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Unusual Tax Situation (USA)


#1

My boyfriend and I are managing airbnbs for home owners. We do everything, all the tax information through the website is in our name, and then we pay a stiffen (like rent) to the homeowners.

I am trying to do taxes on Turbo tax but my audit risk is coming back as Medium because “Owning more than one rental property”. But I do not own them.

Are there any other airbnb managers here that can help me with how I am supposed to report my income on my taxes but not be tabled as an “owner” of the property? I am so confused!


#2

Review the characteristics of Schedule C business; your activities may be a better fit there.


#3

Talk to a cpa to make sure.


#4

Talk to a CPA as soon as possible which may be difficult since it is crunch time. You are managing a business so I hope you have a business license!


#5

Right now I have two schedule C Businesses on my return, the airbnb is one of them. But I don’t know how to indicate that I do not own the property. I thought I went through all the prompts correctly but the audit risk says it is due to owning two properties, which I don’t.


#6

I wouldn’t be sending two schedule Cs through Turbo tax. File an extension and go see a proper CPA.


#7

I do three Schedule C’s with TurboTax. It manages multiple Schedule C’s with no issues.


#8

I concur, find some tax help. This is a bit complicated, isn’t it? Based on the limited information provided (for discussion purposes and not professional tax advice), I’m still puzzled as to why Turbo thinks you own properties – did you accidentally follow prompts to list a rental real estate asset? Are you paying property tax on behalf of the owners? Those properties are not your assets, they are the owners’ assets.

As a surface reaction, I think you may have two ways to characterize the business, depending on the nature of your contract with the property owners:

  1. You are renting a number of properties (the stipend you pay the owners), and running your own short term rental business out of them. Then the stipend is just one of the expenses of your business. Other expenses are the Airbnb fees, supplies, repair and maintenance, sales and lodging tax. You do not own any real estate assets (property) that you are renting out and therefore would not depreciate. You may have some equipment & furnishing assets that you depreciate.
  2. You are the property manager for a number of properties the owners are renting out short term. The agreed-upon income to you is the rental income less any sales and lodging tax – those taxes are the owner’s expenses for their rental business. You are just the agent paying their taxes out of the proceeds. Are you also paying their property taxes out the proceeds for them? I hope not as that is complicating, but that would also not be your expense. The stipend is a fee expense of your business. As above, your other expenses are Airbnb fees (which you have agreed to pay as part of the contract because that is the platform you selected to run their business), supplies, repair and maintenance, and depreciation for any equipment and furnishings your provide.

I’m not an expert on property management, but another complication is – are you (or your business) listed as the Airbnb host for all these properties, not the co-host with the owners listed as the host, and are the rentals making enough to generate a 1099-K from Airbnb, and is the 1099-K issued to you as the “retail merchant”? In that case, the IRS will have been informed that this is your income, associated with your Taxpayer Identification Number (SSN or EIN). From the IRS’s perspective, you are in situation 1. above, the owner is invisible other than being your landlord. If you are a property manager, the owner should be getting the Airbnb 1099-K, and you should be getting a 1099-Misc from the owner, showing your income as net of owner sales, lodging, business & property taxes paid by you as agent out of the short term rental proceeds. Technically, the owner is leaving those funds (their income) in escrow with you for you to make the payments; they are not part of your income.
You may want to contact Airbnb and ask what their arrangements are for working with property managers.


#9

I’m sure you can submit 100 without issues (that you know of ) but if you have a complicated tax situation you should get professional help. Plus, a good CPA is worth her weight in gold. Mine has saved thousands over the years in ways Turbo Tax couldn’t dream of.


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