Every Airbnb Host's Tax Guide

Airbnb, HomeAway, VRBO and More

Every Airbnb Host's Tax Guide

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Every Airbnb Host's Tax Guide

New Title

, 2nd Edition

The complete tax guide for Airbnb and other short-term rental hosts

This book focuses on the unique tax issues arising from renting residential or vacation property through online rental platforms like Airbnb, FlipKey, TripAdvisor, Craigslist, and VRBO. Every short-term rental host needs to understand these tax rules to ensure they take all the deductions to which they are entitled, pay no more tax than is legally required, and stay out of trouble with the IRS. This book provides all of this information in a practical, easy-to-understand way.

See below for a full product description.

Product Details

As a short-term rental host, you’re entitled to many valuable deductions and other tax benefits. This book—the first of its kind—shows you how to make the most out of your hosting business without risking problems with the IRS.

Learn everything you need to know about taxes, including:

  • what deductions you should be taking
  • how to report your short-term rental income
  • how to deduct losses, and
  • vacation home and tax-free rental rules.

The book covers the new tax law, including the new 20% pass-through deduction. Whether you rent your property through Airbnb, FlipKey, HomeAway, TripAdvisor, Craigslist, or VRBO, you want to make sure you understand these tax rules.

This new editoin is completely updated to cover the new Tax Custs and Jobs Act.

"In Nolo you can trust." - New York Times

ISBN
9781413325515
Number of Pages
208

About the Author

Table of Contents

1. Introduction: Who This Book Is For

2. How Short-Term Rental Hosts Are Taxed

  • Income Taxes
  • Social Security and Medicare Taxes
  • Net Investment Income Tax
  • Local and State Occupancy Taxes

3. Tax-Free Short-Term Rentals

  • Short-Term Rentals That Qualify for Tax-Free Treatment
  • Effect of Qualifying for Tax-Free Treatment

4. Deducting Your Expenses: The Basics

  • What You Can Deduct
  • How Your Tax Status Affects Your Deductions
  • Deductions for Multiple Owners

5. Operating Expenses

  • What Are Operating Expenses?
  • Direct Expenses Deductible in Full
  • Operating Expenses That Must Be Allocated

6. Repairs

  • Repairs vs. Improvements
  • Deducting Repairs for Short-Term Room Rentals
  • Three Safe Harbors
  • Repair Versus Improvement: Analysis Under the Regulations
  • How to Deduct Repairs and Maintenance
  • When Guests Pay for Repairs
  • Properly Document Repairs

7. Deducting Long-Term Assets

  • Depreciating Property Used in Your Rental Activity
  • How to Depreciate Real Property
  • Personal Property

8. The Pass-Through Tax Deduction

  • Your Rental Activity Must Be a Business
  • Your Rental Activity Must Be a Pass-Through Business
  • You Must Have Qualified Business Income
  • You Must Have Taxable Income
  • Calculating Your Pass-Through Deduction
  • Taking the Pass-Through Deduction
  • Strategies to Maximize the Pass-Through Deduction

9. Prorating Your Deductions

  • Direct Expenses Are Fully Deductible
  • Expenses That Must Be Prorated
  • Calculating Personal and Rental Days

10. Reporting Rental Income on Your Tax Return

  • Most Hosts Use Schedule E to Report Rental Income
  • Schedule E Line-by-Line
  • Completing Schedule E When You Have a Rental Loss
  • Hosts Who Don't File Schedule E

11. Filing IRS Form 1099 Information Returns

  • When Someone Else Reports Your Rental Income to the IRS
  • Reporting Payments You Make to ICs and Other Workers
  • Back-Up Withholding for Independent Contractors

12. Deducting Losses for Short-Term Rentals

  • What Are Rental Losses?
  • Which Rental Loss Rules Apply
  • Vacation Home Rules
  • Hotel Business Rules
  • Regular Rental Activity Rules

13. Record Keeping

  • What Records Do You Need?
  • Trackiung Income and Expenses
  • Supporting Documents for Your Expenses
  • Property Usage Record

Index

Sample Chapter

Chapter 1
Introduction: Who This Book Is For

This book—the first of its kind—is a guide to the income tax issues faced by people who rent out all or part of their homes to short-term guests. We refer to such people as short-term rental hosts. The information here applies to rentals arranged through online rental platforms, such as Airbnb, HomeAway, VRBO, FlipKey, and others. It also applies to short-term rentals made through Craigslist,
or made offline through local advertising, word-of-mouth, or any
other means.

This book provides the tax knowledge rental hosts need whether they rent out all or part of their main home, vacation home, or any other property they own or rent, like a cottage or separate unit attached to their home. The tax rules for short-term rental hosts are different from those that apply to traditional landlords. If you’re a traditional landlord who rents property full time to long-term tenants (or if a short-term guest ends up being a long-term tenant), refer to Every Landlord’s Tax Deduction Guide, by Stephen Fishman (Nolo), for in-depth guidance on all the tax issues you face.

Taxes are complicated enough for traditional landlords, but they can be even more difficult for short-term rental hosts. Online rental platforms provide little or no tax guidance—they’re in the rental business, not the tax advice business. Many tax professionals have little understanding of the unique tax problems posed by short-term rentals. This book is intended to fill that void. It provides all of the information short-term rental hosts need to minimize their taxes and stay out of trouble with the IRS, including:

  • when short-term rentals are tax free
  • how to identify, allocate, and maximize short-term rental deductions
  • IRS reporting for short-term rentals
  • how to deduct short-term rental losses
  • completing your tax return (IRS Schedule E), and
  • record keeping for short-term rentals.

This year more than ever you’ll need guidance when it comes to taxes for your short-term rental activity. Congress passed the Tax Cuts and Jobs Act at the end of 2017, the most sweeping change to the tax code in over 30 years. Most of these changes went into effect starting in 2018. We explain how all the provisions of the new law affect hosts, including how you can use the new tax deduction for pass-through business owners to reduce the income taxes you pay on your rental income by up to 20% (see Chapter 8).

Even if you work with an accountant or other tax professional, you need to understand these tax issues. Doing so will help you provide your tax professional with better records, ask better questions, obtain better advice, and, just as importantly, evaluate the advice you get from tax professionals, websites, and other sources. If you do your taxes yourself, your need for knowledge is even greater. Not even the most sophisticated tax preparation software provides the insights and specialized guidance you’ll find in this book.

Minimizing the taxes you pay on your rental income can make your hosting activity far more profitable—indeed, it can spell the difference between making and losing money. The time to start planning to reduce the taxes you’ll need to pay on your short-term rental income is now. You can’t wait until April 15—by then it will be too late to implement most of the tax savings strategies and procedures covered in this book.

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