Airbnb tax benefits/advice question

[Adrienne DeBauche]

Hi all! My in-laws are looking to capitalize on some of the amazing tax benefits of an airbnb (that we have heard about on a couple of the BP podcasts). They are custom home builders and will be making extra income this year due to selling significant assets. I threw out the idea of buying an airbnb to offset some of those tax implications.

First question: their CPA said if they purchase an airbnb and personally use it more than a couple weeks out of the year (they want to use it as a vacation home, too), then they won’t get all of the tax benefits of an airbnb. Is this true?

Second question: can they rent it to their LLC and have their employees stay? Then what expenses can they write off?

Third: any additional advice to save $ on taxes before the end of the year?

Last: We also discussed possibly doing a 1031 exchange. Can they use a portion of the income to 1031 into a vacation home and just get taxed on the left over?

Background: they live/work in Tennessee and are looking to maybe invest in Florida for the airbnb.

Any and all help is appreciated (including CPA references willing to chat). Thank you!