IRS Section 179 Airbnb Tax Deductions
I was at a real estate seminar this week and I learned something AMAZING about Section 179 Airbnb Tax Deductions. I wanted to share everything I learned with you here.
You can learn how to make $1276 becoming an Airbnb Host here.
Keep in mind these tips do not just relate to Airbnb rentals. They apply to capital equipment purchases for any business you own as well. Given the fact I am in real estate, with a strong interest in Airbnb rentals, I really tuned in for the Airbnb Tax Deductions discussion.
IMPORTANT NOTE: I am not a tax professional nor a CPA and I am not advising you in any way. Rather, I just learned all about the Section 179 Airbnb Tax Deductions available to entrepreneurs like myself, and I wanted to share. PLEASE speak with your CPA to learn more.
What does the Section 179 Tax Code Mean?
In 2017, in an effort to support small business, the real estate industry and stimulate the economy (which I am all for), the Trump administration enacted the Section 179 Tax Code.
Basically, Section 179 allows small business owners to write off business personal property and/or capital equipment purchases – all in the first year that the asset is acquired or purchase is made.
Now, if you own a restaurant or flower shop type business, equipment costs might mean vans, delivery vehicles, refrigerators, cooking equipment, tables and chairs and so on.
If you are a real estate investor, and purchase a rental property, these expenses might look more like refrigerators, stoves, microwaves, washing machines, garage doors, garage shelving and flooring.
Keep in mind, the also applies to property you purchase and operate as an Airbnb rental.
So, with a rental property, or Airbnb rental, might be available to write off ALL these expenses in the first year you own the asset:
- $3,000 in appliances
- $2,000 for the garage door
- $1,000 for garage shelving
- $8,000 for flooring
- $5,000 for landscaping
Does this diminish my standard depreciation?
No, this is in addition to the standard depreciation your CPA is most likely already using on any real estate asset you own. It’s a bonus – mean to help entrepreneurs grow their business. :))
So what is Personal Property in a real estate Rental?
Keep in mind that these Personal Property items are most likely things that CAME with they house when you purchased it. NOT things you had to go out and buy. They most likely were inside the home at the time of your purchase – items such as the stove and flooring.
By the same token, if you purchase a home to rent out as an Airbnb, you will have additional Personal Property items to deduct.
Think of the items you must buy to furnish the house and run your business. Things your customers will need and use while they stay in the rental home.
With an airbnb.com rental, you would also purchase items such as: dishes, beds, sheets, silverware, glassware, supplies and even the boat that came with the lake house that the renters use while staying.
The beauty is…you are now able to write it all off in year 1!!
Do Section 179 Airbnb Tax Deductions Apply to Property I Purchased Years ago?
Unfortunately, or fortunately if you just purchased property and have not filed your taxes yet, the deduction only applies to rentals or Airbnb homes – the fist year you purchased the property.
Therefore, if you purchased a house in 2018, furnished it and kept it as an Airbnb rental and already filed 2018 taxes, you can not take the deduction on your 2019 taxes.
Rather, if you purchased the property in 2019, kept it as an Airbnb rental, or ordinary rental in 2019, and plan to deduct it on your 2019 tax return, you may still do so.
How long will the Section 179 Airbnb Tax Deductions Apply?
There is no way of knowing. As administrations change, so do tax codes.
For now, however, it is a very helpful addition to the tax code for entrepreneurs, real estate investors and Airbnb hosts everywhere.
Be sure, again, to speak with your own trusted CPA to find out more about how you can take advantage of the IRS Section 179 Airbnb Tax Deductions. They are amazing.
Click here to learn how you can get $55 toward your first Airbnb rental.
Not yet earning money as an Airbnb host? Click here to start earning $1276 a month as a host today!!
To read more about the IRS 179 Tax Codes you can check them out here on the IRS website.
What to look for in an Airbnb before booking – from an Airbnb superuser!