Page 15 - BusinessWest May 2, 2022

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ACCOUNTING & TAX PLANNING
MAY 2, 2022 15
Increasingly, third-party sites like Airbnb and VRBO have made it easier for individuals to rent out their homes
and condos and generate revenue. Given these trends, it’s important to understand both the tax benefits and tax implications before listing your property for lease.
BAy Elliot Altman, CPA, MST
re you a current host or con- sidering renting your prop- erty on third-party vacation sites?Understand the tax ben- efits and implications before
listing your property.
Whether you are a first-time host or an
experienced pro, it’s important to consider
the responsibilities as much as the benefits. What follows is a comprehensive tax guide for vacation rental owners that covers everything from how to report your income to the IRS, to what deductions you can claim.
Benefits to renting out a room or vacation property
With the rise of the sharing economy, more and more people are renting out their homes on platforms like Airbnb and VRBO. Third-party sites like these can offer a variety of advantages.
First, you can reach a large audience of potential renters. Both sites have millions of users, so you’ll be able to find people from all over the world who are interested in stay- ing in your rental. Second, you can set your own price and terms. You’re in control of how much you charge and what kind of rental agreement you want to have with your guests. Finally, renting through a third-party site can be a great way to earn extra income. With careful planning, you can make sure that your rental property is profitable.
What is taxable and what is not?
When you’re renting out your property, it’s important to know what income is tax- able and what is not. Generally, any money that you receive from renting your property is considered taxable income. This includes rent, cleaning fees, and any other fees that you charge your guests.
However, there are some exceptions. For example, if you rent out your property for less than 14 days per year, the income is not con- sidered taxable. Additionally, if you use your rental property for personal use part of the time, you may only have to pay taxes on the portion of the income that comes from rent- ing it out.
Here are some of the most frequently asked questions related to taxes and your Airbnb and Vrbo rentals.
Do I have to pay taxes on rental income?
If you rent out your vacation home, spare room, or apartment for more than 14 days a year, you are required to pay taxes on the
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How to Maximize Your Tax Benefits on Your Vacation Rental Property