All Forum Posts by: Vikrant Prakash

@Sarah Kensinger

Yeah I have come across Toby’s team. It seems they have a lot of clients and sometimes I get inconsistent guidance from them but I will try. 

@Account Closed

@Tanner Bellamy

Thanks for the responses. I understand that Section 280A limits the expenses to income if the rental is part of the primary residence. But I heard a podcast from Tax Smart Real Estate Investors (link below) on house hacking which notes that if part of the residence is used exclusively for STR, section 280A loss limitations shouldn’t apply. I am probably going to try renting my unused basement for STR in any event due to incremental cash flow (STR loophole or not due) but wanted to check on the right accounting treatment.

https://podcasts.apple.com/us/podcast/tax-smart-real-estate-...

Quote from @Account Closed:

Quote from @Vikrant Prakash:

I am new to this forum but have seen some really great posts, advice and experiences shared on this forum. I am new to real estate investing and thinking of starting off by doing a "house hack" via renting out the unused basement as a short term rental (AirBNB, Vrbo etc) in my single family home which is used as primary residence. My local authorities allow STR once I get the necessary permits and business licenses. Based on what I have heard/read thus far, it seems like I don't need a formal legal structure such as LLC for running this is as an active business (but I may set up an LLC for asset protection, which is allowed by my mortgage lender). While the bookkeeping will likely be complicated, is the accounting/taxation on this STR based on 100% STR income/expenses allocated 100% to business and general house expenses (mortgage, utilities, depreciation etc) pro rated between STR/personal residence based on sq footage? if anyone on the forum has executed this strategy and/or if accountants/tax professionals have come across this situation, I would appreciate your thoughts and advice. Thanks in advance!

 Hey Vikrant, 

Your STR wouldnt count for the STR loophole since its your primary residence, but the good news is the book keeping and tax situation would not be super complicated. This is quite common and you don't need an LLC for it.

Zachary. Thanks for the response. Can you please elaborate why the business activity nature of STR will be treated differently due to part of the property being primary residence and under which rules? How is this activity treated/reported?

I am new to this forum but have seen some really great posts, advice and experiences shared on this forum. I am new to real estate investing and thinking of starting off by doing a "house hack" via renting out the unused basement as a short term rental (AirBNB, Vrbo etc) in my single family home which is used as primary residence. My local authorities allow STR once I get the necessary permits and business licenses. Based on what I have heard/read thus far, it seems like I don't need a formal legal structure such as LLC for running this is as an active business (but I may set up an LLC for asset protection, which is allowed by my mortgage lender). While the bookkeeping will likely be complicated, is the accounting/taxation on this STR based on 100% STR income/expenses allocated 100% to business and general house expenses (mortgage, utilities, depreciation etc) pro rated between STR/personal residence based on sq footage? if anyone on the forum has executed this strategy and/or if accountants/tax professionals have come across this situation, I would appreciate your thoughts and advice. Thanks in advance!