CPA Tom Wheelwright uncovers 10 Airbnb Short Term Rental Deductions

TEMPE, Ariz., Aug. 28, 2019 /PRNewswire-PRWeb/ -- CPA, CEO of WealthAbility™, and Tax-Free Wealth Author Tom Wheelwright uncovers ten ways real estate investors and property owners can maximize short-term rental tax deductions. These legal tax savings are for rentals through Airbnb, VRBO, HomeToGo and more, and include new deductions from the Tax Cuts and Jobs Act of 2017 for rentals that are "businesses".

Wheelwright emphasizes, "If you are renting a home or room as part of a business entity, it's important to know how to legally keep way more money and pay way less taxes." And with Airbnb's growth rate up 31% and $9.4 billion in total book revenue in the first quarter of 2019 (Reuters), the vacation property and short-term rental business is booming.

Based on Wheelwright's recent Entrepreneur column on how to take vacation property deductions, below are ten tips that every real estate investor should consider:

1. 14-Day Rule Can Eliminate Short-Term Rental Tax - If the 14-Day Rule is used, home owners will pay $0 income tax on short-term rental income. To take advantage of this rule, the two requirements include 1) renting the property for fourteen days or less during the year AND 2) the owner must use the vacation house for their personal use for the greater of fourteen days or 10% of the total days the property is rented to others.

2. New Bonus Depreciation Deduction – The new tax law now allows property owners to deduct 100% of expenses for personal property and land improvements used for business. This change applies to new properties placed into service from September 27, 2017 – December 31, 2022.

3. New 20 Percent Pass-Through Deduction – If the property is owned as a business entity (Sole Proprietorship, S-Corp, C-Corp), the landlord may be able to deduct 20 percent of their rental property net income as a result of the new Tax Cuts and Jobs Act of 2017. Hire a great tax advisor to determine if this pass-through rule can be applied.

4. New Section 179 Deductions for Improvements – Vacation property owners can now legally deduct capital expenditures such as roofs, HVAC units, security systems and fire alarms under the new Section 179 Deduction, as long as the vacation rental is used by customers an average of seven days or less.

5. Home Office Deduction – Rental property owners may be able to deduct home office expenses, as long as their rental properties are managed from the home office. If applicable, equipment, utilities and supplies may be deducted as a percentage of your home expenses.

6. Rental Property Insurance Deduction – Landlords can also deduct your insurance costs. These expenses can include mortgage and fire insurance for the year they are paid.

7. Guest Service Fee Deductions – Many short-term rental companies charge service fees, including Airbnb, VRBO, HomeToGo and more. To determine the write off amount, the landlord and IRS will receive a 1099 Form from the rental company with the total fees collected.

8. Real Estate Tax Deductions – Real estate taxes are disallowed on personal returns once overall tax deductions exceed $10,000. However, this limit does not apply for real estate taxes related to vacation rentals because the income applies to business taxes.

9. Travel Expense Deductions – Landlords can deduct expenses when traveling to a rental property for maintenance and repairs. These travel deductions may include airfare, accommodations, meals, miles and other expenses, as long as they are reasonable.

10. Room Rental Deductions – Home owners who rent out a room versus the entire house can deduct 100% of expenses based on a percent of the business versus personal use. Expenses may include property insurance, mortgage interest and property taxes. And if a room rental is under fourteen days total for the year, the property owner does not owe any tax on this short-term rental income because the 14-Day Rule applies.

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About
Tom Wheelwright is a CPA, CEO of WealthAbility™, Best-Selling Author of Tax-Free Wealth (Rich Dad Advisors Series), Host of The WealthAbility™ Show with Tom Wheelwright CPA and the NEW Podcast: The WealthAbility™ for CPAs Show, Speaker and Entrepreneur Magazine Contributor. Tom is best known for making taxes fun, easy and understandable, and specializes in helping entrepreneurs and investors build wealth through practical and strategic ways that permanently reduce taxes. As a Rich Dad Advisor to Robert Kiyosaki (Rich Dad Poor Dad), Tom frequently speaks at conferences worldwide to entrepreneurs on these topics. His work has been featured in Accounting Today, The Wall Street Journal, Forbes, Investor's Business Daily, Consumer Reports, FOX & Friends, ABC News Radio, Marketplace, and many more media. https://wealthability.com

SOURCE Tom Wheelwright