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I'm considering renting out my furnished 2BR/2BA condo as a daily rental. It is close to hospitals and is in Little Rock, Arkansas.

I don't expect to make enough money to pay all the expenses associated with the condo, but since I am only there about twenty percent of the time (I'm caring for my mom and live in a house on her property for which my husband and I pay all the expenses) it would be nice to recoup some of the loss.

How do I pay income taxes on it and if so, is it worth the trouble since I'll have to clean before and after each use which entails a 90 mile round trip? I want to be able to use the smaller bedroom when my husband or other family members need it so I don't want to lease it.

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    Income tax reporting is on Schedule E, and if it runs a net loss after depreciation, you are likely to be able (there are several tests in the instructions) to take up to $25,000 in losses against your other income. However, check if this will fit into your association rules. My condo is limited to initiating 3 leases per year.
    – user662852
    Commented May 28, 2016 at 17:38
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    Be sure to check your HOA rules and local regulations. In some cases there are restrictions on this type of usage of the property.
    – BrenBarn
    Commented May 28, 2016 at 18:07
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    You don't necessarily have to drive 90 miles to clean it - you could hire a local maid instead.
    – stannius
    Commented May 31, 2016 at 18:17
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    I wold make sure this doesn't affect your taxes when it comes time to sell.
    – kweinert
    Commented Aug 8, 2016 at 18:46
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    >I'll have to clean before and after each use which entails a 90 mile round trip? There may be airbnb cleaning services if you area you can outsource that to. There are in my city.
    – ChatGPT
    Commented Sep 7, 2016 at 5:48

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There really cannot be a straightforward answer to this question. It all depends on what lengths you take to make the situation advantageous.

If you manage to have a constant flow of people living at the place during all of the times you are not living there, and manage to find a cleaning service for a reasonable price. Then yes, there is a chance that this could be advantageous for you.

If you are simply looking for a way to offset some of the costs of the place you aren't living at full time, then you need to draw a comparison between upkeep and how often you will actually have customers.

It is likely you will have down time, in which there will be no one staying at the house. Hiring a cleaning service will cut some of your profit, and depending on how much that profit is, it could be a pretty big cut.

Now, not being an expert on taxes, I cannot say how this will impact those, but it is likely that you will have to pay taxes on money earned.

All this in mind, its a decision you will need to make taking all of the factors into consideration. Maybe give it a trial run, see if after one tenant you make any kind of reasonable profit in the end, and decide from there.

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This is easier than you think:

1) At the end of the year, AirBnb will send you a 1099 form. You will need to report the amount on this form as your rental income - they will report it to the IRS so it has to match. As a bonus, turning your condo into a rental property can become advantageous in that you can deduct repairs and improvements against any rental income.

2) As a host, you will have the option of charging a cleaning fee. Take a look at competitor listings to determine the average cleaning fee in your area. You do not have to clean before and after each guest, only before.

3) As a host, you also have the option of charging a security deposit to cover any damages. Don't get confused by AirBnb's host protection plan - this plan protects you against liability for damages incurred by your guests.

Now take a look at competitor listings to determine your rental price. (You may want to lower your price initially to get positive reviews going). Deduct your cleaning fee plus any reasonable wear and tear not covered by the security deposit above. This is your rental income.

If your rental income is a positive number - and as long as you charge a realistic cleaning fee/security deposit, it will be - you should rent it out. The worst that can happen is low occupancy i.e. you can't rent your place out as often as you expect. In which case you will be no worse off than you are today.

Good luck!

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I have loved using AirBnB. I have found it easier to hire a maid to clean and it has been extremely financially advantageous for me. Be sure to check out out regulations in your area regarding AirBnB.

I spoke with a personal advisor before I used AirBnB just to be sure that it would not affect my insurance, property taxes, as well income tax. It was very helpful to take this step before becoming a host!

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  • Are you suggesting there's no income tax to pay?
    – JTP - Apologise to Monica ♦
    Commented Sep 9, 2016 at 20:07
  • If you are taking a loss, there would be no income tax to pay. Depending on how often you rent it out, and the cost associated, it could be very easy to avoid any income taxes from the property, and even use it as a means to lower your existing income taxes.
    – Anthony McCloskey
    Commented Sep 13, 2016 at 18:12
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    @AnthonyMcCloskey - it would be an interesting set of numbers, to provide an ongoing loss for taxes, yet positive cash flow to make it feel worthwhile. Especially since the individual days would be rented at a high rate.
    – JTP - Apologise to Monica ♦
    Commented Oct 6, 2016 at 1:40
  • @JoeTaxpayer it really depends on what makes it "worthwhile" to the individual, right? In my case, I have at least one property for which I only want the mortgage covered. Someone else builds equity for me. But, that also means I take a loss on that property every year... The numbers don't have to be that interesting, you just have to understand your priorities and finances.
    – Anthony McCloskey
    Commented Oct 6, 2016 at 20:26

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