Bank Account question

[Rick LaFleur]

I am close to finishing refreshing STR and putting on AirBNB for the first time.  This townhome was purchased as primary, then kept after buying another home as primary, so it is held personally, not in LLC.  Is there a legal need to use business checking to house income and pay expenses even if not in LLC? I know that it is better for obvious tracking means, but am curious about whether it is required for tax purposes.

Thanks.

[Account Closed]

Quote from @Rick LaFleur:

I am close to finishing refreshing STR and putting on AirBNB for the first time.  This townhome was purchased as primary, then kept after buying another home as primary, so it is held personally, not in LLC.  Is there a legal need to use business checking to house income and pay expenses even if not in LLC? I know that it is better for obvious tracking means, but am curious about whether it is required for tax purposes.

Thanks.

I'd put it into an LLC for banking, taxes and for liability protection reasons. If it's in your name, you can be sued for any and everything that happens regarding the STR. Not an enviable position.

By having the LLC, you then open a separate account and the IRS (and your CPA) love you for it. It makes it easy to not comingle funds. Yep, it's a very big deal if you have any assets to speak of.

You probably also want to consider that if you lived in it for 2 of the last 5 years you probably don't have any tax on the previous home. However, if you go longer than 2 out of the last 5 you might have a hefty tax when you do sell it. Talk to a CPA that understands real estate, many CPAs don't understand.