That’s what I do. I have 2 airbnb. Just use 2 excel files. I record every expenses and note a category next to the each item and note what the items are, how I paid for, witch credit card or check # listed by the dates. Each month is one sheet, one file has 12 sheets and a final sheet. End of the year, I just add them up by category then send to my CPA. I also keep my receipts use same category. My son is going to write me a software that afer I put in the amount I just need to chose a catergory it will automatically add every up to the final sheet.
I don’t have that much expenses. So far not too bad.
That is essentially what YNAB does automatically.
California airbnb and vacation rental investors, operators and hosts should consider joining our San Francisco, Sunnyvale or LA meet-up groups!
Airbnb and vacation rental property investors, hosts and Co-host ecosystem
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I know this is an old forum question but there is a new bookkeeping business just started up specifically for hosts of vacation rentals, airbnb’s, etc. It’s called “Vacation Rental Bookkeeping.” You can hire your own personal bookkeeper for about the same price per month as the average rental gets for one or two night of bookings.They get paid month-to-month and all you have to do is get them the info they need at the beginning (cc, bank accounts) and then follow up by sending them pictures of your receipts with your phone. They’ll even catch your books up for you! The reports they make are super handy too - they can track practically anything you want to have tracked and have a lot of knowledge in the vacation rental industry so they can lend an ear if you need advice. They even work directly with your CPA or tax preparer to make sure they are getting exactly what is needed and you will end up saving time, money and knowing exactly how much money you have all the time (minus security deposits and all that). Check them out and tell them Katrina sent you!
What percentage will you be receiving?
Nothing. I just think the service is great…wish I could receive a percentage. You might want to ask…maybe they will give you a discount if you refer someone. I never asked - think I will 
Hi Lots of good info here. But didn’t see the answer to a question I have. If i spend $10k on a new roof or repaving a driveway, and I rent out a couple rooms in my house on AirBnB, and live in the rest of the house, how much of that $10k is a deductible business expense according to California and Federal tax laws?
If i buy new furniture for the guest room that is never used except for AirBnB, how much of the cost can I deduct as business expense?
Thanks everyone!
Shared expenses get very complicated and could very well affect the depreciation of your house, which in turn will mean that you might owe taxes when you sell that house. No one should answer this question who is not a CPA, preferably one that is registered in your state. Note, you can’t “write” it off… there is an IRS defined life span for a roof and driveway. You can not “write” off the complete number, or percentage of a complete number in one year.
Furniture is easier. You can depreciate furniture, based on expected life span, for the life of that furniture. If you do this, you can NEVER use that furniture for personal use.
Sounds like you need to meet with an accounting professional if you want to play in these waters.
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That’s what I do, as well (although maybe not every month)!
It is fairly complicated. For max depreciation deductions, do not use your rooms for personal use (yourself or friends/family staying for free or discount) over 14 days per year. Then the basic formula is to take the the annual depreciation on your roof calculated from IRS tables (new roof capitalized and depreciated over 27.5 years). Multiply it by rent days divided by rent days plus personal days – so you don’t get to expense for any personal days. Then multiply by the sq footage if the rental area divided by the sq footage of your total house – so you don’t get to expense for your non-rental space. There are rules for common areas etc. what the IRS would be looking for is documentation that the space was on the market continually, that you are charging market rate, and that you are not expensing things unrelated to the rental and not expensing improvements that should be capitalized (expensed a little bit every year). Plus, for mortgage interest and taxes, you need to exclude not only your personally-used sq footage, but first must exclude interest and taxes attributable to the land for your detached house. You can use your property tax valuation to figure out that proportion – assigned value og building divided by assigned value of land plus building. The depreciation will reduce (must be subtracted from) the basis in your property – generally what you paid for it plus cost of improvements --, making for a bigger and bigger potentially taxable gain when and if you sell if the property is holding value or going upin value.
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You are allowed to have "idle time, " say if you are closed for improvements or closed for the season. But if you are flip flopping between for profit and personal use (generally more than 14 days or 10% of toal rental days), there is an IRS calculation form for that and your deductions will be limited. So whew!
I use waveapps, too, and am happy with it.
Regarding that expense vs depreciation, not talking about a house where you rent rooms, I cannot speak to that, but I rent a whole house & I for any bill $2500 or less, I can declare a “safe harbor” and deduct that as an expense rather than depreciating it over time. It’s worth googling so you understand how that works
I Googled “safe habor” but will have to ask my bookkeeper because I definitely didn’t come up with the same def. that you did. “Safe harbor” from what I can tell, means that you underpaid on your taxes last year and this year you made less money (your business did not do as well) so you don’t have to pay the fees associated with underpaying.
Not sure if we are allowed to post links here, but following is a pretty good explanation:
There are multiple safe harbors, for example what you found is about how much withholding or estimated tax is paid in a year.
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There are different kinds of “safe habors” under tax law. Busymumsy’s is a great one for small businesses.It can be used if the total amount paid during the year for repairs, maintenance, improvements, and similar expenses for a building does not exceed the lesser of $10,000 or 2% of the unadjusted basis of the building, AND the unadjusted basis of the building (cost less land, usually) is $1 million or less. There is also an income limit but that’s $10 million over 3 years!
I bought my non-Airbnb LTR house in 2016, and I purchased a dishwasher. However, I couldn’t use the safe harbor because I spent over $10,000 altogether on a boatload of deferred maintenance that first year. I also have a loss carryforward so I wouldn’t have benefited in year 1 anyway (I don’t qualify for the $25,000 passive loss exception), but more expenses to carry forward sooner is good.
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Good to know. Guess it’s good I have a good bookkeeper…so many things I don’t know.
California has adopted Federal depreciation provisions called the Modified Accelerated Cost Recovery System (MACRS), for personal income tax purposes (this is where the 27.5 year recovery period for the roof mentioned by dpfromva below is determined) . Assets placed in service (i.e. when you started renting the dwelling unit) before 1987 continue to be depreciated under pre-1987 California rules.
Most of the differences between California and Federal depreciation (that have to be reported to Cali) occur within specific periods where assets were placed in service OR there was bonus depreciation on personal property.
Here it is, a year later. I am re-reading this post and it still sounds like greek to me. My game is as lame as it was last year. I’m lucky I can even tell you how much I took in this year.
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I did a webinar last year about taxes and I’m reaching out to the accountant so we can do an update. With the new tax bill it will affect us. Hopefully in a good way.
No… no way. The tax bill is terrible and won’t affect me in a good way.