STR Management and Taxes

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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
7mo
Quote from @Jerry Zigounakis:

Hi all this was my first year hosting a STR and there has been a lot of growing pains and learning as I go. As we are entering tax season I am wondering what Expenses I can write off and if I need A 1099 for my Co manager who contracts out the cleaning team that I am essentially paying for? I located in CA.

I am not an accountant, but...

Your STR is a small business. Every reasonable and necessary expense can be deducted. Travel, training, repairs, maintenance, dues, credit card fees, etc. Some expenses are considered capital improvements and will need to be amortized. Anyone that you pay that earned over $600 in the calendar year, you will need to issue a 1099.

Ask your accountant for more details.

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  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    7mo
    Quote from @Jerry Zigounakis:

    Hi all this was my first year hosting a STR and there has been a lot of growing pains and learning as I go. As we are entering tax season I am wondering what Expenses I can write off and if I need A 1099 for my Co manager who contracts out the cleaning team that I am essentially paying for? I located in CA.

    I am not an accountant, but...

    Your STR is a small business. Every reasonable and necessary expense can be deducted. Travel, training, repairs, maintenance, dues, credit card fees, etc. Some expenses are considered capital improvements and will need to be amortized. Anyone that you pay that earned over $600 in the calendar year, you will need to issue a 1099.

    Ask your accountant for more details.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    2Reply
    • John UnderwoodPro Member
      Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
      7mo
      Quote from @Collin Hays:
      Quote from @Jerry Zigounakis:

      Hi all this was my first year hosting a STR and there has been a lot of growing pains and learning as I go. As we are entering tax season I am wondering what Expenses I can write off and if I need A 1099 for my Co manager who contracts out the cleaning team that I am essentially paying for? I located in CA.

      I am not an accountant, but...

      Your STR is a small business. Every reasonable and necessary expense can be deducted. Travel, training, repairs, maintenance, dues, credit card fees, etc. Some expenses are considered capital improvements and will need to be amortized. Anyone that you pay that earned over $600 in the calendar year, you will need to issue a 1099.

      Ask your accountant for more details.


       That sounds correct to me.

      I deduct all associated expenses including mileage. 

      0Reply
  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 978 votes
    7mo

    @Jerry Zigounakis

    I recommend finding an accountant who specializes in real estate taxation and is proactive instead of reactive when providing advice.

    Working remotely with your accountant will expand your options. The best person for the job may not be local.

    I would also recommend looking for an accountant who will work with you throughout the year. You want an accountant who can help you strategize and who is responsive when you want to know the consequences of the financial decisions you are making throughout the year.

    Happy to answer any questions. Good luck.

    404-482-3170
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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    7mo

    Every dollar in is being tracked by the OTA's, CC company, etc and you will receive a 1099 from them (money in).  Every dollar going out should be tracked by you via Quickbooks or similar program and all of your vendors receiving over $600 should be sent 1099's (money out).  What is left in the middle is profit, and taxable income to you/your corp.

    [email protected]813-563-0877
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    • Christopher Tile
      Accountant · Long Island, NY · Member since 2021 · 184 posts · 148 votes
      7mo
      Quote from @Andrew Steffens:

      Every dollar in is being tracked by the OTA's, CC company, etc and you will receive a 1099 from them (money in).  Every dollar going out should be tracked by you via Quickbooks or similar program and all of your vendors receiving over $600 should be sent 1099's (money out).  What is left in the middle is profit, and taxable income to you/your corp.


       Spot on. 

      If your bookkeeping is clean, so will be your tax reporting. 

      What gets measured properly, gets managed properly. 

      I'd advise setting up QuickBooks/your accounting system EARLY before you start to scale. When you get more properties, it's just going to get more difficult to track everything if you don't have a system in place. You want to be set up in a way that a new property isn't a new headache, it's just plug and play into the software.

      Chris Tile, CPA

      2Reply
  • Markus Shobe
    Accountant · Indianapolis, IN · Member since 2019 · 247 posts · 135 votes
    7mo

    Expense has to be reasonable and necessary for it to be deducted. So repairs, advertising, lawn care, mileage, would be some examples of things you could write off.  

    1Reply
  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    7mo

    I'd recommend connecting with a real estate cpa. With STRs, there's a lot at stake in terms of deductions and tax advantages. There's a lot that can be deducted for expenses. As someone else in the thread mentioned, the benchmark is ordinary and necessary. 

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    6mo

    Like the people above mentioned, any expenses that are ordinary, necessary, and related to your STR are deductible. That includes cleaning, management fees, supplies, utilities you pay, insurance, repairs, etc. The key is keeping clean records and separating personal use from rental use.

    Regarding the 1099: if your co-manager is an independent contractor and you pay them $600 or more during the year in the course of your rental activity, you generally need to issue a Form 1099-NEC. You’ll want a W-9 from them to confirm their tax status.

    The biggest thing in year one is setting up bookkeeping correctly so you’re not reconstructing everything later.

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