The San Francisco Bay Area is a multi-talented region. A resident can specialize in engineering and spend the weekends playing drums in a local rock band. Or a full-time parent might be an aspiring artist after the kids are put to bed for the evening.
It’s rare that anyone in the Bay Area only does “one thing.” We love the variety! And that’s why living in such a successful, vibrant place is so appealing.
Our own CPA team is multi-talented, too. We have other interests, just like everyone else. But we are in our “wheelhouse” as San Francisco tax professionals. And when it comes time to do your taxes, you don’t want an amateur handling them. There are real consequences to allowing someone who dabbles in tax filings.
Maybe a relative has been handling their small business taxes for years and thinks they can help out. Or an uncle persuades you to let him assist with that personal tax return. They may be good at doing their own taxes—we won’t question that—but each person has an individual “thumbprint” around their tax situation.
For instance, owning property is still a great way to grow wealth. Some locals own several properties outside the Bay Area. It could be a cabin in the Sierras or a weekend getaway in the Redwoods. Sometimes, these homes are passed down from the family, too. Whether it’s used as an Air B&B or a regular family retreat, there will be tax requirements, and working with a savvy CPA is the best route.
Own a vacation home? You’ll want San Francisco Tax Professionals to handle that!
Maybe that vacation home is in Tahoe or somewhere in Washington State? If you have decided to rent it out for a few years or a weekend, the California Franchise Tax Board has rules about that (https://www.ftb.ca.gov/file/personal/income-types/rental.html). For instance, there are “fair rental days,” which are when a property is being leased to tenants. This is different from “personal use days.” Deductions and reporting will vary.
Any income received as a landlord is probably taxed. If the rental is also a special events property used for weddings, reunions, and parties, that income is taxed, too.
Remember, California residents are taxed on all rental income, no matter what state the property is in. So, if someone has a side hustle in property tax and tells you they know a few workarounds to avoid paying, consider the source.
The IRS also has a 14-day rule to pay attention to. The revenue must be reported if you rent your home for more than 14 days in a tax year. The IRS also explains the meaning of “personal use days” which is considered non-taxable dwelling use. Usually meaning you or your family are staying at the property for no charge (but not always). There are also differences around a “fair rental price” if you charge a family member to stay at your rental. This is common to help cover the housekeeping and energy use costs after the visitors have left. Every situation can result in a different tax outcome.
Dividing rental vs. personal use on a vacation home is just one example of what to consider when filing taxes. It’s wise to bypass the amateurs and go straight to San Francisco tax professionals!
