Q. If I rent my summer home out for Airbnb, what are the tax ramifications? Do I claim it? Are there any write-offs involved? Should I start an LLC?
— Landlord, maybe
A. It all depends on how often you plan to rent out the summer home.
Typically, payments received through Airbnb are considered income and will need to be reported to the IRS on Schedule C or E (Form 1040), said Karolis Matulis, a certified public accountant with Wilkin & Guttenplan in East Brunswick.
He said Airbnb may provide you with a 1099-K at the end of the year summarizing all of the payments.
“The IRS does provides an exemption for those who rent a personal residence out for less than 15 days during the year; they do not require you to report any income or expenses for this kind of activity,” Matulis said. “In the event that the summer home rentals exceed 14 days, rental income less any allowable expenses must be reported.”
He said allowable expenses are any items that can be directly attributed to the rental activities. Some common examples of these items in Airbnb rentals could include advertising, cleaning and maintenance, utilities and service fees.
Depending on the level of activity, items such as property taxes, interest on mortgage payments, and depreciation could be prorated and deducted, he said.
On your LLC question, that’s a strategy to limit your potential liability. Read this story to see the pros and cons of an LLC.
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