Tax categories on a vacation home expenses

[Pandu Chimata]

Hello tax gurus, How are you folks doing? 

Background: In this year, I bought a house in CA for an vacation rental in Airbnb and VRBO. Its going good so far. I spent close to 25K in setting up as an vacation rental. Setup expenses includes furniture, appliances, cookware, repair services, and some supplies such as soaps, toilet paper, tissue paper, etc. 

Supplies are recurring expenses, every 2 or 3 months depends when they run out. On top of it, there are monthly standard expenses such as utilities, maintenance issues and/or supplies. 

Question:

How these expenses will be accounted in tax filing? Will all these expenses be shown on Supplemental income and loss form (Schedule E) or some where else? I want to understand how these expenses will impact my overall income in 2019, and in the future if some of the costs are going to carry over? 

Any insight is appreciated. 

[Natalie Kolodij]

ST rentals are kind of a limbo item of rentals. 

By default, yes schedule E. 

Any of your expenses incurred prior to it being in sevice that made it "ready" to be rented- like renovations and furniture likely need to be capitalized and depreciated. 

Whether you provide substantial service and how long your average stay is will both come into play with the tax treatment on this property. 

There is a lot of "it depends" related to ST rentals so I would recommend talking to a tax pro to make sure it's all being handled correctly.