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Tax Strategies for Airbnb Hosts- NYC Airbnb Hosts Meetup

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This presentation was given by Taylor Brugna from The Real Estate CPA at the February 4th, 2020 NYC Airbnb Hosts Meetup.

For future events, join our Meetup group- https://www.meetup.com/NYC-Airbnb-Hosts/events/267520104/

Published in: Real Estate
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Tax Strategies for Airbnb Hosts- NYC Airbnb Hosts Meetup

  1. 1. NYC Airbnb Hosts Meetup Sponsored by:
  2. 2. TAX STRATEGIES FOR SHORT TERM RENTALS TAYLOR BRUGNA, CPA
  3. 3. WHY SHOULD YOU LISTEN TO US?  400+ real estate investor clients across the United States  We only work in the real estate space, and many of our clients are STR investors  Niche real estate tax experience  Creative real estate tax strategies  We believe that proactive tax strategy is where you save money  Our tax strategists also own investment real estate
  4. 4. WHERE YOU CAN FIND US  www.therealestatecpa.com  The Real Estate CPA Podcast on iTunes or Soundcloud  Connect with us on LinkedIn  BiggerPockets  contact@therealestatecpa.com
  5. 5. HOUSEKEEPING ITEMS  Personal situations or highly specific questions will not be answered during the presentation. I will be sticking around after the presentation, so feel free to introduce yourself and we can discuss then!  Disclaimer:  This document and all text contained herein is not meant to render tax advice nor create a client relationship with you, the reader, viewer, or listener. This is for informational purposes only and should not be used to render advice or to substantiate tax positions.
  6. 6. COMMON FORMS OF SHORT RENTAL INCOME  Primarily rent, of course!  Security deposits that you keep  Property or services in lieu of rent  Rental expenses paid for guests  Reservation cancellation fees  Cleaning fees
  7. 7. COMMON SHORT TERM RENTAL DEDUCTIONS  Advertising costs and listing fees  Legal and professional fees  Property management fees  Rent expense (if subleasing)  Travel  Mortgage Interest and property tax  Furniture and personal property costs  Depreciation  Repairs, cleaning and maintenance
  8. 8. REPORTING: SCHEDULE C VS. SCHEDULE E Schedule C  Providing substantial services  Classified as a trade or business  Subject to self employment taxes up to 15.3%  Losses can be deducted Schedule E  Reported similarly to a long term rental  Classified as a rental activity  Not subject to self employment tax  Losses may be suspended and carried forward
  9. 9. WHAT ARE SUBSTANTIAL SERVICES?  Similar to a hotel or bed and breakfast  Meals or snacks  Laundry services  Daily cleaning services  Concierge services  Tours and outings  IRS Regulations indicate that the services must be worth at least 10-15% of the total rent paid by guests
  10. 10. DEPRECIATION METHODS 27.5 Year Residential Property vs 39 Year Commercial Property  According to the Internal Revenue Code, a dwelling unit must be classified as commercial property if it is occupied on a transient basis  IRS has provided little guidance on the definition of transient basis  Our interpretation: If the unit has been occupied by short term tenants (less than 30 day stays) for over half of the year, the unit has been occupied on a transient basis  Most short term rental investors will fall into this category
  11. 11. LLC VS. LLC TAXED AS AN S-CORP  Short term rental investors providing substantial services and subleasing may benefit from electing S- Corp status by avoiding some of the self employment tax  S-Corp status: must pay yourself a reasonable wage (subject to self employment tax) and then other distributions will not be subject to self employment tax  Investors that own property and report on schedule E will not benefit, because the income will not be subject to self employment tax  From a tax perspective, a single member LLC is a disregarded entity
  12. 12. TAX TIPS  Avoid providing substantial services unless they are providing significant revenue  Establish a home office  Keep track of mileage and business meals with technology! MileIQ and Expensify are some of our favorite apps  Consider upgrading furniture and fixtures in a very profitable year  Update your books at least monthly! Waiting until the end of the year may cause missed expenses
  13. 13. THAT’S IT!  Thanks for listening!  Join our newsletter so that you can access the webinar reply and stay up to date on the tax law  Check out our podcast: The Real Estate CPA Podcast (iTunes)  Connect with us on LinkedIn
  14. 14. Q&A

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