How To Handle Taxes with Your Airbnb and Short Term Rental

With short term rental regulations changing day-day, it’s important to keep up and adapt with the regulatory landscape. A simple change, like ski-town, Breckenridge’s requirement of a responsible agent, can add another expense to your P&L.

Are you tracking your income and expenses for your short-term rental on Airbnb? Do you have an accountant to help with with your taxes? Have you considered the tax ramifications of your Airbnb, especially for your Airbnb in Chicago?
The good news is that there are tools and resources that can help you. And if you REALLY don't want to deal with them, we can help ;) Here are tax insights for your Airbnb:

Go Pro? The Right Questions to Ask

Whether you choose to prepare your taxes yourself or have a professional do them for you, it’s important to get the full scope of the tax implications so you know your true return, ie yield. We recommend walking through your taxes with professional help.

If you choose to do your taxes yourself, there are some resources that provide educational tools to understand the tax process. Ernst and Young and Airbnb havean in-depth guide here. This a must for most every Airbnb host. You'll learn how to cover everything from deducting maintenance costs to reporting rental income.

Here is a local guide for Illinois and Chicago taxes. The most relevant questions to ask yourself include:

• How much of your Airbnb income must you report?

• Which tax deductions do you qualify for?

• Which forms should you file?

• How can you stay compliant with estimated taxes and penalties?

How To Handle Taxes with Your Airbnb and Short Term Rental

Tax deductions are great because they help you pay fewer taxes. An Airbnb tax deduction is incurred in Chicago when you incur an expense in order to generate more income. For an Airbnb host, this may include:

• Mortgage or monthly lease payments

• Sheets, linens and other soft goods in your rental unit

• Wi-fi

• Cleaning fees you pay to a service provider

• Netflix/entertainment service costs

The important thing is to track your expenses. In order to claim these deductions keep all receipts and proofs of purchase in order to reduce your risk of tax penalties.

The 14-day Exception: Room-sharing

If you rent out one room in your house, the 14-day rule applies in the same way as if you rent out your property. If guests stay for 14-days or less, you don’t have to report the income , but you cannot take any deductions either

Track+Keep records of rental periods

Airbnb and short-term rental platforms are nice because they help you track and keep records. If you rent out your place for two weeks or less, keep track of rental days and days you use the residence yourself.

If you rent for longer than the 14-day exception period, detail the dates precisely so you can properly divide out personal and business expenses, like mortgage interest.

Airbnb Occupancy Tax in Chicago

In Illinois and Chicago, the municipalities impose occupancy taxes on short-term rentals. These vary widely from one jurisdiction to the next, from the name of the tax—hotel tax in some states, transient lodging tax in others—to the rates and rules. Here are the tax rules for Chicago.

Sometimes, the host is required to collect the occupancy tax directly from renters and submit the money to the tax authority. However, in certain cities and states Airbnb collects and submits the taxes. Airbnb imposes and remits these taxes in Chicago.

Self-Employment Taxes for Your Airbnb

Depending on how you structure your Airbnb business in Chicago, you may have to pay self-employment taxes, as well as income taxes. Self-employment taxes cover Social Security and Medicare contributions for income you make when you are in business for yourself.

When you Airbnb your home, make bookings and provide amenities like coffee or breakfast, the IRS treats you as being self-employed in the vacation rental business.

Prepare, prepare, prepare

Track, prepare, and use a professional is our best advice. Airbnb is still a new tool so always be prepared to receive a letter from the IRS. Don’t worry, just keep all of your documentation at hand.

Airbnb's Economic Impact in Chicago - 2017

Airbnb, the short-term rental platform, continued to grow in the Chicago market in 2017. And it isn't welcome news for the city's hotel industry.

For travelers who like the Airbnb experience, it is a positive sign to connect people to local culture, bring business to little-known neighborhoods, and provide unique travel experiences.

Airbnb's Chicago 2017 economic impact study states that Airbnb hosts' income totalled $77 million last year, up from the $67 million earned by hosts in 2016.

Airbnb hosts welcomed 500,000 guests in 2017, a significant jump from the 390,000 guests reported in 2016. Total Airbnb guest spending in 2017 was estimated to be $270 million, with average spending per day by Airbnb guests pegged at an estimated $171.

Airbnb operations in Chicago generated a total economic impact of $345 million in 2017, up from $331 million a year ago.

In their report, Airbnb takes pains to note that the proliferation of homesharing in Chicago has particularly benefited the city's South Side, where growth in guest arrivals in 2017 was up 70 percent compared to the previous year.  Much of the South Side is more economically depressed than other parts of the city, and Airbnb looks to be serving as something of an economic stimulant.

Perhaps to ward off any more salvos aimed at Airbnb by Chicago's hotel industry, the home-sharing service included some upbeat data about Chicago's hotel business in its economic report.

Chicago's hotel industry has been particularly paranoid about the Airbnb threat since the service started gaining traction in Chicago. Per Airbnb, Chicago hotel occupancy increased to 75.19 percent in 2017, up from 72.1 percent in 2011. And Chicago annual hotel revenue has increased 39 percent since 2011, from $1.64 billion to $2.28 billion.

To make hotel companies feel a little less paranoid, Airbnb pointed out today that 94 percent of its Chicago listings are outside of the Loop, the epicenter of the city's hotel business.

Founded in 2008, Airbnb is now a presence in 65,001 cities in 191 countries around the world. If you're curious why it is called "Air" bnb, send us a message.

The Best Bars Around the Chicago L: The Brown Line

So you've arrived in Chicago and booked an Airbnb. You ask the host where and what the nearest public transportation is to check out some of the great nightlife around Chicago. They tell you that a short few blocks away is the "brown" train line.

Huh?

Have no fear! If you’re looking for a good night out on the town, and  a way to get around at the same time, you're in luck.  Welcome to our 4 part series of “The Best Bars Around the Chicago L”.

We’re going to go over the 5 best bars around the various stops on the Pink, Red, Blue and Brown L lines. This piece will be about the Brown Line.

Let's hop on this train and get going!

The Red Lion

Neighborhood: Lincoln Square

L Stop: Rockwell

The Red Lion is a cozy neighborhood pub hidden in quaint Lincoln Square. The English styled pub prepares and serves fares grown locally with what it calls "Heritage Recipes", family recipes it says passed down from England for over 100 years. It features a large selection of twenty five classic and unique single malts such as Balvenie, Oban, Auchentoshan, Caol Ila, Bowmore and others. They also feature small batch Bourbons and Ryes. Their beer list includes over thirty five local, craft and imported beer, from the UK of course. For an intimate pub, that's an impressive list!

Another reason to stop by The Red Lion is, if you haven't guessed, the amount of Englishness it has. From a painting of the elegant Queen Victoria and a victorious English sea battle to the staff wearing a bearskin hat (you know the ones you see red English guards wearing?), it's a perfect place for an Anglophile to visit. Even if you're not, it's definitely a charming place to have a beer before you head to the next bar on the Brown line.

Huettenbar

Neighborhood: Lincoln Square

L Stop: Western

Since we're on the subject of great European style bars, let's move on to one of the other great countries in Europe, Germany. And being Lincoln Square with its traditional large German population, Huettenbar would have to be on the top of the list.

Huettenbar is a classic German pub. It has an Old World decor to it like its triangular roof, wooden front doors, sloped wood paneled ceiling and a floor of multicolored ceramic tile in earthy tones. The bar name is inspired by Alpine slopes which "Huettenbar" is loosely translated as "mountain hut/bar" in German. From the moment you enter the bar to sitting down, you'll feel like you stepped into an Alpine village pub.

Huettenbar doesn't serve food but it does serve plenty of German beers. It has 10 beers on tap like Kutschen Alt and Spaten and a nice selection of German liqueurs, such as Jagermeister, Westfalen Jager, Kabanes, and more fruity flavors like Edel-Kirsch, Echte-Kroatzbeere, Crazy Ananas , and Barenjager. 

Now that you have found an authentic German bar in Chicago, we're ready for our next stop for more great drinks! 

Schubas Tavern

Neighborhood: Lakeview

L Stop: Southport

Now that you have been to two cool bars that remind you of Europe, it's time to step into a bar that has been a staple of the northside and known for its great musical acts.

This bar is Schubas, a Lakeview establishment that goes wayyy back. Schubas was originally built around the turn of the 1900's as one of the Schlitz Brewery tap houses (they have Schlitz in bottles today). You can tell immediately the history of this place walking in. And though it sits on Southport street, it has the feel of a small neighborhood corner bar. Entering inside, the green-painted front room opens up to a 30-foot Brunswick mahogany bar. Above are traditional looking ceiling fans with tin ceiling above. You'll see the bar room with old bar goodies like a jukebox, photo booth, old TV's and even a mounted elk head.

And if you have all day, try their 70+ different types of hard alcohol, including a selection of bourbons, and several beers on draft and in bottles.

But the bar is as we said known most for its live music shows. On a weekend evening, you'll hear music even before you enter the doors. This Lakeview spot has everything a music fan wants - a small inviting room, excellent sound and an atmosphere that music fans can appreciate. Local bands come to belt their music, anywhere from rock, country, funk, indie, jazz to even folk. Usually you can come to the music room without a ticket but it's a good idea to call ahead.

So come to Schubas in the day for a low key affair or come at night to hear some great local music.

Local Option

Neighborhood: Lincoln Park

L Stop: Fullerton

Looking to drink at an intimate bar with great craft beer without all the hype or pretentions in Lincoln Park? Perfect, stop at Local Option! 

Local Option is nestled in a quiet Lincoln Park neighborhood, not far from DePaul. Which this is why it may surprised you that the crowd at Local Option is not college-heavy but instead gravitate toward a more mature crowd from later 20's to 50's. The more mature, but beer sophisticated crowd, like Local Options array of delectable craft beers. Names like Mourning Wood, Outlawger, Exorcist, Sky burial and so on. Interesting names aside, the beers are crafted strong and flavorful, ranging in alcohol content of six to as high as fourteen percent. It's definitely a craft enthusiast's dream.

Food is another intriguing aspect about Local Option. They range from NOLA style fare to Mexican food. The wide selection makes you want to try it all but definitley go for their jambalaya and tacos as well as their po'boys. They are good, good, good!

Corcoran's

Neighborhood: Old Town

L Stop: Sedgwick

As our train rolls around the bend to Old Town, we get off on the Sedgwick stop. Here we step foot into Old Town, a neighborhood west of Gold Coast, north of River North and east of Wicker Park. Money seems not to be a problem with its expensive condos all around but don't be intimidated, there are many good bars here. One of our favorite bars in this neighborhood is Corcoran's. 

Walk into Corcoran's and get ready to explore.The first bar is small and narrow, with not much room to stand but as you keep walking past tables you'll find a cool beer garden. Sit with your friends and talk about life or just people watch as others walk by. Or keep on going and you'll step into a "coach house" of sorts known as "Thade's Room." This room is quite unique. Always happening and full of fun people, it's a place you'll always remember, even if you had too much too drink! The beer garden and Thade's Room is what makes Corcoran's a great place for a cold Sunday drink or just a really fun Friday night out.

Five great spots on the Brown line for you to check out. There are plenty of more bars along this route but since we cannot make them all, check out these five first!