CW 911 FBF - The Potential Perils of Using Your Properties As Short Term Rentals

Today's Flash Back Friday comes from Episode 563, from September 2015.

If you are using your buy and hold properties as short term rentals, through a company like AirBnB,  you may be required to pay an additional 15.3% self employment tax. Although it may seem like a gray area to you, the IRS considers it an active business and will take note of which schedule you are filing. Short term rentals require more of your labor and your time which rarely gets accounted for when calculating costs. Considering all the aspects of short term rentals versus long term buy and hold properties will shield you from future surprises.

Key Takeaways

[2:04] The huge flaw in Airbnb

Brandon Hall Guest Interview:

[15:02] Airbnb investors also have a 15.3% tax on active income

[19:01] It’s more time and labor intensive than a buy and hold property

[21:50] A complicated scenario in setting up short term rentals

[27:47] The IRS may be bringing on the audits

[33:23] 500 material participation is solely for rental properties

[37:53] Long distance self management is possible and maybe easier

[39:35] Segmented depreciation, cost segregation using a sears catalog

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