Julian Sage:                         00:00                     In this episode, we’re talking about taxes for your short term rental Airbnb business. So stay tuned.

Julian Sage:                         00:06                     Vacation rental machine helps hosts just like you learn how to start grow and scale your short term rental business. The show’s all about creating systems that help you automate your business, give any more time and money freedom. If you’re ready to start living the vacation rental life, then subscribe to this podcast today, come and join us on our Facebook group, the host nation where we’ll be talking about starting automating and scaling a short term rental business. Now onto the show.

Julian Sage:                         00:32                     Hey, welcome back to another episode of vacation rental machine. I’m Julian Sage and I’m with Jon Bell and we are talking about taxes and optimizing and how these relate to optimizing your business. So when you are operating a business at scale, you are going to be spending a lot of money. There’s going to be a lot of money coming in and out. So when you are just getting started, it can be pretty easy to quickly not get a handle on where your money’s coming in and out. But you do want to get this very tight when you are optimizing at scale and you are managing multiple businesses. Things can get very messy very quickly, but we also want to talk about the ways that you can be able to save money by tracking certain types of things in your taxes. So Jon, with over 34 properties now, 34 that is crazy.

Julian Sage:                         01:16                     What are your taxes look like and how much are you able to save off of this business even with the rental arbitrage business because people think when it is just rental arbitrage that maybe because it’s not purchasing a property, the taxes aren’t as great, but in the rental arbitrage business, that might actually be even better than let’s just say a purchase of a long-term, buy and hold. What are your thoughts on that?

Jon Bell:                               01:37                     Oh man, it’s definitely going to be better than a traditional buy and hold, but you also get the same benefits that you do if I had a buy and hold rental property that I was claiming expenses on. In this scenario, I have a lot more expenses because either I’m touching the unit a lot more, it needs a lot more maintenance. Whether that means I got to get new blinds. I got the maintenance guy going to fix whatever.

Jon Bell:                               02:00                     All of those things are something I can write off, including the expense for the lease. So that’s the majority of a lot of income right there that you instantly can write off and you want to be smart about just recording all of those expenses. Every time you go to the store, you could write off whatever you’re buying. I mean this business kind of lends itself to just write offs in general because there’s travel involved. You need gas, you need to go out there. So that means you got some mileage that you should be able to clock against some taxes. When you go to the store and you pick up just one or two things, you buy that ring doorbell and you want to go put that on. Well, if you go put that on and you have it installed, that’s all a write-off.

Julian Sage:                         02:42                     So Jon, with this business, there is a lot of money that you are able to generate, but a lot of people are probably afraid at the end of the year where they do have to pay their taxes and they’re just going to be just thrown a giant tax bill that maybe they, you know, maybe not everybody’s really good at saving up for that tax bill. But what are your taxes like at the end of the year with over 34 properties?

Jon Bell:                               03:01                     Well, this is the first year I will be doing it with 34 properties, but last year I was able to just have enough losses and have a good amount of profit documented that my taxes were not unbearable. Again, you’re really going to write off a lot of the stuff that you do in this business. You still have payroll, right? You got to pay your people you should be paying yourself. All of this stuff in the right company structure really shouldn’t cost you at the end of everything.

Jon Bell:                               03:28                     It should only really be a benefit when it comes to actual personal write-offs. So again, you’ve got to document this stuff. You got to get in with the CPA, you got to make sure that you’re recording all of your expenses and everything that you need to know and everything that they need to know before tax season. Tax season is upon us right now. We should all be getting ready and prepared. One other quick bit; in Airbnb, if you are prompted to either operate as a business or not, you need to go ahead and put in your tax information. What I found out on one of my profiles is that I didn’t put in this information and Airbnb was actually keeping in remitting 24% of all revenue just because I didn’t put in this information. So that basically meant that they were withholding some of my money.

Jon Bell:                               04:16                     So make sure you put that information in and save it and then look back at your trends for the months forward and make sure that you get it as much revenue as you can from those bookings.

Julian Sage:                         04:26                     So at this point, if you haven’t started optimizing your tax savings strategy, then you definitely need to do that. If you haven’t set up a system such as like QuickBooks to be able to track all of your expenses. If you haven’t set up your business account or your business credit card, you really need to be doing it at this point when you already have your business operating. This should have been something that you should have been doing before, but now is the time to really start fine tuning these things. So we’ll include the episode right here where we were talking about the tools that you can use to be able to track your finances.

Jon Bell:                               04:55                     The question of the day, what are some of the things that you’re doing in order to save money on your taxes? Leave it in the comment section down below and until next time, host nation.

Julian Sage:                         05:06                     Keep on hosting. Hope you hosts found value in this episode. If you did, please go on over to iTunes and leave us a review as that would greatly support the show. If you’d like to connect with Jon, the community, and I then go on over to our Facebook group, the host nation, talk to you hosts in the next step episode, keep on hosting.