1099 From AirBnB and Schedule E?

[Luke Carl]

When I have to ask this question on BP it's time to find a new accountant. LOL. 

I will get my first 1099 from Airbnb this year. Do those numbers get transferred to a schedule E or am I actually paying regular old 1099 self employment tax?? 

Thanks!

[Brandon Hall]

@Chris Mason @Luke Carl there is no flexibility for Sch C reporting if your average rental period is less than 7 days. The IRS deems you to be operating a hotel or BnB business. As such, you must report as those businesses would report.

If you can push your average rental period above 7 days and NOT provide substantial services, you have flexibility of reporting on Sch E. What are substantial services? What if a property management firm is the one managing it? Great questions. All of which will soon be audited and trialed in court.

I foresee a ton of AirBnB folks getting their a** handed to them by Uncle Sam over the next few years. Mass market BnB is relatively new due to AirBnB. Millions of people are incorrectly reporting this stuff per current guidelines.

If you see it, point people to resources where they can learn about their position and determine whether or not they are incorrectly reporting. Otherwise it's going to hurt once the IRS knocks on their door.

Our firm presses boundaries and plays in the grey area. But we only do so when we feel we can make a compelling argument to support a tax position.

One thing you can do - buy multi family instead of a single family. Then (assuming a duplex here) rent one unit on a 12 month lease. Rent the other unit on AirBnB. Doing so pushes your average rental period above seven days as this is looked at on the property, not unit, level. And you still get the increased rents due to AirBnB.