Hi, I purchased a home in 2018 which I’m currently renting out through AirBnb. I don’t live there. Do I fill out a Sked C or Sked E to declare income and write off deductions? Thank you for your time and information.
Many U.S. hosts assume they are doing Schedule E passive rental activity. It depends on 1) how actively you host in terms of providing personal services (serve breakfast? offer touring assistance? – then it may be a Schedule C business with self-employment taxes) and 2) on the average length of stay (7 days or less average stay pushes you off Schedule E onto Schedule C, but you may not have the normal Schedule C self-employment tax requirement on Schedule SE if you do not provide personal services.
Your expense deductions are impacted if you ever use, or let friends/family use, the home for more than 14 days or a percentage of rental days.
Here is a helpful note on Schedule C self-employment tax: https://www.royallegalsolutions.com/is-my-airbnb-subject-to-the-self-employment-tax
And a flowchart: https://www.hrblock.com/tax-center/wp-content/uploads/2018/05/airbnb-taxes.pdf
NOLO also has a guide that you can download for a fee called “Every Landlord’s Tax Deduction Guide,” with information on various business structures as well as short and long term rental expense deductions and taxes.
You may want to hire an accountant for peace of mind and some back up in the event IRS ever questions your tax filing. Like the insurance industry, the tax guidance has not quite caught up with this type of business yet.
For discussion purposes only, does not constitute professional tax advice.
Thank you so much! I truly appreciate your time. You’re awseome!!!
Hi @Ritz3 this post includes a good breakdown of how you should file according to how you use your property (near the bottom). Hope this helps! bench .co/blog/accounting/property-management-accounting-taxes/
Thank you so much : )
I purchased the Nolo guide and think it is well worth the price.
Thank you : ) I’ll check to see if Amazon has it.
one question. on my earnings summary, there’s the amount airbnb collected on my behalf, several deductions, and a net amount that i actually received.
do i report the net, or the gross? and if the gross, how do i deduct the service fee, etc?
Technically you would report the gross and show the Airbnb service fee as an expense deduction. I can’t recall if I chucked it under Commissions or Managment Fees, but IRS shouldn’t care as long as you report it somewhere reasonable.
Of course the math is the same if you reported the net and no expense. But if you make enough for Air to send you a 1099, you will want to report the gross amount so your return and the 1099 match.
If Airbnb is collecting and remitting local lodging tax, do not report it as income or expenses. You or Airbnb are just a middleman doing the collection for the government.
If Airbnb doesn’t collect taxes for you AND you have an all-inclusive rate that covers taxes (i.e., you don’t collect separately and later remit the taxes yourself) AND you gross enough for Air to send you a 1099, then you’ve got some 'splaining to do because your real gross less the collected taxes won’t match the 1099 – you’d have to append a note to your return.
For discussion purposes only, not professional tax advice.