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I have a Vacation Rental By Owner (VRBO) rental in a city that the company I work for (large company - W2) requires I travel to regularly. I am authorized to use either hotels or VRBO/AirB&B rentals when I travel.

Is there any financial / tax reason NOT to stay at my own VRBO rental? Any negative I'm not thinking of?

I have not told them it's mine, and I see no reason to as it's owned under my company name / not myself directly and managed solely (along with other rentals) by my spouse. I only plan to rent it to them when: 1) I can rent it to them cheaper than a local hotel and 2) it's already vacant.

Mark Henderson
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maplemale
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    You might want to keep a diary regarding condition (1) in the event the comptroller takes a close look some day. – user662852 Sep 28 '16 at 20:44
  • I am absolutely doing that. I am planning to take screen shots of local hotel prices with every booking showing the higher hotel rate and the cheaper VRBO rate and attach that to every expense report I submit...

    Any other advice? I don't see anything in our company policy which restricts me for renting to myself for travel. Though, my bet is it hasn't come up often. There are other restrictions such as not allowing fuel expenses for my own aircraft etc. but nothing about my own property rentals that I can find.

     – maplemale Sep 28 '16 at 20:45
  • i'm pretty sure brand-centric companies (like visa inc) would prohibit this simply because it has the "appearance of impropriety". the fact that it is a win-win would be irrelevant. that said, most product-centric companies (like InBev) would be totally fine with it. – teldon james turner Sep 29 '16 at 17:51
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    Be clear in your statements to your company that the unit belongs to a rental company in which you have an ownership stake. Don't say it's your house. It's not your house. It's not true and it gives the wrong impression. It is a rental unit owned by your company. Your house is your legal residence for tax purposes. I am assuming that the two are separate. – Xalorous Sep 29 '16 at 18:13

2 Answers2

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Your biggest problem is that this may be seen as a conflict of interest - in other words there is potential for you to make decisions about company money that benefit you, rather than the company. Fortunately it's not a very big problem, handled rightly.

In order to prevent any possibility that this might be a problem, I recommend that you:

  1. Go and tell whoever approves your travel expenses about the arrangement. Be up front that the place you are staying is yours. (That it is technically run by your wife will make no difference.) You might need to come with evidence that you aren't overcharging, i.e. rates of other places you might stay, but they probably know the rates in this city pretty well. However note that they will be comparing prices at other places you might reasonably stay, not necessarily places with the same facilities.
  2. Get a written statement that they are OK with the arrangement, and that they are OK with the price you are charging. If you really are cheaper than the local hotels they will probably be OK with it. Getting their agreement removes any possibility that you are trying to do something shady.

People have been fired for trying to rip off their companies through deals like this, but if you are up front about everything and aren't overcharging there shouldn't be a problem. And this is likely not a big enough amount of money to be a real problem anyway.

I don't see any tax issues in this. However check with the company that there might not be some more tax efficient way of doing things.

DJClayworth
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    I also suggest the term "arms length transaction", which is usually an assumption in most day to day activities and which would be violated here if the OP did not proactively mention it. Other than that I would only add that many people would consider nixing this as it also gives an "appearance of impropriety" - sure, you can explain that it's all on the up and up, but the fact that you have to explain it suggests it looks bad. Anyone in a political/public/sensitive role should avoid this even if it would actually be cheaper for the company - it just looks fishy. – BrianH Sep 28 '16 at 21:06
  • Given this answer and your comment, I'm starting to agree and thinking I'll just stay away from the entire situation. Seems like it's not worth it.

    Maybe this should be a different question: Let's say I stay at my VRBO rental, but don't expense it. Maybe it would be worth still staying there and somehow claiming it as a tax write off? I guess I'd have to pay myself (my wife) to do that though?

     – maplemale Sep 28 '16 at 21:12
  • No, don't misunderstand me. If you are up front about it, and the company is OK with it, it won't be a problem. I edited a bit for tone. – DJClayworth Sep 28 '16 at 21:36
  • Our expense / travel dept. doesn't really know how they feel, other than "VRBO rentals are fine with prior approval" -- which I have.

    I'm going to pose a written / email question to our legal team and or HR and be 100% open / up front as you suggested that it is my own rental. Thanks again for the comments!

     – maplemale Sep 28 '16 at 21:37
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    In some jurisdictions, land lords are liable for the same taxes hotels pay when renting out, so I'd check into that. – NuWin Sep 29 '16 at 03:20
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    @maplemale if your employer has an ethics officer/ethics hotline/etc they should probably be your first point of contact, and definitely be in the loop of you already started talking elsewhere. – Dan Is Fiddling By Firelight Sep 29 '16 at 14:36
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    @DanNeely That's actually a good point... I've found a section in our employee handbook dealing specifically with "Conflicts of interest" and it seems I am to email legal@. However, I'm fairly certain we have a hotline I remember hearing about as well. Perhaps they have a direct answer without me bugging the lead counsel of a massive company and irritating someone. :) Thanks! – maplemale Sep 29 '16 at 15:41
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    @maplemale If you handbook explicitly says to email legal@, that should trump the advise from random people on the net. If yours actually points to a generic legal@ address it's probably filtered by a junior staff person; if it explicitly says to email the top lawyer I'd guess they want him/her in the loop for compliance reasons; but minor issues would be handed off downward. A generic ethics line is generally setup to make sure there's always a PoC available if you're not sure who to ask; and (potentially) to provide a way to raise concerns anonymously. – Dan Is Fiddling By Firelight Sep 29 '16 at 15:50
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    I'd also add it's a good idea to get comparable rates from other places in town to show you're in line with expected rates. – corsiKa Sep 29 '16 at 17:56
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I am assuming United States based on the mention of W2.

It will depend on what documentation the company requires. Generally they will either require a receipt, or they will give you a rate based on IRS regulation or government per diem for that city.

I know that in the past one of my employers gave a set percentage of the per diem, in exchange for no receipts. This allowed you to stay with a friend or relative. The money wasn't taxable.

If the company doesn't require a receipt then you are probably OK. But I would make sure they knew about the ownership issue.

The tax issue could get interesting. If you stayed in the unit without paying that would count against personal use limits. If you use the money to pay the rental fee, the money will be income for the unit.

mhoran_psprep
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