Want to confirm that Airbnb income is reported on Schedule E.
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For long-term rentals without substantial services, Schedule E. If it rises to the level of a business, includes substantial services provided by the lessor, or average stays are short-term, then Schedule C. On my way to a biz client's site, so don't have time to look up short-term for this purpose, maybe less than 7 days? 14 days? You can look this up in TTB. -
The average length of stay does NOT determine whether the income is subject to SE tax. It only affects other things like passive activity classification.
So yes, Schedule E. Vacation rental rules probably will apply, since it is most likely a dwelling used part personal, part rental during the year."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe HowardComment
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In summary
If rentals are 14 days or less then you don't report. If 15 days or more then if run like a B & B then Schedule C. Otherwise Schedule E.Comment
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I agree completely. I've seen this mixed up many times.
However, the tricky thing is to determine when "services" are provided. The shorter the stay, the more likely the IRS or Tax Court might rule that there were "services". I recommend clients go out of there way to minimize any potential services. For example, having renters strip the bed and vacuum the room when they are leave could reduce the chance that any cleaning up between clients from being ruled as "maid service".Comment
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AirBNB is a national booking service that books rooms in people's homes who have signed up for these services. AirBNB sends out 1099's to the participants each year.
It's hard to maintain that anyone accepting AirBNB clients does not provide substantial services. By its very name, I don't know of one that does not provide breakfast, for one thing, plus cleaning, providing linens, toiletries, and most of the time concierge services, plus things like snacks/soft drinks and wine & cheese. These rentals are not like beach houses, where the renters bring their own food & sheets & towels, plus everything else. It goes on Schedule C as a business subject to SE tax.
(PS: Note to Rayman: Use actual subject matter in your title when posting -- Thanks.)Last edited by Burke; 05-20-2016, 04:24 PM.Comment
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It's not clear-cut one way or the other - facts and circumstances. The "bnb" part of the web site name has nothing to do with whether SUBSTANTIAL services are actually provided by the person renting their property. I have a client who completely vacates his property when rented, so obviously he is not serving breakfast. It actually could be very much like the beach house rental situation you describe. I have stayed in vacation rentals where linens were provided (but I was expected to wash them myself before leaving), and I myself have rented out a condo (long-term, not through AirBNB) where a pool and hot tub were include as part of the complex, in neither case were substantial services being provided. When signing up through AirBNB, you have a CHOICE of what amenities to offer (see NATP Monthly journal Feb 2016 article). Renting of personal property, such as clothes hangars and irons, would also not necessarily rise to the level of substantial services.
In response to Jiggers, it does seem that most Americans don't know about these services or have never used them. They tend to be used mostly in larger cities, especially on the coasts.
"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe HowardComment
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