Deductible expenses taxes

[Irina433]

Hello, 

I have been doing Airbnb since 2018, I always thought about having few reservations but it was not like that, even last year I assumed another market renting the entire house and for that reason I had many expenses, because the rate That I would charge had to have those amenities, such as air conditioning throughout the house. Now everything has been as a personal account, I didn't know how my account change to business and having deductions as a business. I made many expenses as an investment so that this year It was the same and now the house was ready. now I must do the taxes and the first thing it tells me is that was better as a company, because I will be able to deduct none of that. I do not know what I can do if I made all that investment from my earnings, I even had to renovate a bath because It was not acceptable for someone would pay 600 per night.

I appreciate all the information that you can provide me, I understated your not accountants or experts, only share the information if you switched to business, as you did not what things you have been able to reduce from your investments. 

thank you so much, 

irina NY

[Brian2036]

@Irina433 

I think you should consult with a tax accountant.

The IRS would like to treat your Airbnb business as a hobby. That means that you cannot deduct losses greater than your rental income against the income from your other job.

You would be better off to form an LLC (Limited Liability Company) and run your Airbnb business through that. It sounds like you have more expenses than income this year so you will be able to use the loss to offset other income or defer it until next year and use it then.

A good accountant would be able to help you do what you need to do to minimize your tax burden.

Good luck --

[Michelle53]

@Irina433  @Brian2036    

I agree, it's best to talk to a professional, who can look at the big picture, and help to make the right decisions. 

This is a link to a website that talks about how the IRS determines whether your Airbnb is a hobby or a business.

https://sharedeconomycpa.com/blog/hobby-vs-business/

[Irina433]

thanks for your replies. I understand that the professional is the expert , I just expected a fluid conversation from your own experiences. I know now the best way is an LLC but I can’t change last year process, that’s why I was expecting personal opinions. 

I did not talk about losses, I meant what happens when you use your earnings to invest in your space and make it better, to offer an optimal space. 

thank you! 

[Michelle53]

@Irina433  Respectfully, these things have to be set up correctly right from the beginning, or you can have big problems later. I don't think you are helping yourself trying to source personal opinions on a public forum.  Contact a reputable CPA firm and have them get you properly set up, based on your own personal situation and objectives.