New AirBnB’er.. question with schedule c and tax benefits

[Matt Lenzi]

Hi All! Still trying to lock down a tax pro who is familiar with the STR strategies, but in the mean time- I've got some questions. I just started my AirBnB, it's a full time investment property. According to most everything I've read, I'll be filing schedule c on taxes. It is my understanding that I will not be subject to self-employment taxes because I don't think I offer any substantial services... Still not sure about that one.

With that being said, we just finished the rehab and furnishing.  I’ll have a couple bookings this month, but tax year 2019 will be a huge loss with all the expenses.  Will I be able to deduct the loss against my main source of income? As I understand, schedule c is active income not passive, so if I am able to deduct losses from this AirBnB against other income AND not pay self employment taxes, that would be great!  Any help on the subject is greatly appreciated! 

[Luke Carl]

@Matt Lenzi Ask 100 CPAs and you'll get 50 on schedule E and 50 on Schedule C. First lets answer the big question. What's the difference? 

Schedule C: Self Employment (1099)

Schedule E: Rental Income or Loss

More often than not a STR is a little of both.

I greatly depends on how you're running this business. The more it is like a hotel, the more taxes you'll pay. 

 If you're cooking them breakfast and turning the sheets every morning that would be Schedule C. If you're not... schedule E. If you're average stay is 7 days or less that's Schedule C. Yes you will be getting a 1099 from Airbng. As you can see, it's a bit of a gray area. 

Do some googling and search BP where you will find this topic discussed many many times. 

Keep in mind Schedule C (1099/self employment) is a much higher tax to pay. So.... perhaps if you can get away without turning the sheets every morning you'll be building more long term wealth!