STR Tax Strategy + House Hacking Guidance

[Tony Phiri]

Hi Bigger Pockets Community,

My name is Tony and I'm excited to be here and connect with fellow real estate investors! My family and I recently relocated to Worcester, MA, and we’re currently operating one of our residential properties as a short-term rental (STR).

I’m seeking some guidance and insight regarding tax implications and optimization strategies for STRs. Here’s a quick overview of my situation:

1. I personally manage cleaning, minor repairs guest-related damages, land scaping. 

2. I partner with a management company that handles bookings and reimburses damages with proof and receipts.

3. I want to maximize tax deductions and explore the possibility of reporting this income as active income (vs. passive) to access potential tax breaks.

4. I’m considering opening a cleaning or property management LLC to support my STR business. Is this a good strategy tax-wise?

5. Lastly, can I claim depreciation on the property without forming an LLC?

We’re also in the early stages of house hacking our current residential home and would love advice or experiences from others who’ve done something similar. Looking forward to learning from this amazing community and really appreciate any insights you can offer!

Best,
Tony.

[Andrew Freed]

@Jonathan Greene - Thanks! I chatted with him. He should be coming to the next meetup. Also, the STR looppole probably makes sense for him given his situation. How are things on your neck of the woods?