You’re looking to make some passive income and Airbnb seems like a good way to accomplish that. Before you click on the website and make an account, you should read this brief list of facts about hosting on Airbnb.
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1. It Doesn’t Have to be Your Primary Property
Are you worried about strangers sleeping in your home? Do you not want them to walk into your bedroom or browse through your kitchen? That’s perfectly understandable.
The good news is that you don’t have to put up your main residence on Airbnb. You can rent out a secondary property on the site so that you can maintain your sense of privacy and comfort.
What if you don’t have a secondary property? It’s possible that you could make one. As long as you have enough space and the approval of your local zoning laws, you could build a secondary property called an accessory dwelling unit in your backyard with the help of a shipping container. A container home Airbnb is not a bizarre concept. In fact, the rental type is so popular that Airbnb has a specific search category for shipping container homes. You could join that category!
2. Airbnb Takes a Cut
As a host, you will bring in profits from your renters—but you should know that Airbnb will take a cut of those profits. The percentage isn’t enormous. Airbnb only takes approximately 3% of your earnings. So, you’ll keep the majority of the profits in your pocket.
3. Airbnb Offers Insurance
Are you worried that a guest will damage your property? That a guest will get injured? That something bad will happen and you’ll be financially responsible for it as the host? Airbnb has you covered.
The AirCover for Hosts plan offers host liability insurance. Hosts have $1 million in coverage in the event that they are considered legally responsible for issues like guests getting injured or guests losing personal items. The plan also offers $3 million in coverage for damages to your property. That should be a relief.
4. Your Neighborhood Might Stop You
Before you put up a listing, you will need to do some research. You will want to check local zoning regulations to guarantee that you’re legally allowed to go forward as a host. If you’re a member of a homeowners association (HOA), you will also want to check with it before you rent out your property. Your HOA might forbid members from doing so.
5. You’ll Have to Prepare for Tax Season
If you’re planning on hosting an Airbnb, you should also know that you might have to report your earnings to the IRS. After all, your rental property is generating taxable income.
There are some exceptions to this legal obligation. According to the IRS, if you rent out your residential or vacation property for fewer than 15 days, you do not have to report your rental income. Or if you earn less than $600in the calendar year, you do not have to report your rental income.
If you earn more than $600 in gross income from your rental property and you rent it out for more than 15 days in the year, Airbnb will issue you a Form 1099-K. You will have to fill that out come tax season.
Don’t rush into hosting on Airbnb. Do your research and then you can decide whether you should put up a listing. Get the facts first!
