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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Hi. What are you credentials please? I am an airbnb host

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Hi. What are you credentials please?

I am an airbnb host in NYC who is an apartment renter who rents a spare bedroom only while I am also here. I can't really file a schedule E since I don't own the real estate. I thought maybe a schedule C would be more appropriate, possible with Code 721310 "Rooming and Boarding" or Code 721100 "Traveler Accommodation" I am leery about saying it's a traveler accommodation because then I may owe NYC occupancy tax. I need your advice please. Thanks.

Hi and welcome to our site!
If that is rental activity - and if you receive rental income - that income and qualified expenses are reported on schedule E.
It doesn't matter if you own the property or not for reporting purposes. However if you do not own the property there are some limitations - for instance - you may not deduct depreciation. But your rental income and rental expenses are still reported on schedule E.

If you provide additional services to renters and such services are substantial - they it is not a rental activity - but a business - and you would report your income and deduction son schedule C.

Additional services might include food, cleaning services, etc.

 

The Hotel Room Occupancy Tax in NY - that is a separate issue. The tax must be paid on the occupancy, or the right of occupancy, of a room or rooms in a hotel. A "hotel" includes an apartment, hotel, motel, boardinghouse, bed-and-breakfast, bungalow, or club, whether or not meals are served.

A permanent resident (one who occupies a room for at least 180 consecutive days) is exempt form the tax. If your tenant lives less than 180 days - the Hotel Room Occupancy taxes are required regardless how income is reported for income tax purposes and regardless which business code is used.

Specifically for your situation - I suggest to review this article - http://techcrunch.com/2013/10/03/airbnb-nyc-concessions/

Customer: replied 3 years ago.

Hi. Thank you for your response. I did not realize that it was appropriate to possibly use a Schedule E in this situation, even if you DO NOT own the property. I thought E was solely for property owners.I have another rental property in Florida which I DO own, for which I have rental income and depreciation. I see that there is room on the schedule for multiple properties (A, B, C etc.), so the IRS will most likely be able to sort it out.


 


1.) If I decide to use the Schedule C instead, because we arguably do include in the base fee some other services like food and periodic cleaning, what "code" should I use? 721310 - "Room and Boarding", 721100 - "Travel Accommodations", or another one I have not considered? Would using either of the above codes raise a red flag that I should also be collecting occupancy tax? Will using solely the schedule E solve this quandary?


 


2.) If I simply fill out the Schedule E as outlined above, will anyone even know that "Property B" requires Occupancy Tax to be collected?


 


3.) If I do pay the Occupancy Tax, who collects it and how much is charged?


 


Thank you! Have a great evening!


 


Suzanne

If you have a rental activity - your rental income and rental expenses are reported on schedule E. There is NO requirement to own the property. However - as it was mentioned above - if you do not own the property - you may not deduct depreciation on that property. Still you may deduct other expenses - for instance if you rent the property from someone else - your rental expenses are deductible.

You may not simply decide to use the Schedule C if that is a rental activity. You may use any business code you think is appropriate. The business code itself is for statistical purposes and generally doesn't raise any red flags. You are using the business code for income tax purposes - that is not related to NY Hotel Room Occupancy Tax.
NY Hotel Room Occupancy Tax might be required regardless how your income is reported and regardless which business code is used.

2.) If I simply fill out the Schedule E as outlined above, will anyone even know that "Property B" requires Occupancy Tax to be collected?

When you have rental activity - you may have long term tenants or short term tenants - that is NOT indicated on your income tax forms. If you have short term tenants who occupies a room for less than 180 consecutive days - you are subject of NY Hotel Room Occupancy Tax.
Again - there is nothing on schedule E or any other income tax forms indicating if you have short or long term tenants.

3.) If I do pay the Occupancy Tax, who collects it and how much is charged?

Hotel Room Occupancy Tax are added to your bill and generally are stated separately as additional to your rent. You collect the tax and remit to taxing authorities.
Here is some additional information you might find helpful
- http://www.nyc.gov/html/dof/downloads/pdf/faq/hotel_occuupancy_tax.pdf
NYC-HTX Hotel Room Occupancy Tax Return -
http://www.nyc.gov/html/dof/downloads/pdf/12pdf/business_tax_forms/nyc-htx_2012.pdf
NYC-HTXB Hotel Room Occupancy Tax Return (for use by small facility operators only) -
http://www.nyc.gov/html/dof/downloads/pdf/12pdf/business_tax_forms/nyc-htxb_2012.pdf
File online with E-File -
http://www.nyc.gov/html/dof/html/jump/e_file.shtml
Hotel Tax - Certificate of Registration Application -
http://www.nyc.gov/html/dof/downloads/pdf/payment_operations/htx_certificate_of_registration.pdf

Hotel Room Occupancy Tax is based on the “rent” being charged for a room: <table border="1" cellspacing="0" cellpadding="2" align="center">

If the rent for the room is…

The tax will be…

$10 or more, but less than $20

50 cents per day per room + 5.875% of the rent

$20 or more, but less than $30

$1.00 per day per room + 5.875% of the rent

$30 or more, but less than $40

$1.50 per day per room + 5.875% of the rent

$40 or more

$2.00 per day per room* + 5.875% of the rent

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