Is it recommended or necessary to open a business when you start renting your home on Airbnb?

[Francesco1424]

Hi, we're located in California and just starting to rent our home on Airbnb. We are not sure whether or not we need (or it would be a good idea) to open a business. We are going to work with a property management company which will offer full service. However, we want to be able to deduct all the expenses that come with running an Airbnb, from the startup fees to the ongoing utilities and maintenance costs, including depreciation. Would it be possible to do this if we file taxes as private individuals or we would need to open a business to maximize our deductions? I realize this is a very naive question but this is the first time we're getting into this and would really appreciate some perspectives here.

[Lorna170 · Accepted solution]

@Francesco1424 You should speak with an accountant.  I have several properties.  I have a business, and some of the rental properties are deeded to the business and their income and expenses are reported via a business tax return.

I also have a property that is not deeded to the business.  I track the income and expenses and report on my individual tax return on Schedule E.

Speak to an accountant as to what you should do to meet your municipality, County, State and Federal tax requirements.

[Elisa]

Hi @Francesco1424 😊, 

Thank you so much for bringing up this topic in the community, it is really interesting!

As our host suggested, the best approach is to ask an accountant for advice. If you don't know anyone, feel free to connect with hosts from your area through our 👉 Local Host Clubs and ask them if they know an accountant.

Don't forget to let us know what you decide to do. I am sure your question will help other hosts in the future!

Warm regards 🌻