The Minnesota Department of Revenue recently announced that VRBO, AirBnB & other short-term intermittent rentals will be subject to more tax in Minnesota as they will be classified as commercial property. The department of revenue passed this earlier this year and sent a notice to all county assessors to identify these properties. Any required classification change identified by our appraisers will be effective for the 2020 assessment year and impact taxes payable in 2021.
Can short-term Rental Property be Classified as Residential?
In short, no. Short-term rental property cannot be classified as residential or apartment property because its primary function is income generation through short-term lodging (less than 30 consecutive days) - similar to a hotel property. Residential non-homestead and apartment classifications require rentals by tenants for 30 consecutive days or more.
CPEC1031
If you have any questions about how these new rules apply to your short-term rental property or whether or not you can subsequently do a 1031 exchange on such a property, contact us. For the past two decades, CPEC1031 has been helping taxpayers large and small exchange their investment property under section 1031 of the Internal Revenue Code. Our qualified intermediaries can advise you on replacement property, prepare your 1031 documents, and answer any questions you have along the way. Contact us today to learn more about the process and if your property qualifies. You can find us at our downtown Minneapolis office or at one of our satellite offices around the United States.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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