Protecting Your Assets and Optimizing Your Tax Position
Operating STRs without proper legal structure exposes your personal assets to liability. This chapter covers LLC formation, insurance requirements, and the tax strategies that STR investors use to legally minimize their tax burden.
Form an LLC before your first booking. Single-member LLC provides liability protection and pass-through taxation.
Separate LLCs per property vs. one LLC for all: consult a real estate attorney. One LLC is simpler; separate LLCs provide better liability isolation.
Insurance requirements: standard homeowner's insurance does NOT cover STR use. You need STR-specific insurance (Proper Insurance, CBIZ, or Airbnb AirCover supplement).
STR tax advantages: depreciation, mortgage interest, repairs, supplies, software, and professional services are all deductible.
Short-term rental loophole: if you materially participate (500+ hours/year), STR losses can offset W-2 income. Consult a CPA.