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Returning Member

Depreciation of an Airbnb rental through an LLC with Combination of Rental Options

Hello!

 

This is a depreciation question.  Background data: my wife and I short-term rent our home.  We rent it out via an LLC (2 owner partnership non-community property state) for which we will be filing Form 1065.  The house is utilized 3 ways: (a) we live in it appx 8 months a year; (b) 4 months a year we rent the entire home out (though there is some vacancy); (c) we offer a shared living option during the 8 months we live in the property. 

 

How do I depreciate?  2018 had vastly different utilization rates (of each kind) than 2019 which will be different from 2020.  (a)+(c) are concurrent.  If we only rented the entire home 4 months a year (b), seems straight forward ~120 days/yr at full depreciation.  If we just did the private room (c), we would depreciate per % of house used/shared.  How do I amalgamate the three?  

 

For numbers in 2019: (a) personal use 200 days; (b) 76 days booked of 120 offered (we did not use the house in the difference); (c) 50 days shared living/co-utilized.

5 Replies
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Employee Tax Expert

Depreciation of an Airbnb rental through an LLC with Combination of Rental Options

Unfortunately, you have a rental situation the TurboTax is not set up to handle. You have a vacation home for some part of the year and a shared residence for another part. If you had either situation by itself, the program could handle it, but it can't reconcile both a part year and and shared space situation.

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Level 15

Depreciation of an Airbnb rental through an LLC with Combination of Rental Options

Normally, you would use TurboTax Business (different from Home & Business) to prepare the 1065 partnership return. The partnership would then issue each owner a K-1.

Once you received the K_1 you would use some other version of TurboTax to prepare your personal 1040 return and enter that K-1.

TurboTax Business just flat out can not handle your situation. So you really have no choice but to seek professional help for the 1065 Partnership return. Once you have the K-1's you "should" be able to use any personal version of TurboTax to prepare your personal 1040 return which would include those K-1's.

Take note that unless the IRS has changed the filing deadline for business returns, your 1065 was due on March 15th and is now late. The late filing penalty for a 1065 is $200 per person, per month. So as of now your penalty is $400 on that. Hopefully they've extended the deadline for business returns, as they have for personal returns.

 

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Level 15

Depreciation of an Airbnb rental through an LLC with Combination of Rental Options

The deadline for certain business returns that were due March 16th (including Form 1065) has not been extended.

 

With respect to returns due on March 16, 2020, which include Form 1065, Form 1065-B, Form 1066, and Form 1120-S for calendar year taxpayers, the filing of those returns has not been postponed.

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Returning Member

Depreciation of an Airbnb rental through an LLC with Combination of Rental Options

I definitely understand my situation is a bit more unique and not Turbotax friendly.  What would you suggest for the actual calculation to break down the situation and I can manually enter/override the numbers?  Thanks!

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Returning Member

Depreciation of an Airbnb rental through an LLC with Combination of Rental Options

Well, I had a CPA decline to take me on mid-February after talking to them since November last year.  I have filed the 1065 Partnership Return extension paperwork so I have a 6 month bonus window... now, I need to resolve how to do the math to make this make sense and not get in trouble with the IRS.