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!

[Michael Plaks]

@Adrienne DeBauche

This is trying to get a 2-hour consultation in a free online post - impossible, particularly because we would need to know a lot about your in-laws' situation. And they really should be getting tax advice first-hand, not through you.

That said...

1. AirBnb for tax benefits cannot be used personally for more than 14 days. There's a second rule that may allow a few more days if the property has very little vacancy. Most important: letting friends and family (you for example) stay there is ALSO "personal use" unless you pay them full market rent.

2. Renting to their own LLC will not work. A+ for creative thinking though.

3. https://www.biggerpockets.com/forums/51/topics/1007488-debun...

4. 1031 and vacation homes is complicated

5. Not enough time to buy and set up an STR for 2023. Buying is not enough, they will need to accommodate at least two stays during 2023.

6. This forum features 20+ tax experts specializing in real estate, plenty to choose from.