Tax situation with long term and short term rental.

Newark, New Jersey
Personal Finance
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Tax situation with long term and short term rental.

Joval Mathai
Investor · Northern Jersey · Member since 2022 · 50 posts · 11 votes

I’m a first time home-buyer. I bought a multi-family in NJ in May 2023. 

We live in Unit 1 and Unit 2 is rented out. Unit 1 where we live has a basement that’s rented out on Short-term rental/Airbnb (with average stay per person < 7days).

I attempted to do taxes (married, filing jointly with my spouse) on turbo-tax. When adding the rental income for Unit 2, it asked for % sq.ft. rented out. Any deductions (including mortgage tax, insurance etc.) added there was split accordingly and corresponding amount was shown under rental deductibles. We did the same for short-term rental/Airbnb.

It asked not to separately add mortgage interest/insurance paid for the unit where we live in- but we don’t see it deducted anywhere else apart from the rental+Airbnb.

Any suggestions on how to deal this situation with using the same property as primary residence + rental + short term rental ?

Thank you in advance.

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  • Jonathan Bock
    Accountant · Bryn Mawr, PA · Member since 2023 · 409 posts · 321 votes
    2y

    Really wouldn't recommend Turbo ... for your scenario, you have several interesting facts that the prompts and questionnaires are not best suited for.   

    0Reply
  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 977 votes
    2y

    @Joval Mathai


    I recommend finding a tax strategist that specializes in real estate taxation and STRs. You may want to consider working with your tax strategist remotely to expand your options.

    I would also recommend looking for a tax strategist who is willing to work with you throughout the year, not just when preparing your tax return. You want an accountant that can help you strategize and who is responsive when you want to know the tax consequences of the decisions you are making throughout the year.

    Good luck in your search.

    404-482-3170
    Hampton Tax and Financial Services LLC4.7106 Reviews
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    0Reply
  • Joval Mathai
    OP
    Investor · Northern Jersey · Member since 2022 · 50 posts · 11 votes
    2y
    Quote from @Jonathan Bock:

    Really wouldn't recommend Turbo ... for your scenario, you have several interesting facts that the prompts and questionnaires are not best suited for.   


     Thank you Jonathan for the insight.

    0Reply
  • Joval Mathai
    OP
    Investor · Northern Jersey · Member since 2022 · 50 posts · 11 votes
    2y
    Quote from @Bill Hampton:

    @Joval Mathai


    I recommend finding a tax strategist that specializes in real estate taxation and STRs. You may want to consider working with your tax strategist remotely to expand your options.

    I would also recommend looking for a tax strategist who is willing to work with you throughout the year, not just when preparing your tax return. You want an accountant that can help you strategize and who is responsive when you want to know the tax consequences of the decisions you are making throughout the year.

    Good luck in your search.


     Thank you Bill for your advice.

    1Reply
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