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09-24-11 t1_jcfgi2p wrote

Reply to comment by tiregroove in Nearly 1,500 buildings ban Airbnb and other short-term rentals by fluffykintail

Even worse these properties are likely LLCs and they’re writing them off as business expense losses come tax time.

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ChornWork2 t1_jcftvfg wrote

What do you mean? Sure, may result in a loss for the unit since zero revenue but some expenses means a loss. But all they can do with that is offset tax they may have from profit elsewhere. Still a negative for them.

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JuniorAct7 t1_jcg0gly wrote

This is correct. They can only deduct rental losses against other passive income. It will lower their taxable income, but almost certainly not enough to offset the lost revenue.

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kiklion t1_jcg7h5l wrote

It’s considered passive income and there is a cap on how much of that loss can pass through to offset your personal income.

Otherwise it just grows as a prior loss and the expenses are used to offset future revenue, but that only happens if they actually rent out the unit.

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theageofnow t1_jcihh3n wrote

LLCs are pass-through entities, if the landlord owned the building as a direct partnership or in their own name (no incorporation), it would not affect their tax status or rate.

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monkeysandmicrowaves t1_jcg5hb7 wrote

Are they able to deduct the market value of the rental, or just the taxes and maintenance costs? If it's the former, I think we've identified a big part of the problem.

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theageofnow t1_jcihm5r wrote

You can’t deduct money you don’t earn. It’s not writing off an unpaid invoice using the accrual method. You can’t invoice a tenants that’s not there.

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