What is the best way to deduct expenses for AirBnB's

[Brad Scott]

Hey short term rental owners, 

I'm wondering what you would suggest in order to be able to deduct expenses of running your short-term rental business, i.e. furnishing the rental, management fee, etc. Is it easiest to have an LLC for your business in order file taxes through and deduct expenses or is there some way to just do this through my personal taxes?

Any advice on this would be much appreciated. 

Thanks!

[Michael Plaks]

@Brad Scott

Business expenses are deductible no matter how you run them, as long as they are recorded/traced. For recording/tracing purposes, it's cleaner if you have a separate bank account for your rental and channel all your income and expenses through it. The trick is to not mix it with your personal money.

This was a simplistic advice, as the details can get more tedious. For example, your mixed personal/business expenses, such as everything related to your car and your cell phone, should be paid from your personal money but still be tracked.

An LLC changes nothing for taxes, but it might provide some legal liability protection. This is a very controversial topic. You can search this forum for "LLC asset protection" and find dozens of threads debating the legal benefits of LLC, or lack thereof.