STR Business

[jnicole455]

I am establishing a Short Term/Vacation Rental business for foreign property. I will create a US based LLC, but the property is outside of the US. The income will come from a foreign bank account, but I will be using US funds and credit cards to make purchases for running the business here in the US. What kinds of expenses can I write off for the business/property? And if I set up an LLC for the business, would I file that with my personal taxes or on a separate tax filing specifically for the LLC?

[tagteam]

Will you be providing substantial services to your renters, such as meals, changing linens, maid services, and the like?

See https://www.irs.gov/publications/p527#en_US_2023_publink1000234065

[jnicole455]

Yes, we will operate it as a vacation rental and provide cleaning services. No meals. 

[jnicole455]

Since it is a foreign property we will have to travel there from time to time as well. We also need to furnish the property. So can we write off furnishing costs, travel costs, etc from the income? 

We will also have to file taxes in the country we are running the property, and will be expensing some costs of running the business with that. So I dont know how that would work for filing taxes and expenses on the US taxes. 

[BeckyLeeH]

This link may help you understand how to report your Short Term/Vacation Rental business
on your US tax return, including all foreign income and what type of expenses you can deduct:

10 Tax Tips for Airbnb, HomeAway & VRBO Vacation Rentals

https://turbotax.intuit.com/tax-tips/rental-property/10-tax-tips-for-airbnb-homeaway-vrbo-vacation-r...

This link may help you understand how to file tax returns fo your LLC

LLC Tax Filing Rules
https://turbotax.intuit.com/tax-tips/small-business-taxes/llc-tax-filing-rules/L39E29kPR

Congratulations on your new business!

[jnicole455]

If the foreign income is taxable in the foreign country do we then file that as foreign income on our US LLC? And would the travel costs and furnishing costs etc be expenses we write off on the US LLC filing? Or with the foreign tax filing?

[tagteam]

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@jnicole455 wrote:

Yes, we will operate it as a vacation rental and provide cleaning services. No meals. 

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Critical here is this (from the link):

When you rent out your home, make bookings and provide amenities or services, like coffee or breakfast, the IRS may treat you as being self-employed in the vacation rental business.

The foregoing applies to regular cleaning services provided for renters, laundry for renters, linens, and the like.

Cleanings after renters leave the premises are different.