Week-to-Week Rental Saga: Am I a Landlord or Just Running the World’s Longest B&B?

[davidbarber]

So, here’s the thing: I’ve got this short term rental property, right? And I'm renting it here and there, which is cool and all, but then this guy, oh man, this guy decides to park himself for a whole year on a week-to-week basis. They're paying on time, every Sunday... like clockwork, which is great, but they won't sign a long-term lease. It’s like they’re playing some sort of twisted game of Monopoly with my house!

Now, in my head, this setup is a short-term rental because it's weekly, right? But the IRS, those fuckers, might come in and say it's a long-term rental, which will mess up the way I do my taxes, or at least that what my know-it-all non-CPA friend said last week after downing half a bottle of whiskey. Which, I mean... sounds just like them, doesn’t it? Turning things upside down just to mess with me. It’s like they get a kick out of turning my life into a bureaucratic nightmare.

I don’t want to boot the guest out, 'cause they’re clean and pay on time. It’s a rare find, like a unicorn in a dumpster. So, I’m stuck in this weird limbo.

I asked my CPA about it, said it was weird and will look at it after the holidays, money well spent folks!

What I need from you guys is some advice:

• How’s the IRS gonna look at this weird ass situation?
• Are there any IRS traps I need to look out for, like some kind of tax minefield?
• Can I argue this is an STR, or am I just chasing my tail here?
• And how the ***** do I document this for the tax man without pulling all my hair out?

Thanks for any help, folks. I’m just a guy trying not to go nuts over here.

And to the guest, you know who you are. – if you’re reading this, just sign the **** lease already!

[sup]P.S Your dog is an absolute maniac, put a muzzle on that thing.[/sup]

 

[resjudicata]

@davidbarber You resolve all of these issues by following the advice of your CPA, which you will have next week.

 

[zinyoro]

@davidbarber Also, call your lawyer. By letting them live there for more than 30 days (in most jurisdictions, some the period is shorter), they're now a tenant with any legal protections against eviction and whatnot that may provide. It's why property owners who are serious about not establishing that kind of status are resolute about not letting people stay more than 30 consecutive days

 

[tombombidil]

@davidbarber What are the tax benefits of short-term rental that you're afraid you'll miss out on? The usual thoughts are that LTR is better because it's passive income, whereas STR income is business income requiring Schedule C and paying self-employment taxes. Usually homeowners jump through hoops to go the other direction -- to pretend that their STR is really a LTR. You may have lucked into it legitimately?

 

[yager]

@davidbarber You have a weird fantasy of what the IRS is. AFAIK long term rentals are better not worse for tax purposes.

Anyway, you have a legal issue if this guest changes their tune. In every state AFAIK you now have a tenant because you've allowed them to stay 30+ days. Getting them out will take a regular eviction which will be expensive and time consuming.

 

[dmaxie61]

@davidbarber leave it all be.

pay whatever taxes your preparer says you owe out of the money you have been setting back each month from the rental income.

rinse and repeat for 2024