Is my rental property a passive activity? Airbnb guest house tax deduction questions

Thanks for the clear explanation. So just to make sure I understand correctly - I can deduct all my expenses against the Airbnb income itself, but if those expenses exceed the income (creating a loss), I probably can't use that loss to offset my regular income since I'm over the $150k threshold? What happens to that "extra loss" then? Does it just disappear, or can I use it in future years somehow?

You've got it exactly right about deducting expenses against your rental income - all legitimate expenses can offset that Airbnb income regardless of your personal income level. Any losses that exceed your rental income don't disappear! These disallowed passive losses get "suspended" and carried forward to future tax years indefinitely. You can use these suspended losses in future years when: 1) you have passive income from other sources, 2) your income drops below the threshold allowing partial deduction, or 3) when you ultimately sell the property in a taxable transaction. This is actually a nice benefit - these losses are basically banked for future use rather than being lost forever.

That sounds interesting, but I'm curious - does it only analyze past tax returns or can it help with planning for the upcoming tax year? I just started my Airbnb this year and don't have past rental returns to upload.

I've tried other tax tools before that promised to help with rental properties but they always seemed to give generic advice. Does this actually give specific guidance based on your personal situation? And do they connect you with an actual tax pro or is it all automated?

It actually works great for planning your upcoming tax situation - you can upload current year expense tracking, rental agreements, or even just explain your situation in the chat interface and it will analyze what documentation you should be keeping and what deductions you'll likely qualify for. It's a hybrid approach - the initial analysis is AI-driven and extremely specific to your documents and situation (not generic advice). But what I found most helpful is they have tax pros who review complex situations when the AI flags potential opportunities. In my case, they identified a potential home office deduction related to my rental management that I hadn't considered and had a human expert review my specific scenario.

Wait, how does this actually work? They somehow get you to the front of the IRS phone queue? That sounds too good to be true honestly. The IRS hotline is notorious for multi-hour waits.

I don't buy it. No service can magically skip the IRS queue - everyone has to wait. This sounds like one of those services that just autodials for you, which you could do yourself for free. Did you actually get meaningful help faster than doing it yourself?

They don't skip the queue - they just have a system that waits in it for you. Their representatives know which IRS menu options to select to reach different departments, and they stay on hold so you don't have to. When they reach a live agent, they connect you to the call. I was extremely skeptical too, but it absolutely worked. I tried calling the IRS myself three separate times and got disconnected twice after waiting over an hour. With Claimyr, I went about my day, and they texted me when they had an agent. I connected and got specific answers about depreciation recapture rules for vacation rentals that solved my exact issue. The whole consultation took maybe 20 minutes once I was actually talking to the agent.

That's really interesting - I hadn't considered that angle. I do provide cleaning between guests, stock the place with snacks/coffee, and I'm constantly available for guest needs. Probably spend about 8-10 hours a week on average managing everything. Would that level of service potentially qualify as "substantial" under IRS rules?

Based on what you're describing, you're in a gray area that could potentially qualify. The IRS doesn't have a specific hour threshold that automatically makes it "substantial services," but they look at the nature of what you're providing beyond just the space itself. The cleaning between guests alone probably wouldn't be enough, but when you add in the provisioning of food items, constant availability, and especially if you're doing things like local recommendations, welcome packages, or any personalized services, you're building a stronger case. Document everything meticulously - take photos of the snacks/coffee you provide, save all receipts, and keep a detailed time log of all activities. If you're ever questioned, having this documentation ready will be crucial to supporting your position.

I used TurboTax last year for my Airbnb rental. It does handle the basic deductions fine and walks you through the passive activity stuff, but I found it lacking when it came to depreciation calculations for items I purchased specifically for the rental. Ended up having to do some calculations manually. If your situation is relatively straightforward it might be sufficient, but if you have complex scenarios like partial business use or substantial improvements, you might want a professional's help.

Thanks for the feedback! My situation is pretty similar to the original poster - just started this year with a single property. Sounds like TurboTax might work for me if I'm careful with the depreciation stuff. Did you find any good resources for figuring out those manual calculations you mentioned?