Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
I've posted this question on the Tax forum and it seems to be a gray area. We've managed to scale the business pretty quickly this year to 5 STRs. Cabins in the Smoky Mountains. Pigeon Forge and Gatlinburg. I'm likely to get a 1099 bigger than my day job.
I've asked 4 CPAs Schedule C or Schedule E.
3 said C
1 said E because I'm not offering "daily services" such as maid service or breakfast. I was told not to hire the guy that said E.
My question is... since they're under 7 days per rental... am I subject to filing this income under Schedule C and does that mean I'm subject to self employment tax... therefore defeating the purpose of investing in real estate not to mention doing all this extra work communicating with guests and dealing with cleaning crews and scheduling??
Do I need to 1099 my cleaning crews? I'm pretty sure that would send them running.
Someone on here has to be self managing AIrbnb and getting a healthy enough 1099 to be able to answer help me.
If I am filing Schedule C is there some loophole to avoid self employment tax? What if wife is real estate professional? Which, in my case is the true, but is it worth it to make her a pro? What does it mean to make her a pro?
Currently reading loopholes of real estate but he does not cover STRs. Figures.
I have a meeting with a new CPA next week but I want to educate myself enough to know if he knows what he's talking about or not.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
9y
my CPA puts my STR on schedule E same as my long term rentals. He had a reason but I don't remember what it was. He did explain why my previous CPA was doing it wrong by using schedule C.
My understanding is that you do not need to 1099 contractors if you have a W-2 job. Once you become a full time real estate investor you need to 1099 everyone above $600.
Rental Property Investor · FL · Member since 2015 · 29 posts · 9 votes
9y
If you're under 7 days average then it's a business and under C but there is a specific formula for calculating average days. I'd would also listen to @Amanda Han BP podcasts and read this post from @Ben Leybovich.
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
9y
Disclaimer - I'm not a CPA. Talk to one
If you take the money in your name or in an LLC then it'll be Schedule C. However, if you siphon the income into either a C Crp or an S Corp (or LLC taxed as an S Corp) you should be able to take a lot of it as distribution. There are many rules that apply. Get a CPA. Feel free to reach out for referral.
Investor · FL · Member since 2016 · 332 posts · 388 votes
9y
A key I have found is for Pigeon Forge/Sevierville STR is to require 7-night min stays in peak periods Spring Break, JUN-Thanksgiving, Christmas/New Years. I only do 4 night stays or more during the slow season Jan-Feb, Mid April-Mid May, After Thanksgiving-Mid December. Notice no 3-Night or less stays:) If you have a quality property it will book you just have to be patient. Why this for my properties? It keeps you above the 7 day average. You will have a couple 8-15 day stays during the year to bring up your average. Also people who stay longer take better care of your property. I haven't even had a glass broken yet.
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
9y
@Account Closed Great question but I would assume its property by property basis. Either way I'll still be below 7 days. I'm learning much more about it. Schedule C. Set up an S corp or a C corp and there are still plenty of tax shelters.
I highly recommend "Loopholes of Real Estate by Garrett Sutton. I learned a lot.
Talk to several CPAs before committing to one. If they don't have a short term rental of their own maybe it's best not to hire them.