Is AirBNB, VRBO, etc considered rental income?

Is AirBNB, VRBO, etc considered rental income?

Houston, TX · Member since 2018 · 12 posts · 4 votes

Hello fellow investors.  I'm still wrapping my head around the how much information there forums have and the wealth of knowledge there is.  Being a newbie, I have tons of questions and have learned a lot, however I want to throw a topic out there that I think I know the answer to but am not 100% sure.

There is a property in Colorado that I know is being flipped and will be on the market in the relatively near future. If I purchased this property as a "rental" property (in an LLC and for passive income), but didn't put tenants in it and instead put in on Airbnb,VRBO,etc., can that still be considered a rental property and the income classified as rental income? I was under the impression that any income generated from airbnb, etc is considered self-employment income and would be reported on a 1099 (I think that is the self-employed tax form). But I don't know if not being a primary residence would qualify it for being considered a rental property and void the self-employment stuff. I hope this is clear enough and to gain some insight from anyone. Thanks for the help and thoughts!

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  • Jeff CopelandBusiness Member
    Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
    8y

    This is a question for your CPA. If you don't have one, get one. 

    Yes, it's a rental property, and yes, it's considered rental income. 

    But how that income ultimately gets taxed is a more complicated question. Your LLC could be structured as a partnership, C-Corp, or S-Corp - each of which could pass it's income on you you (in the form of salary and/or distributions as the owner/manager/partner/officer) in a different manner, and potentially be taxed differently.

    There can be significant (to the tune 10's of thousands of dollars) differences in your tax burden between these structures, depending on your overall income situation, tax bracket, assets, etc. 

    A good CPA is worth every penny, and is best engaged early on in the process.

    There are many investor-friendly CPAs here in the BP community, such as my friend @Taylor Brugna.

    Copeland Morgan LLC4.770 Reviews
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