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Visitor I

tax for two buisnesses I am self employed but have started renting out our other home on airbnb

I am an artist and do bespoke finishes but have started running our other property on airbnb. Do I amalgamate all my expenses for both businesses together? do I total up all income and divide expenses? 

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Catalyst V

tax for two buisnesses I am self employed but have started renting out our other home on airbnb

Sure wish it was a simple answer. But I have to start with those dreaded two words, "it depends".  (sigh)

If on the rental side you are providing recurring services, that makes the income from the AirBnB rental "earned" income that is reported on SCH C. So what are recurring services? Those are basically services you provide to tenants on a recurring basis. For example, do you include breakfast in what you charge for the room and do you provide that breakfast? If so, that's a recurring service.

Do you provide room service (morning bed making, and/or evening bed turndown service) on a recurring basis? That too is a recurring service.

So if you provide recurring services to your tenants you are basically operating like a hotel. Therefore that is earned income and is reported on SCH C.  Now you "can" report the income from both businesses on one SCH C, but because the two businesses are not "like kind" I do not recommend it. You should report each business on their own separate SCH C as a part of your personal 1040 tax return.

Now for the other side of that coin. If you do not provide recurring services to your tenants on a somewhat regular basis, then that AirBnB income is passive rental income. You report that on SCH E as a part of your personal tax return also. It's passive, because all you do is "sit there" and collect rental income. You don't go out and "do something" to earn it.

You also need to check with your state and local city/county on this too. When renting short term some states or lower taxing authorities consider you to be no different than a hotel, weather the income is passive or earned. They may assess something like a "bed tax" that you have to pay to that local taxing authority, usually on a monthly or quarterly basis.  If this is true in your locale, then chances are AirBnB will send a copy of any tax statements they send you, to that local taxing authority. So check on registration requirements for that. The last thing you need at tax time is for your local city or council to fine you for running an unregistered or unauthorized hotel or hostel.

Oh, one other thing you need to look at too. How does your local taxing authority define "short term rental"? I know in my state a short term rental is defined as "leased for 30 days or less for any one period during the calendar year". A few counties over they define it as leaded for 15 days or less in any six month period during the calendar year.

Generally, a "short term" rental is treated the same as a hotel room you stay in for the night, or hostel that is usually utilized by those "just passing through".