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In October 2021 I acquired a short-term-rental investment property in California for which I use a management company. They handle all booking management and collection, take a commission, then they wire me the remaining on a monthly basis.

It was rented throughout 2021 but notably over Christmas, for which the guest paid the manager up front on Dec 23

The manager will wire me the balance in early January 2022.

Is this 2021 income or 2022 income? That is: do I report the income when the manager was paid or when I was paid?

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Your choice whether you operate on a cash basis or accrual basis. Default is cash basis.

IRS Tax topic 414

Most individuals operate on a cash basis, which means they count their rental income as income when they actually or constructively receive it, and deduct their expenses when they pay them

You should review if you had control to direct the money at the management company within 2021 (that is, could you have directed them to pay a vendor on your account or wire the funds to you sooner than they did by their choice) to determine if you constructively received the funds in the 2021 year.

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  • The manager handles housekeeping and urgent maintenance needs and deducts that cost from what they wire me. Does this change the situation or obligate me to a particular method?
    – Matthew
    Jan 3 at 17:38

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