STR tax benefits for small business owner

[Brian Davis]

Hello,

I wanted to try to fully understand what the tax benefits are for someone who is looking to get into STR investing and trying to navigate tax benefits.

Basically my family has a small business that I am part owner in as I split with my brother and father.  Currently we have a CPA who handles all of our business taxes and also handles all of our personal family taxes.  I work pretty much 9-5 but my taxes are filed as 1040 self employed and every quarter I have to pay estimated taxes to both my state and the IRS.

Once I decide to get my first STR I am highly considering finding a separate CPA that specializes in the short term rental taxes. I am hoping I can potentially find someone on here. I live in CT but don't believe I need a cpa that lives in my state and they can be from anywhere, would that be correct?

I really wanted to see if anybody could try to explain in laymen’s terms what my tax benefits would be outside of depreciation and mortgage interests.  Most people I have been reading up on are W2 employees so their benefits may be way different than mine since none of my taxes are being deducted from my paycheck and I’m just paying estimated taxes.  Can I somehow intertwine and mix my taxes much easier since I’m self employed?

Thanks in advance!

[Michael Plaks]

Quote from @Ryan Thomson:

I would also look into Qualified Business Income Deduction (QBID). The first 20% I make in my rentals is tax free. 

One does not need to "look into" QBI. It's not some strategy that you implement, it's an automatically calculated adjustment.

And it's not that first 20% of your rents is tax free. It's 20% of your net income (after all deductions, including depreciation) from rentals that is tax free. That is, if you have net income. Most of the typical long-term rentals generate net losses, and QBI is not applicable then.