I run a Motel/Boarding House – what can I claim?
Inland Revenue have released an exposure draft on the deductibility of expenses incurred by hotels, motels and boarding houses. The release focuses on these businesses where the proprietor lives on-site. In short, the release clarifies how to account for private quarters and the cost of living when the proprietor and their family live on-site.
The release provides guidance on the deductibility of expenses when the cost has both a private and business portion. The deductibility of expenses can usually be determined by applying a common-sense approach to the situation.
Mixed expenses with partial deductibility may include power, telephone and internet, mortgage interest, rates and repairs and maintenance. The deductibility of mixed costs can be worked out by calculating the area of the motel or boarding house which is used privately. By calculating the privately used area you can calculate a ratio to apply to the mixed expenses. Another method is to apportion the expense in question. For example, telephone and internet expenses can be apportioned.
This release does not apply to short-term accommodation through your own home or other private dwelling, including Airbnb or Bookabach. Bed and breakfast arrangements have specific rules which are not covered under this release.