This presentation was given by Taylor Brugna from The Real Estate CPA at the February 4th, 2020 NYC Airbnb Hosts Meetup.
For future events, join our Meetup group- https://www.meetup.com/NYC-Airbnb-Hosts/events/267520104/
3. WHY SHOULD YOU LISTEN TO US?
400+ real estate investor clients across the United States
We only work in the real estate space, and many of our clients are STR investors
Niche real estate tax experience
Creative real estate tax strategies
We believe that proactive tax strategy is where you save money
Our tax strategists also own investment real estate
4. WHERE YOU CAN FIND US
www.therealestatecpa.com
The Real Estate CPA Podcast on iTunes or Soundcloud
Connect with us on LinkedIn
BiggerPockets
contact@therealestatecpa.com
5. HOUSEKEEPING ITEMS
Personal situations or highly specific questions will not be answered during the presentation. I will be
sticking around after the presentation, so feel free to introduce yourself and we can discuss then!
Disclaimer:
This document and all text contained herein is not meant to render tax advice nor create a client relationship with
you, the reader, viewer, or listener. This is for informational purposes only and should not be used to render
advice or to substantiate tax positions.
6. COMMON FORMS OF SHORT RENTAL INCOME
Primarily rent, of course!
Security deposits that you keep
Property or services in lieu of rent
Rental expenses paid for guests
Reservation cancellation fees
Cleaning fees
7. COMMON SHORT TERM RENTAL DEDUCTIONS
Advertising costs and listing fees
Legal and professional fees
Property management fees
Rent expense (if subleasing)
Travel
Mortgage Interest and property
tax
Furniture and personal property
costs
Depreciation
Repairs, cleaning and
maintenance
8. REPORTING: SCHEDULE C VS. SCHEDULE E
Schedule C
Providing substantial services
Classified as a trade or business
Subject to self employment taxes up to 15.3%
Losses can be deducted
Schedule E
Reported similarly to a long term rental
Classified as a rental activity
Not subject to self employment tax
Losses may be suspended and carried forward
9. WHAT ARE SUBSTANTIAL SERVICES?
Similar to a hotel or bed and breakfast
Meals or snacks
Laundry services
Daily cleaning services
Concierge services
Tours and outings
IRS Regulations indicate that the services must be worth at least 10-15% of the total rent paid by guests
10. DEPRECIATION METHODS
27.5 Year Residential Property vs 39 Year Commercial
Property
According to the Internal Revenue Code, a dwelling unit must be classified as
commercial property if it is occupied on a transient basis
IRS has provided little guidance on the definition of transient basis
Our interpretation: If the unit has been occupied by short term tenants (less than
30 day stays) for over half of the year, the unit has been occupied on a transient
basis
Most short term rental investors will fall into this category
11. LLC VS. LLC TAXED AS AN S-CORP
Short term rental investors providing substantial services and subleasing may benefit from electing S-
Corp status by avoiding some of the self employment tax
S-Corp status: must pay yourself a reasonable wage (subject to self employment tax) and then other
distributions will not be subject to self employment tax
Investors that own property and report on schedule E will not benefit, because the income will not be
subject to self employment tax
From a tax perspective, a single member LLC is a disregarded entity
12. TAX TIPS
Avoid providing substantial services unless they are providing significant revenue
Establish a home office
Keep track of mileage and business meals with technology! MileIQ and Expensify are
some of our favorite apps
Consider upgrading furniture and fixtures in a very profitable year
Update your books at least monthly! Waiting until the end of the year may cause missed
expenses
13. THAT’S IT!
Thanks for listening!
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