Owner Occupied Airbnb tax advise

2 Replies

What’s up BP ?

I currently have 2 properties right now. One of them is a former primary residence that is now an Airbnb and the other is my primary residence where I currently live.

I plan on buying another primary residence property in 2022 with the intention of turning my current primary residence into a 2nd Airbnb.

I’m in the process of renovating and refurnishing my current primary residence from scratch and obviously have costs.

The questions is, am I able to claim all of these expenses as tax deductible business expenses, even though I’m not moving out until 2022? What are the legal issues with this if any and how should I go about tracking that when I get ready to return to my accountant?

These are questions for your CPA as you probably know since each state and 1040 is different, but I've always deducted 100% of costs that are related entirely to the airbnb rental portion of my house.

As far as tracking expenses, this is a very rudimentary solution. you need accounting software or an excel spreadsheet, but I think you already knew that.

Originally posted by @Andy Acosta :

What’s up BP ?

I currently have 2 properties right now. One of them is a former primary residence that is now an Airbnb and the other is my primary residence where I currently live.

I plan on buying another primary residence property in 2022 with the intention of turning my current primary residence into a 2nd Airbnb.

I’m in the process of renovating and refurnishing my current primary residence from scratch and obviously have costs.

The questions is, am I able to claim all of these expenses as tax deductible business expenses, even though I’m not moving out until 2022? What are the legal issues with this if any and how should I go about tracking that when I get ready to return to my accountant?

 When you convert the property into a rental, you will use the fair market value of the furniture and get bonus depreciation deductions on these. If you bought furniture for 500, it might be worth 400 in a year. So, you will not lose the entire deduction if you furnish them now.

The renovation is tricky. Repairs will not help you at all as they are considered personal expenses for the primary residence. Bigger improvements will help you as they will get added to the basis and you can depreciate it when you convert to rental. If you have some repair type work, lump them with the bigger renovation as IRS does allow to capitalize repair to the basis for the primary residence if the repairs are done with big improvement type renovation.