly like to know to adjust my pricing accordingly ASAP for any future bookings!

Many thanks for any feedback on this burning issue🔥

[Elaine701]

@Joelle43 

It's simpler than it seems; You raise your prices by 15.5%.

To prospective guests, this will be exactly the same price it was previously.

The only difference is that you aren't charged 3% commission anymore.

Yes you're being charged 15.5% commission, but you've raised your price to fully cover that. You are now comparatively paying 0%. And the guest doesn't see any difference. Same price they would have paid otherwise. 

Yes, apparently the UK and some US states have some strange tax rules that will have some negative impact on this for certain hosts. But most others will enjoy 2.5-3% more net income. 

[Joelle43]

Hello @Elaine701 

I understand what you're saying but I would just like some official reply as to whether the split fee will still be available to hosts who DO NOT use a PMS after December 1st or not.  @Lonna13 was told by CS that ALL hosts will transition from that date to the single fee but my understanding of the Airbnb link on the subject  is different.  

I don't want to be spreading the wrong information if my interpretation is incorrect.

I'm sure you've seen the posts and the varying views on this new Airbnb commission hike.   I believe that as of December 1st that the split fee will still be an option but when you read the amount of differing views here and on the internet, I think it's important that someone in the know arbitrates!

Well just like @Helen3 explained in a previous post, here in France most hosts are taxed on the gross income depending on their set-up so if ALL hosts are going to be switched to the single fee of  15.5% commission, it is not going to be painless and will have a direct impact on these hosts as they will reach the taxable threshold quicker and will also mean that they will no longer be able to do a simplified accounting but will have to have a certified accountant to do their end of year business report💶

[Elaine701]

@Joelle43 

France too? 

I just find it shocking that they could tax you on somebody else's income.

Not only commissions, but what about other operating costs? Cleaners? Insurance? Laundry? Electricity? Water? Maintenance?

These expenses are paid to others. They are other people's incomes, not yours. And they surely pay tax on it too. 

How about taxes? Do you pay tax on the taxes? If you're levied tax on the

gross income, part of that gross income is paid out in taxes - property tax, possibly tourist tax, etc... So yes, you're being taxed on taxes. 

Are you really sure? Have you asked your accountant? Something seems off about this. 

[Joan2709]

@Joelle43 

I agree...don't rely on frontline CS for information; especially for any new change to policy. They frequently are wrong.

I'm thinking that Canada has a GST threshold for reporting and I think other countries as well. Not sure if their structure is Gross Earnings or not? 

@Lonna13 

[Shelley159]

Yes @Joan2709 I agree the confusion is probably due to the threshold issue. 

For example, for VAT (and in your example, GST), the gross income is considered when determining whether a business is large enough to have to register for VAT. 

This doesn't, however, affect income tax - income tax is calculated on the taxable profit after deductions. The commission charged by Airbnb shouldn't affect a host's income tax.

[Joan2709]

@Shelley159 

Ahhh...but it does. We don't deal with VAT in the U.S. -  but income tax applies. For states like Washington, you have to pay a Business & Occupation Tax based on Gross Income. Granted, the percentage is not much, but is a factor. Can't speak about other states. Of course, you can deduct expenses for running the business at the federal level, but that is for the accountants to figure out. 😊

[Shelley159]

@Joan2709it's a separate tax though, not income tax. But yes, hosts who calculate by how much to raise their rate to compensate for a higher Airbnb fee, will have to keep applicable regional taxes on gross income in mind. And (where applicable) keep an eye on whether it causes you to go over a tax threshold (e.g. VAT).

Some worry that there's a change coming that will have a major financial impact on individual hosts. That's why I just think it's good to keep in mind:

1) For income tax, an Airbnb business will report a higher gross income, but also have a higher deduction for the service fee.

2) Where VAT applies, individual hosts with few properties will often not be near the threshold where they need to start paying VAT.

3) The service fee increase is only from 15% to 15.5% for hosts on the single fee plan.

4) Those using split fees are unaffected.

[Shelley159]

For point (4) above, I should probably add "until December" ...

[Joelle43]

Hello @Shelley159 

So you think that we are ALL transitioning to single fee as of December 1st even those hosts not using a PMS?  I believe that split fee hosts not using a PMS are not affected by the commission increase of 15.5% in December.  Oh boy!

I have a confirmed reservation starting December 1st and it is still showing the split fee option.  

[Shelley159]

Arggh @Joelle43 yes I made that common mistake that @Joan2709 has already pointed out above.

About the December booking, the booking start date will not be the issue anyway (as it's already been booked) . It's about from what date the service fee increases.