I was hoping someone might know the answer to the question I had about whether I need to report the earnings on my Airbnb listing. I listed it last year for around 2 1/2 months, but since the apartment is rented, I didn't actually earn more than the apartment's rental value (I rented it for approx 3 weekends per month). Would my apartment rent be considered an expense, which would effectively offset the income and mean I don't have to report it? Thanks!!
This truly a question for a CPA. Yes you are required to report your income from doing Airbnb. To me its justifiable to count your rent payment as an expense for your airbnb business, however, I could very well be wrong. What you can do for here on out is to set up an LLC and be doing your Airbnb through that entity. That way anything you pay that is related to your business (i.e. Gas, Electricity, Rent) is considered a business expense.
You may not need to report the income if you rented the home for less than 15 days.
Airbnb may provide you a 1099-K for the gross income that you earned during the year. This 1099-K will also be transmitted to the IRS.
The IRS may issue you a notice indicating to you why you did not report the income from AirBnb. You would then need to communicate with the IRS that you rented the unit for less than 15 days and not subject to taxation.
Please see IRS Publication 527 for more details
The rule that @Basit Siddiqi described applies to a home that you own. I cannot be 100% sure without some research, but I do not believe that it can be used for a home that you rent.
I recommend that you report income on Schedule C, but yes, you can offset the income with the rent you paid during the time that the place was available for rent (i.e. advertised and not used by you). You can also deduct other misc expenses - like advertising, supplies etc. It may even create a deductible loss, if your intention was to make money from AirBnB.
I actually did rent the home for more than 15 days, approximately 23. The rent I paid over the three months the unit was advertised on Airbnb was more than what I made since I was only renting it out on the weekends, but rarely rented it during the week. I would say I was there 50% of the time during the month. I did also have some expenses for new linens, cleaning products, etc. but those costs were pretty minimal, it was more so the rent that was an expense.
I also believe I won't receive a 1099-K because I did not make over $20K or have over 200 reservations: https://www.airbnb.com/help/article/414/should-i-expect-to-receive-a-tax-form-from-airbnb
I'd just pay the taxes to be safe. Even if you don't receive a 1099-K there is still ways for IRS to find out. I had to pay back taxes on an AirBNB that I didnt make over 20K
Thanks @Noah Mencia I'm really hoping to rental expense will offset at least some!
@Cassandra Popli This definitely needs to be reported, doesn't matter if a 1099-K was received.
Thanks, @Taylor Brugna I think at this stage I am now wondering about the rental expense and if that would offset it, definitely not trying to avoid reporting it. Thanks!
@Cassandra Popli The rent you pay is an ordinary and necessary expense for you to rent the property. You can't obviously deduct your whole rent payment, but for the days that it's rented it would be valid.
@Taylor Brugna Ah okay, great, thanks. So I should be able to deduct the amount for the 23 days it was rented on Airbnb as well as any other expenses that was necessary for Airbnb, e.g. linens, laundry, cleaning supplies, etc.