Filing Income tax--Federal, allocating expenses to Airbnb income

[Barbara874]

Hello,

Have hosted for a year and will file federal tax with AirBnb income and expenses for the first time.

Questions:

1. how to allocate use of shared spaces?  Guests use not only a bedroom, but also the kitchen, living room, dining room, back yard (in summer, I live in Vermont), laundry room.
2. how to account for expenses such as furniture, cleaning materials, payment to a cleaner, paper products?

I know of 2 formulas--square footage and # of rooms used compared to totals.  What passes muster with IRS?  It seems wrong to use only the bedroom space in creating the formula.  But...maybe that's the IRS standard.  This formula would apply, to fuel oil, internet access,  property tax, water bills, possibly repairs.

And what about the paper products, cleaning supplies--I use them too!

Advice, insight, experience would be greatly appreciated!

Barbara

Bellows Falls Vermont

PS my tax preparer has never done this before, either.

[Pete28]

Look up how to account for rental property - irs has examples which are generally based on % rented. Not sure how shared use would go - maybe half the % if you share ?

Anyway, make sure you depreciate property, furniture. Also any property tax and loan interest. I managed to cover about $20k of income.

[Raf3]

@Barbara0 CPA here and I help hosts (in VT too!) affordably do their taxes. I write about it here. The shared spaces are  not included in the pro-ration as they are not exclusively used for ABB rental activity. That said, if your rented room is very large you may want to use square footage instead. Pick the method that benefits you most. You also have to further pro-rate by days rented. Depreciation is a big advantage if you own - use it if you can and depreciation is not pro-rated by days used (its a time in service concept).

All the expenses you mentioned can be written off.

[Christine1426]

I am a host AND an IRS Enrolled Agent, and have been preparing income taxes for about 25 years.  I recommend keeping good records of the supplies you use for the guest area, you can write off those.  For the common areas used, they are not really exclusive to the 'rental property'.  However, you can use the % of dedicated rental space (ex: 200 sqft room, 1000 sqft house = 20%) and include mortgage interest, real estate tax, homeowners insurance, utilities, maintenance/repair, depreciation...)  

Please contact me if I can help you prepare your tax return:

**[E-mail address hidden due to safety reasons - Community Center Guidelines]

[James284]

Hi Christine,

Does an Airbnb guest renting a couch in the living room have "exclusive use" of this room? How would you recommend identifying this space on one's taxes?

Thanks a lot! 

James