Bolingbrook, IL · Member since 2015 · 11 posts · 2 votes
Hello! We are looking to start AirBnb'ing a property and wanted to know about taxes. I assume all income made off the property is taxable income so what's the best strategy here? I was looking to take out 20% of income and save it for tax time. Would that work? Should we start an LLC and keep the AirBnB in there?
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
7y
@Melissa Wedell. I believe OP is talking about INCOME tax, not sales or lodging tax am I correct?
These are two very different conversations both of which are lengthy.
I don’t think I would bother trying to contact @Brandon Hall he is extremely busy and successful AND it’s tax season. Find his podcasts and listen to those. Also, read a book called Loopholes of Real State.
Find a CPA that OWNS real estate and work with them. It’ll probably take you a few years and a few tries to find one you like.
Google the difference between Schedule E and Schedule C when related to short term rental, and search BP for the same subject.
I am in no way a licensed professional but I’m happy to hop on a call and teach you what I’ve learned from mistakes.
Sales/Lodging tax are a bit more cut and dry but is still about a 30-45 minute conversation.
Rental Property Investor · The Villages, FL · Member since 2017 · 341 posts · 397 votes
7y
How you remit taxes depends on the State that your rental is in. I don't rent through Airbnb, so I'm not sure if they remit taxes for you. Vrbo recently started remitting taxes in Florida where my rentals are. For the income outside of VRBO, I remit the transient rental taxes monthly, based on the income from the month prior, which is what Florida requires. You should contact the State tax dept. where your rental is and register your vacation rental. In Florida everything is done online and it is actually very easy.
Hello! We are looking to start AirBnb'ing a property and wanted to know about taxes. I assume all income made off the property is taxable income so what's the best strategy here? I was looking to take out 20% of income and save it for tax time. Would that work? Should we start an LLC and keep the AirBnB in there?
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
7y
@Melissa Wedell. I believe OP is talking about INCOME tax, not sales or lodging tax am I correct?
These are two very different conversations both of which are lengthy.
I don’t think I would bother trying to contact @Brandon Hall he is extremely busy and successful AND it’s tax season. Find his podcasts and listen to those. Also, read a book called Loopholes of Real State.
Find a CPA that OWNS real estate and work with them. It’ll probably take you a few years and a few tries to find one you like.
Google the difference between Schedule E and Schedule C when related to short term rental, and search BP for the same subject.
I am in no way a licensed professional but I’m happy to hop on a call and teach you what I’ve learned from mistakes.
Sales/Lodging tax are a bit more cut and dry but is still about a 30-45 minute conversation.
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
7y
If you are talking about income tax, find a good CPA to do your A. A good one will be able to find every deduction and expense related to your STR business include them in your tax return. It can be your cell phone, vehicle, etc. A good CPA isn't expensive, he is priceless.
Rental Property Investor · Boca Raton, FL · Member since 2014 · 104 posts · 55 votes
7y
I'm unclear if the questions is about sale and hospitality tax or income taxes on the profits you make on Airbnb rentals. If the questions is about sale tax you will need to educate yourself since both Airbnb and Vrbo do collect taxes but sometimes they do so only at a county level and not on a state level but some other times they collect everything. The idea of putting aside 20% for taxes is great if you are talking about income tax, in case of the sale and hospitality tax you are in essence collecting it for the government and they request for you to pay once the guest has checked out (or at least they do so in Florida where my properties are). Hope that helps, feel free to reach out if you have questions.
I'm unclear if the questions is about sale and hospitality tax or income taxes on the profits you make on Airbnb rentals. If the questions is about sale tax you will need to educate yourself since both Airbnb and Vrbo do collect taxes but sometimes they do so only at a county level and not on a state level but some other times they collect everything. The idea of putting aside 20% for taxes is great if you are talking about income tax, in case of the sale and hospitality tax you are in essence collecting it for the government and they request for you to pay once the guest has checked out (or at least they do so in Florida where my properties are). Hope that helps, feel free to reach out if you have questions.
Yes this is very informative. I was indeed talking about income tax on the profits I would make. It sounds like I'll have to check with Arizona laws as to paying the taxable income once the guest checks out since it sounds like that varies by state. Thank you!
Property Manager · Queen Creek, AZ · Member since 2016 · 608 posts · 426 votes
7y
@Melissa Wedell If you ever need or want I have a great CPA that works with investors and has attorney resources for LLC's etc that is Arizona based. He works with a number of my current investors, a few of which have pretty complicated tax situations.
He happens to be an Iowa Hawkeye fan, that may or may not work for you. lol
Property Manager · Mammoth Lakes, CA · Member since 2014 · 262 posts · 229 votes
7y
Obviously I would echo everyone else's suggestion to get a good CPA. As far as income tax goes, I would definitely set aside some savings, but most importantly I would meticulously track your expenses to help offset that income. Short term rentals are great because you can deduct SO much against that income! Everything from mileage to toilet paper to your own computer and internet connection for airbnb access, etc.
..Short term rentals are great because you can deduct SO much against that income! Everything from mileage to toilet paper to your own computer and internet connection for airbnb access, etc.
Is there a list that you know of that discusses the legal deductions you can take? Or is it easier to just track everything and turn over to your CPA? I literally love spreadsheets and will track everything in sections if needed!
Property Manager · Mammoth Lakes, CA · Member since 2014 · 262 posts · 229 votes
7y
@Melissa Wedell I don't know of a specific list, but I'm sure someone has one somewhere! I used the same schedule as a long term rental, but you can definitely cram a lot more into each category!
Rental Property Investor · St. Louis, MO · Member since 2019 · 63 posts · 52 votes
7y
Re: Sales tax You'll need to register as a business with your state get a sales tax license. You'll then remit the sales tax on each stay. The frequency will depend on how much you collect, and your state will determine that and tell you. If you are in an area that the listing site collects and remits sales tax for you, you will need to decide if you will still get your tax id or not. Personally, I would for the direct bookings. Note that if you have a tax period that you do not have sales tax to remit, you still need to file a return, but simply state it is zero.