About to deduct 220k on taxes help me feel ok with it

[Anonymous]

You should 100 expect to be audited.

[Anonymous]

You did not do this correctly. You need to depreciate improvements. $200k in repairs and maintenance is unbelievable and you will likely get caught.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is this your only business? You don't have W2 income because if you do, you cannot deduct those expenses if you don't have rental income to offset it.

we have a small amount of income from the running airbnb and about 600k of w2 from our primary jobs

It does not sound like running Airbnbs is your primary business, so it should probably be reported on schedule E and subject to passive loss limitations. I would expect an audit if you're taking $220k in schedule C Losses against your W2 income.

That's wrong. Airbnbs are active and schedule c because of it being like a hotel you provide services like cleaning and actively manage. Long term rents are passive and schedule e.

Actually, you're not quite correct. One can own an Air BnB rental and have it classified as a passive activity. Many folks rent their entire properties, use a property manager, and provide no services. This is a completely passive activity, and it shouldn't be reported on Schedule C.

If you are changing the sheets, cleaning up after your guests, actively managing the reservations, etc... you can report this on Schedule C. This is most common when folks are renting out a portion of their primary residence.

Anybody claiming a $220K rental loss should be very wary. The passive activity loss rules are very IRS-friendly.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You should expect to be audited.

We sold a rental property in OBX that we had bought at the height of the market in the early 2000s and sold about a decade later. We claimed a similarly sized loss, around $250k. They audited the F out of us. We had to provide receipts for every claimed expense down to the penny. It was a royal pain in the a$$ that cost us about $5k in accountant fees AND another $5k in disallowed deductions. So get ready.

We had never been audited before, and haven't been audited since.

Was this during the Obama administration? We got audited then to and never again , think they ramped up funding for the IRS back then and they were itching for work

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is this your only business? You don't have W2 income because if you do, you cannot deduct those expenses if you don't have rental income to offset it.

we have a small amount of income from the running airbnb and about 600k of w2 from our primary jobs

It does not sound like running Airbnbs is your primary business, so it should probably be reported on schedule E and subject to passive loss limitations. I would expect an audit if you're taking $220k in schedule C Losses against your W2 income.

That's wrong. Airbnbs are active and schedule c because of it being like a hotel you provide services like cleaning and actively manage. Long term rents are passive and schedule e.

Actually, you're not quite correct. One can own an Air BnB rental and have it classified as a passive activity. Many folks rent their entire properties, use a property manager, and provide no services. This is a completely passive activity, and it shouldn't be reported on Schedule C.

If you are changing the sheets, cleaning up after your guests, actively managing the reservations, etc... you can report this on Schedule C. This is most common when folks are renting out a portion of their primary residence.

Anybody claiming a $220K rental loss should be very wary. The passive activity loss rules are very IRS-friendly.

We don't use a property manager and do it all ourselves with apps

[Anonymous]

Anonymous wrote:

Anonymous wrote:Are you 100% sure you should be using schedule C instead of schedule E? Also, should you be capitalizing some of the improvements and depreciating?

some things were capitalized liked the buildings but everything else like repairs was not

Major repairs need to be amortized.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is this your only business? You don't have W2 income because if you do, you cannot deduct those expenses if you don't have rental income to offset it.

we have a small amount of income from the running airbnb and about 600k of w2 from our primary jobs

It does not sound like running Airbnbs is your primary business, so it should probably be reported on schedule E and subject to passive loss limitations. I would expect an audit if you're taking $220k in schedule C Losses against your W2 income.

That's wrong. Airbnbs are active and schedule c because of it being like a hotel you provide services like cleaning and actively manage. Long term rents are passive and schedule e.

Actually, you're not quite correct. One can own an Air BnB rental and have it classified as a passive activity. Many folks rent their entire properties, use a property manager, and provide no services. This is a completely passive activity, and it shouldn't be reported on Schedule C.

If you are changing the sheets, cleaning up after your guests, actively managing the reservations, etc... you can report this on Schedule C. This is most common when folks are renting out a portion of their primary residence.

Anybody claiming a $220K rental loss should be very wary. The passive activity loss rules are very IRS-friendly.

You are actually wrong. Even if I rent an entire property and hire third parties to do everything it is schedule c income, just like owning and not operating a motel.

[Anonymous]

I don’t have any clients who report short term rental income on Schedule C. Look at the IRS website and form instructions, not blogs.