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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.

user662852
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Toni P
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3 Answers3

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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.

Ranma344
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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!

RADA
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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!

Regan Clarant
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