I am trying to file my Airbnb income but the directions tell me to do it as a rental/royalty. However, the first question is whether or not I rented out owned property
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sarahg1117
New Member

I am trying to file my Airbnb income but the directions tell me to do it as a rental/royalty. However, the first question is whether or not I rented out owned property

I did not rent out owned property. I rented out an extra bedroom in a house that I rent. How do I account for that?
5 Replies
Phillip1
New Member

I am trying to file my Airbnb income but the directions tell me to do it as a rental/royalty. However, the first question is whether or not I rented out owned property

Rental income from subletting property that you rent is still treated as rental income and expenses on schedule E.

My apologies. I need to expound.

In your situation, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. You will enter the calculated rental portion into the rental section of TurboTax.

While calculating your deductions, you cannot deduct any part of the cost of the first phone line even if your tenant has unlimited use of it. If you install a second phone line strictly for your tenant's use, all of the cost of the second line is deductible as a rental expense. You do not have to divide the expenses that belong only to the rental part of your property. For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense.

You can use any reasonable method for dividing the expense. The most common methods for dividing an expense are based on the number of rooms in your home or based on the square footage of your home.

For example, I would go about it like this. Assuming I have a 4 bedroom 2 bath home that also has a kitchen and living room, we would have 8 rooms to consider and the number 8 would be used as the denominator in my division problem. The tenant would have one room and one bath that is exclusively used by them. Since the kitchen and living room is shared, you could take 50% for both rooms making 3 total rooms used by the tenant. The number 3 is the numerator. The rental percentage becomes 37.5% or ? of the home. You would take this percentage and multiply it against all of the home’s expenses, except expenses that apply to the tenants bedroom and bathroom. Any expenses for the tenants exclusive rooms are fully deductible as rental expenses.

To complete the example, you would need to apply the fraction of ? (8 rooms - 3 tenant rooms = 5 personal rooms) or 62.5% to the deductible expenses for your part of the home. The deductible expenses for the personal part of the home includes mortgage interest, mortgage insurance, and real estate taxes.

sarahg1117
New Member

I am trying to file my Airbnb income but the directions tell me to do it as a rental/royalty. However, the first question is whether or not I rented out owned property

Hi Phillip, it's not a sublet. There is no sublet contract and all fees go through Airbnb. I am tripped up because if I answer the first question correctly, which is "No - I do not own this property", it doesn't file it at all. If I say "Yes" and go through the questions about owning 0% of the property, after I fill everything out and look at the summary, it says I made $0 income from this property, which is not true. Maybe I'm dense, but I don't know what you are talking about with "schedule E" because the way Turbo Tax works is you answer a bunch of questions, so I really don't know where the answers are going on the form, which is frustrating bc I just paid a bunch of money to go around in circles.
Phillip1
New Member

I am trying to file my Airbnb income but the directions tell me to do it as a rental/royalty. However, the first question is whether or not I rented out owned property

No problem. Let me take a moment to run this through the program.
sarahg1117
New Member

I am trying to file my Airbnb income but the directions tell me to do it as a rental/royalty. However, the first question is whether or not I rented out owned property

Hi Phillip,
Sorry, still not getting it. I understand when you say you need to calculate the division, but I don't have a mortgage because I don't own it and I have no idea what the mortgage is on this house - I just pay my rent. I am totally lost on how to fill this out.
Phillip1
New Member

I am trying to file my Airbnb income but the directions tell me to do it as a rental/royalty. However, the first question is whether or not I rented out owned property

You are definitely not dense. This is a complicated situation, there are a few special circumstances for a rental property involved.

In your case, enter “yes, you owned 100%” on the screen labeled “Property Ownership”. Although this is not true in regards to the ownership of the home, but it is true in regards to the income from AirBnB.

You will then need to make the calculation for the rental portion of your property (number of rooms rented/total rooms in the home) as mentioned in the revision to my original answer.

TurboTax will use the number of days rented that you enter on the screen labeled “Was This Property Rented for All of 2016?” to calculate the portion of your rental expenses that are deductible for the portion of the year that you rented the property on AirBnB.

Let me know if the above makes sense in a comment. I am off for the night in a little while, but I will continue if needed tomorrow night with you.

(I am going to paste a few attachments to the original answer)
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