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What Do I Need To Know About Short Term Rental Taxes
We recently put a property under contract that will be our first short term rental. We have owned long term rentals for a number of years, so we are very familiar with how to track and handle expenses on that type of property. The biggest difference seems to be startup costs and furnishings, but I have also read comments about being self employed in a STR business. I do have a CPA who I do plan to speak to, but I want to get educated ahead of time so I can have an intelligent conversation. I don't want to miss any deductions.
1. My question is how does a STR differ on taxes from a LTR or do I just use the standard Schedule E?
2. Are purchases like furniture expensed or depreciated? Does it matter if they are purchased before we put the property "in service" and start renting it?
3. I am assuming with startup costs my first year will be a loss, so I assume I can write that off against my LTR income, correct?
4. I read somewhere that with a STR it is considered an active business and you are self employed versus rentals that are considered passive. Is there something here with self employment I should be aware of as far as taxes or additional write offs?
@Natalie Kolodij and any other CPA or STR owners please share your best advice.