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AirBnb for 3 months Rental for 9 Months

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    AirBnb for 3 months Rental for 9 Months

    I have a new client that has a rental for 9 months and for 3 months during summer in Alaska they turned it into a AirBnb. No personal use it just a straight rental but changes to AirBnb during summer. How would yall handle a situation like this?

    #2
    My View

    When I have stayed at an ABB the owner provided nothing more than a furnished place to stay. No breakfast, no significant services. If there is no personal use during the year then claim all income and expenses on Schedule E. For number of days rented list the number of days rented not 365.

    Comment


      #3
      As Kram pointed out, you need to determine if "services" are provided or not. Unfortunately, there isn't a clear-cut answer for what "services" encompasses. Maid service and meals are services, but "furnishing of heat and light, the cleaning of public entrances, exits, stairways and lobbies, the collection of trash, and so forth, are not considered as services". Everything else may be a bit of a 'gray area', and may depend on the precise facts-and-circumstances.
      https://www.law.cornell.edu/cfr/text/26/1.1402(a)-4#c

      If Services are provided, that period goes on Schedule C. The non-service period goes on Schedule E. You may need to 'force' your software to depreciate it on both Schedules for the partial year.

      If Services are not provided, it all goes on Schedule E. Although short-term rentals could avoid the Passive Loss rules if the owner Materially Participates, I suspect the owner would meet the Materially Participation standards unless Services are provided. Assuming that is the case, you would not need to do anything special with Schedule E.
      Last edited by TaxGuyBill; 11-14-2017, 03:18 PM. Reason: Fixed typo-Last word is Schedule E, not Schedule C

      Comment


        #4
        TaxGuyBill

        As there was one 9 mo rental, I doubt the average period of rental will be 7 days or less, so I doubt Material Participation will come into play.
        But good point. I did not consider that.

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