How is Airbnb Taxed for Hosts? | Best Tax Strategies

[@TobyMathis]

Do you want to dive deeper into this topic and talk to someone on my team? Schedule your free consultation now. 👉 aba.link/yy9

[@kirkreese9066]

been watching hours of video on the topic and this was by far the most clear and complete. thank you

[@mrapp8918]

Excellent info! No hype. Just facts, logic & math. Keep calculating!

[@jimmyfun22]

Thank you for your hugely informative help! I am left with a question: Is it OK to set up the lease-back situation you showed at the end of the video after the first year of actively self-managing?

[@janetvalencia597]

Thank you Sir. Broke it down very elementary for all of us not tax savvy. Appreciate your content. 😀

[@TobyMathis]

Happy to help! Thank you for watching!

[@alexanderhroma6753]

Very insightful video, I watch many of the Anderson Advisors content and attended one of their workshops. Question: my short term rental is out of state but I manage it remotely (mostly guest communications and troubleshooting issues) and if I include in that the time I spent getting it ready to rent, I would say I materially participated and even more than anyone else (i.e. cleaner). Can I claim the losses as active against W2 income?

[@tax-modern]

Yes. The IRS may scrutinize it a little closer if it's a property that is a significant distance away from you and you are claiming material participation, but if you logged the hours to qualify, then you certainly can qualify as materially participating in it so it can offset your W-2 income.

[@kevinroberts7255]

First video of yours I've listened to Toby and this is excellent. Love the way you distilled this down also. Will be watching more of yours for sure.

[@TobyMathis]

Glad you enjoyed it!

[@kasiwilliams5927]

Great detail explanation thank you so much for your knowledge.

[@tomstewart2426]

Great video! Thanks for breaking this down to a novice tax understanding level. Like a couple of other people commenting, I would love a video on addressing taxes for rental arbitrage.

[@TobyMathis]

Glad you enjoyed it and we will make a note of that suggestion!

[@mancorallc1463]

@@TobyMathis It be really helpful to a question mostly unanswered online

[@virginalanzen-gi5cr]

Thank you for the info. on that the Air Bee 🎃🌻‼️

[@alliesteamc3546]

Excellent, valuable education hard to find otherwise. Mant thanks!

[@alexis5784]

Super informative and easy to understand. Just started on the platform & came here to get a better understanding of how I should manage my listings from a tax standpoint.

[@jerrymartinez4120]

Very informative video. I'm still unsure how to approach taxes this year since we live and list our home on Airbnb (still paying mortgage) and travel when its booked. We also have a detached garage behind out home that was converted to a small studio space, also part of our current mortgage. Main home = average stay is 3.2 nights Garage studio = average stay is 7.4 nights Combined = average stay is 6.1 nights I manage both on the Airbnb app, both are fully furnished, and we have a cleaning person that we pay. No other services offered.

[@TobyMathis]

If you have any questions, consider asking them on our podcast to help you andersonadvisors.com/tax-tuesdays-questions/

[@jacobdurrah-ml6xy]

How did this end up working out for you?

[@spencersmith8011]

Wow this was such a great explanation thanks for putting this out here for us!

[@kesahnartis8111]

Is this for only if you own the property can you still do the last thing you explained with the LLC ? Because what I do it rent condos and then ask the owner if I can do Airbnb out of them. What would mine be labeled as

[@coacharthur9839]

Loved it, nicely broken down and totally makes sense. How does this work to those who only do rental Arbitrage?

[@TobyMathis]

We are glad that you enjoy our content! As for your question, that depends on a few details.

[@andrewrushton4546]

We have been b n b hosts for over 16 byrs in the uk - and joined air b n b approx 2016 - the research we have done shows that bn b s in the uk qualify for rent a room status and therefore can now earn up to £ 7 200 per yr tax free - no need for tax forms - this is a government hmrc scheme and they detail this on the hmrc site

[@LilaCWest-cn6cb]

So glad I found your channel!! Very powerful information.

[@devonblaine]

Exactly the video I needed right now. Thank you. Can I do a cost seg right now and apply it for a prior year?

[@TobyMathis]

I'm thrilled to hear that the video was helpful for you. Regarding your question about cost segregation, the ability to apply it for a prior year depends on several factors. To provide you with accurate and personalized guidance, I recommend scheduling a free strategy session so we can provide a more in-depth answer. aba.link/yy9

[@curtisianni7528]

What if you’re in construction the year before renting will begin. Does that still qualify as

[@datboyblu3]

Thanks for the informative lesson Toby! I host my home on AirBnB and still live in it. I just stay somewhere else while it is occupied. I manage it through automation technology and a google suite of tools. I have a cleaning that cleans after each guest, except for when I stay in between in guest visit, then I will clean. Would I qualify as a material participant?

[@davidhill5988]

Based on his info yes you are materially participating from the sounds of it

[@tyjameson7404]

Epic video and breakdown 👍🙌🙏🏽❤️🔥

[@laurenpage3301]

Quick question, so I spent over 100 hours w some renovations decorating cleaning etc for guests last year. Only 3 rented in December the same year I did a ton of renovations. For my 2022 taxes, do I get to offset my 1099 and w2 w that activity (home Reno decor set up etc)?

[@cristianmonsalves8132]

Amazing video; thanks so much!

[@robertyoung6320]

I can't believe I understand that... So I material active.... That tax even if I'm an LLC... I don't have a big depreciation.. and how I pay myself is another issue...

[@djcdubb]

We have remodeled a back bonus room in our home to be a stand-alone, private studio for Airbnb. With a single property such as this, is it still recommended to create an LLC for the property and lease it to a S-Corp? My wife will manage and service it, so I assume it would qualify as material participation, thus qualifying us to deduct from my W2 income? Thank you for the awesome content!

[@Alphaanbu95]

I Enjoyed your Class ,Clear explanation.

[@TobyMathis]

Thank you for your feedback! I'm really happy to hear that you enjoyed my class and found my explanation clear.

[@Alphaanbu95]

@@TobyMathis absolutely it’s my pleasure 😀Thank you for the reply and class 🙏

[@Lissa0105]

Thank you for this detailed video!

[@TobyMathis]

You are so welcome! Thank you for watching the channel!

[@community1854]

The best on the subject! So if the first 2 questions are yes, active participation, but it’s in a foreign country or another state so a manager is doing it is it no substantial participation by the tax payer physically, is that passive without self employment tax?

[@langdonbarnes]

Thank you for your wisdom!! Very helpful.

[@community1854]

Superb!! Love it!!

[@magalivillarroel9790]

Very nice, questions what happen if the Airbnb is out of the country?

[@robwin0072]

Thank you Toby Mathis. Excellent information. I, now, am ready to prepare a couple of clients tax returns with AirBnB situations. Kudos to you.

[@TobyMathis]

Excellent!

[@janetayala6908]

After your monthly expenses what percentage do you set aside for the end of the year business taxes? Do you also pay the quarterly sales taxes? Please help!!!

[@cindianderson9443]

How does it change if the property is a second home part of the year? (Passive loss exception)

[@tax-modern]

If your personal use days exceed 10% of the number of rental days (and you had at least 14 days of personal use of it), then your losses for expenses/depreciation are limited to the amount of income the property generated. And so the STR exception and other techniques to use the loss to offset your regular income no longer apply. Any expenses/depreciation that you couldn't deduct to get carried forward as “carryover of unallowed expenses".

[@stevenpower1804]

Nice work Toby! Now if you didn't participate and you paid someone to manage the ABNB is that expense deductible?

[@matt9923]

What is you have multiple property's in one LLC do you average them together or keep separate? One property I have is under 7 and one is over. If I average them I am above 7 days.

[@simplysoothesounds]

Great video! Thank you for sharing! Can you please do another video in taxes for rental arbitrage and Airbnb?

[@Jason.Jodway]

If the property were managed in a limited partnership, would the income going to the limited partner(s) be considered passive income?

[@Lake_George]

I get conflicting advice on this for years. In my case, year one has no income since I am investing / fixing up the property. Rentals will be 7 days and I materially participate. Can I still deduct against w2 income for this year?

[@TobyMathis]

We would like to direct you to andersonadvisors.com/ss/ where you can sign up for a free 45-minute consultation. In this session, you will meet with a professional who will be able to answer your questions regarding this topic.

[@tax-modern]

You can't deduct anything related to a rental property until the tax year that you put the rental "in service" (when it is available to be rented). But those expenses from before it was placed in service can add to the basis of the property that you get to depreciate, starting on the date it is placed in service. During the years while it's in service as a rental, that's when it matters if it has an average stay under 7 days and material participation.

[@user-sh5qv5kv1r]

Me, thinking a casual Airbnb gig is simple. 🥴

[@maxduran99]

Just signed up for a strategy call. I have two questions. Is it possible to carry over the cost segregation loss to active 1099 income if the property was purchased in December of that tax year? If so, can you then convert the property to a long term rental the next year after taking the cost segregation loss the previous year against active 1099 income? Thanks so much!

[@mikieemiike3979]

So, we're expected to materially participate at least 100 hours, but the IRS just shows up and collects after spending zero hours on our business?

[@sumeetbedi1042]

Very nice detailed information. I always watch your videos and you always explain everything so well. Thanks

[@TobyMathis]

Thank you for watching our videos! We hope you continue to enjoy our content!

[@Midlife-Changes]

So, if I own an airbnb in another state, even if I manage everything from my state, then I can't materially participate?

[@superjohn100000]

I had the same question. I reviewed a few times and I think the scenario he was talking about was if you use a management company ..then you don't materially participate.

[@metallideth503]

Great video, do you do any consulting ? If so I would be happy to pay for a tax strategy. We are considering turning out primary residence into air bnb. We have lived there about 1.5 years and it has appreciated well over 100k. So not sure what we should do

[@TobyMathis]

Here is the link to schedule a free strategy session, aba.link/tobyss. Or you may call to speak with an advisor at our toll-free line, 800-706-4741.

[@golfprogress]

I liked it, but it did seem like you contradicted yourself on schedule C verse schedule E if the rental average is seven days or less. Early in the video you said if the average term is seven days or less that is trade/business and not rent. Then, later in the video, you said, if there are no substantial services, you would not use Schedule C, but you would use schedule E. But schedule E is just rental activity so there’s a contradiction.

[@TobyMathis]

You can use either. The issue is whether there is SE tax on the STR profit - there is a split as you could pay on either Sch C or E. Either works as far as I can tell.

[@tax-modern]

I haven't seen that earlier video you mentioned, but 7 days or less is completely unrelated to whether it goes on Schedule E or C. The *only* factor in choosing C or E is whether you provide "substantial services", which are things like *daily* cleanings, meals, or entertainment during guest stays. That's very rare, that's not what most Airbnb owners do. 99% of rentals go on Schedule E. The 7 days or less + material participation topic has to do with how the rental losses are treated on form 8582, which is something completely different.

[@danielgomez8458]

hi toby, you say to put the property under a LLC and lease it to a corp. what corp would you recommend to collect the money

[@rodrigodasilva2629]

Golden video. Thanks.

[@252tanman]

Can you still do this if you’re only Airbnb half your house and living in the other house?

[@rdulepet]

Terrific and informative video, and I subscribed as well. It is so timely since I just acquired single family home specifically for Airbnb rental in Los Angeles. But was curious if I use property Mgmt and they give me 1099 since they would collect rent and they would take care of all things Airbnb Mgmt based on services listed, would I loose the benefit of active income and active loss that I can discount against my other W-2 income since I am not real estate business?

[@tax-modern]

There isn't a rule that specifically says that if you have a property manager, or if they report your income on a 1099, that you can't qualify for the income to be non-passive. But realistically, when you have a property manager it is much more unlikely that you will really be logging the hours to qualify for material participation. But if you do put in the hours, you can potentially still qualify.

[@xcen22cal3]

Great informative video. Toby, do you have videos on the process of creating that lease between the LLC and Corporation . Would you go more into detail on how to set up all of that. Thank You.

[@TobyMathis]

Great suggestion! We will make a note of it.

[@ERIC-lw2yl]

If I’m listed a co host on the Airbnb app would that count as materially participating in regards to documenting hours worked?

[@TobyMathis]

IRA wants you to track the time you actually spend. Being listed as a co-host helps, but is not what they are looking for.

[@ThriveWithLouise]

Yeah but what if you have multiple properties some based internationally… tryna get my head around this but, very interesting content. I have to watch this several times to really get it

[@TobyMathis]

If you need a better understanding, I recommend setting up a free consultation with my team. aba.link/yy9

[@edb5770]

loved it great video! keep it up.

[@TobyMathis]

Thank you! Will do!

[@vikkimichalios6320]

I would like to list my timeshare hotel on airbnb who collects the appropriate taxes. The hotel itself will also charge for the same taxes. How does a host navigate a listing for a timeshare hotel properly to avoid double taxes

[@TobyMathis]

To get the best answer tailored to your specific circumstances, I recommend scheduling a free consultation with my team. Visit: aba.link/yy9

[@kindnesstoall]

So informative... all your videos. Do you have a radio talk show?

[@TobyMathis]

We have a podcast!

[@kindnesstoall]

@@TobyMathis thank you so much. Will search for you.

[@kindnesstoall]

@@TobyMathis We could not find you in podcast. Searched your name. Searched tax & asset protection. Enjoy your videos though. Thanks

[@rachealrhee8652]

Hey Toby, airbnb beginner host here. How do i go about filing 1040 C? Do i need to establish an LLC? Is it something I declare while filing?

[@cecetapia6350]

Is there a w2 income limit for offsetting trade or business losses

[@nenyfernandez8011]

Thank you very much for the information. You have been very clear..

[@charmainefaulknor5546]

Thanks for the information

[@simonkaravai3424]

Good info ,thank you

[@TobyMathis]

Glad it was helpful!

[@jackpestaner6925]

Thanks so much!

[@khongcolong]

Hello toby, i want to thank you for your service to us small business owners. Your content is excellent. What asset value or income level one should have in order to use your service?

[@TobyMathis]

Thank you so much for your kind words, we appreciate you. If you are interested in our services, we offer a free strategy session to go over prices and what we offer our clients andersonadvisors.com/ss/

[@DanielChoTV]

I am an airbnb host. But my properties are in another country. I am a us resident. Do i have to pay taxes?

[@TobyMathis]

Yes. US taxed its residents on worldwide income. There are treaties and tax credits, however, that may soften the blow.

[@brittanyzaborowski7938]

Very informative. My question is how do you calculate the depreciation? Your example was you bought a $500,000 property and claimed $120,000 depreciation. How do you calculate that number?

[@TobyMathis]

Price + Closing Costs minus land value as determined by assessor or appraisal. This is what is called the improvement value. From that, you carve out the 5, 7, and 15 year property. It is that carve out that can be bonus depreciated.

[@jrun26301]

Thank you!

[@thehalographicmind3976]

Do you help with accessing our Cestui Que Vie Trust Accounts ?

[@TheBatman777]

What if the host isn’t the one rendering the cleaning services? What if you are paying a cleaner - who does pay SE taxes on their cleaning fees?

[@Jackson1739_life]

So question, if filing the air bnb on a sch C because the length of stay is 7 days or less, but no services were rendered, what exactly are you filing on the sch E?

[@TobyMathis]

Rental income is collected through the operation and certain expenses and deductions that may offset the income. It's the same information reported but because it is on a different schedule, it creates a different tax treatment.

[@tremerefury]

If you are subletting a rental for an AirBNB, can you write off the Rent payments?

[@TobyMathis]

Thank you so much for your question! We highly recommend you join us at our next Free Tax & Asset Protection Workshop Livestream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/taptoby

[@jameszeris5418]

Excellent

[@wendellotanael5201]

WHat does unique renter mean? How about if one church rents my place 1-2 days in a week?

[@metallideth503]

What if you live out of state. But you don’t have a property manager?

[@TobyMathis]

Hi, could you rephrase your question?

[@dudewhat7738]

Awesome break down. Very informative, even though it was bad news for me. 😭

[@TobyMathis]

Sorry to hear that but thank you for watching

[@mikieemiike3979]

Why even try when they're just going to take it from you. Bull shit.

[@MySpace777]

Thank you for the amazing video! I am curious to know how the process applies to US citizens who own an Airbnb property abroad while living overseas. Can you also please guide me on the appropriate tax form to use and whether it is eligible for FEIE? Thank you

[@cabet6]

Good job in explanation

[@TobyMathis]

Glad it was helpful! Thank you for watching our content!

[@edgehouse]

My accountant keeps trying to carry over qbi loss on my 7 day less active income Airbnb. I thought I could deduct that loss from my wife’s w2 income in the same year

[@lavellnutrition]

If I purchase a home and rent to a family member can I deduct depreciation for maintenance costs?

[@TobyMathis]

Potentially, that would entirely depend on the type of maintenance costs in discussion and whether it will be considered a repair which is a tax-deductible expense, or a renovation which would simply increase the basis of the property.

[@nicholasshook7513]

How can schedule c also be passive

[@Yulifish]

Yes

[@Simonsaysboxing]

What would this cost me to set this up. I'm buying a duplex and will be air bnb-ing one of the other units

[@TobyMathis]

We recommend speaking with one of our professionals in a free strategy session andersonadvisors.com/ss/ They could potentially be of great assistance to you.

[@TobyMathis]

Learn how to use the IRS tax code to your advantage and keep more of what you earn during this free webinar. aba.link/ca3

[@tonyacox6024]

What does the math look like if there is no accelerated depreciation.

[@robertflores6319]

Can a regular Airbnb Host that does not have a real estate license use this tax option? I was told that I cannot use this option and all my airbnb income is still subject to loss limitation.

[@TobyMathis]

Yes - the license is not needed.

[@chelsearodriguez919]

More on a corporation pls

[@TobyMathis]

Thank you for the suggestion. 👍

[@Hank_Alemany]

If I’m not mistaken. You said if you live there more than 10% of the year you don’t have to report it? I run an Airbnb out of an addition to my house. And it is rented on average 2 months per person. I was assuming “rental income” because all I have done is furnish the place and have it cleaned before and after then manage in between (toilets, light bulbs etc.). But about 27:00 in the video I believe you said Briefly my situation may not warrant reporting income

[@TobyMathis]

You still report the income:-)

[@godnestgodest6265]

Airbnb still report any income you make to IRS even if you don't report it, so be careful, hope this helps 👌

[@edranoemillacalles2610]

What if I have a housekeeper to do the cleaning?

[@TobyMathis]

I recommend reading this article on my blog, it talks about this matter: andersonadvisors.com/short-term-rental-tax-deductions/

[@erikbrown8688]

Can you put your Airbnb in your non profit for income

[@TobyMathis]

You can, but do need to be careful that you do not create UBIT from the active income if the average rental term is 7 days or less. Might be smart to transfer the RE into the 501c3 and lease it long (annually) to an entity that acts as the host.

[@rcruz401]

Can my spouse qualify for real estate professional if her and I are 50% partners in a C corp (Management rental company) and she meets the hour requirements? We are not married, and she fills her personal returns as single.

[@TobyMathis]

If you are not married filing jointly, then she would need to meet the criteria individually. But, yes, she can.

[@vincentanguoni8938]

Wow... No wonder Americans are bonkers!!! Gonna get a little funky he says!!! Yikes.. I was in the tourist rental business before the"sharing economy" we shared with the NY times.. The Boston globe.. Newspapers in the northeast. I spent 5 to 7 percent on advertising.. 50 percent deposit for reservation. The remaining 50 percent upon arrival..at some point that changed and we required the other 50 percent 30 days before arrival.. People had started arriving saying they only wanted to stay for half the week.. They were almost all weekly.. Saturday to Saturday.. There were no walk-ins.. Everything had to be rented in advance.. The advent of Airbnb was certainly good for tourists.. Not so good for us owners. And we did not worry about level of services or tax bs.. Clean and friendly... So that's how it worked not so long ago..

[@nicholasshook7513]

In conclusion: file schedule c

[@tax-modern]

No, almost all rentals go on Schedule E, almost never Schedule E. The only exception is if you provide daily cleanings, meals, or entertainment during guest stays. That's very rare, that's not what most Airbnb owners do. 99% of rentals, including short term, go on Schedule E.

[@mimimusama9418]

🥂🧚🧚🙏