<prompt> Human: Hi personal finance,I live in NYC and my room mate and I rent a couple of rooms in our apartment on AirBnB. We average 2500.00 pmonth proom which pays for all of our rent, and utilities and maybe three or four hundred dollars in extra income per person.Im wondering if anyone on personal finance has experience running an AirBnB or something similar in a major city, preferably NYC.Im primarily interested in tax advice. Its likely that well hire an accountant to do our taxes in the end but Im trying to get an idea on what to expect.-What I can write off what I cant etc.-Special taxes applying to this type of income.-Also Id be interested to know how rental insurance is effected by running an AirBnBTheres a surprising shortage of this type of information considering the popularity of the service. So if anyone has first hand experience particularly in my area advice would be welcome.P.S. Before anyone feels the need to advise me on the legality of AirBnB in NYC let me just state that Ive read up on the law and so long as we occupy the apartment simultaneously this is legal. Also our landlord is aware of the situation and we have it in our lease that were allowed to do short term sublets without informing him or getting permission.Assistant: You, uh, read up on current case law on this subject -- or do you just read the blogs and leave it there? Because I am not convinced that what you are doing is legal and, furthermore, you are liable for NYCs hotel tax under the current interpretations of the law. I doubt youll find anyone reputable to provide you with the proper insurance for this endeavour. 2014 NY Slip Op 24129 AIRBNB, INC., Petitioner, v. ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL OF THE STATE OF NEW YORK, Respondent. 5393-13. Supreme Court, Albany County. Decided May 13, 2014.Human: the tldr; version of this is:The New York Attorney General has taken the position that it is illegal to rent out your apartment through AirBnB in the state of New York if:1 You rent for periods of less than 30 days. Because New York Multiple Dwelling Law, Art. 1, 4.8a only permits permanent residents to live in apartments and a permanent resident is defined as someone who lives there 30 days or more.2 You have rented your place out on AirBnB on three or more occasions and have rented for at least 14 total days during a one-year period. Because you are then counted as a hotel operator, requiring you to collect and pay New Yorks 14.75 Hotel Room Occupancy Tax, which you did not do.Assistant: 1 You rent for periods of less than 30 days. Because New York Multiple Dwelling Law, Art. 1, 4.8a only permits permanent residents to live in apartments and a permanent resident is defined as someone who lives there 30 days or more.Unless the apartment is occupied by the permanent resident at the time of rental.I rent rooms not my whole apartment.Its illegal to rent out your apartment while you arent there, subletting for periods of less than 30 days is legal so long as youre occupying the apartment at the time.Human: I am really concerned about number 2. You would be required to pay that tax even if you did not collect it. 14.75 of 2500 is 368 per month per room. Then you have to add penalties and interest. They are trying to get your information. If they do expect a bill. 1. An Excel spreadsheet Identifying all Hosts that rent Accommodations in New York State, including: a name, physical and email address, and other contact information; b Website user name; c address of the Accommodations rented, including unit or apartment number; d the dates, duration of guest stay, and the rates charged for the rental of each associated Accommodation; e method of payment to Host including account information; and f total gross revenue per Host generated for the rental of the Accommodations through Your Website. The Excel spreadsheet should be capable of being organized by gross revenue per Host and per Accommodation.2. For each Host identified in response to Request No. 1, Documents sufficient to Identifyall tax-related communications Your Website has had with the Host, including tax inquiries or tax document requests whether initiated by the Host or You.Then this money is taxable federally under the income tax. I am unfamiliar with NY state tax laws but if it mirrors the IRS code it would be taxable there as well.As for deductions you can probably deduct the percentage of sq ft that you rent out as business expense. Maybe a portion of your utility bill and food if you feed them. But this is not my area of expertise.Assistant: This seems to suggest you may be able to get out of paying hotel bed and breakfast taxes so long as you dont provide certain hotel services. And so long as you use the rooms for your own purposes without income for at least some of the time.We use the rooms as guest rooms when friends and family visit so we could probably argue that their specific purpose is not as a business.  <response>: Ummm. I dont know about that. That link seems to be talking about federal taxes. The HOT is a local and state tax. Who Has to Pay the Hotel Room Occupancy Tax?The Hotel Room Occupancy Tax must be paid on the occupancy, or the right of occupancy, of a room or rooms in a hotel. A hotel includes an apartment, hotel, motel, boardinghouse, bed-and-breakfast, bungalow, or club, whether or not meals are served. The occupant of any room or rooms in a hotel must pay the tax. Hotel operators and remarketers when a room has been purchased through a re-seller collect the tax from the occupant.I do not know NY state and local laws at all. I looked up the NY General laws. The hotel tax is broken down by county for some reason. I think different rates but I am unsure. I do not know which county you live in. But this would be the place to get your information. From my research the hotel tax is based on Tax Law 1202. Check it out.I hope for your sake you are right. But you might want to put some money aside to deal with any potential liability you might have. 