Airbnb Tax Deductions

airbnb tax deductions

By The Hospitable Team

Turning your home or apartment into an Airbnb can be a great way to earn additional income, but it comes with tax implications that you need to be aware of. As an Airbnb host, you must report your earnings from your short-term rental property as income on your tax return.

The good news is that you can lower your tax bill by claiming Airbnb tax deductions. Wondering what expenses related to running your Airbnb rental, you may be able to deduct? In this blog, we’ll talk about common tax deductions that Airbnb hosts in the US may be eligible for.

We highly recommend checking our masterclass and podcast, which cover all angles of US tax savings for vacation rental hosts.

What Are Airbnb Tax Deductions?

Operating an Airbnb is a business like any other, meaning that the profit you generate from your short-term rental is considered taxable income for the IRS.

At the same time, there is a fully legal and transparent way to reduce the taxes you pay to the IRS every year. You can deduct certain expenses associated with operating your Airbnb property.

Taking advantage of all available tax deductions can increase your rental income, which you can reinvest in buying a new Airbnb property to expand your business. You can scale faster if you streamline your routine operations using vacation rental software like Hospitable and put your business on autopilot.

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But first, you need to understand when you can claim Airbnb tax deductions. There is the 14-day rule, which determines if a property qualifies as a personal-use property or a rental property. This will significantly impact how your taxes and tax-deductible expenses are calculated.

To qualify for these tax-saving strategies, two primary requirements must be met:

  • The property must be available for rent for more than 14 days per year.
  • You can’t use the property for personal purposes for more than 14 days or 10% of the total days per year.

As you see, Airbnb tax deductions work for those who invest in a property with the main purpose of renting it out to paying guests and earning income in this way. If you sometimes use your STR property for your own purposes, you’ll need to keep detailed records as to what expenses were for your guests and which ones were personal. You will need this information when it’s tax time, and it can likely help you save significant money.

Airbnb Tax Deductions You Can Claim

If you are actively involved in managing your short-term rental property, here are the most common Airbnb tax deductions you should consider to minimize your tax liability.

Depreciation. The IRS allows you to deduct a portion of the cost of your vacation rental property each year over its useful life (it’s typically 27.5 years for residential property). This tax deduction starts working as soon as you begin to rent out your property to paying guests, and you can continue to write off depreciation until you have written off the entire property value.

Property taxes. Real estate property tax, paid to local government authorities based on the property’s value, is another deductible expense for short-term rental owners. It’s definitely something that you should take advantage of to reduce costs and boost profitability.

Costs for repairs and maintenance. Hosting Airbnb guests who stay for only short periods is associated with significantly more tear and wear than having a traditional, long-term rental property. That’s why regular maintenance and unexpected repairs are inevitable when owning a vacation rental property. So, whenever you have to fix a leaky sink, repaint the dirty walls, or fix an HVAC system, remember to keep the invoice to apply it to your tax deductions.

Insurance premiums. Having proper insurance coverage is a must for Airbnb hosts. This way, you can protect your rental property from a wide range of potential risks and yourself from liability if something goes wrong. The good news is that the cost of insurance coverage for your short-term rental property qualifies for tax deductions.

Cleaning services and supplies. Cleaning between guest stays is vital for keeping your Airbnb in top shape and attracting guests. Luckily, the costs of hiring a cleaning crew and buying housekeeping supplies and equipment can be deducted as rental expenses.

So, you can maintain a clean and welcoming environment for guests and get positive reviews that can win you more bookings while benefiting from reduced taxable income. If you opt for Hospitable, you can set your rules and let our system assign tasks to your cleaners automatically.

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Utilities. You can deduct the cost of essential utilities like electricity, water, gas, and internet service if you use them for your Airbnb. They are considered eligible as deductions since they are used by guests staying at your property and not by you.

Marketing and advertising. Marketing is essential for any business. Everything from building and operating a direct booking website to running paid ads on Google and social media is all eligible for tax deductions. If you use OTAs like Airbnb or Vrbo to reach potential guests, the host service fees you pay to the platforms are tax deductible since they are considered a necessary expense for conducting business.

Home office expenses. If you manage your STR property yourself, you have some sort of a home office. In that case, you can also deduct expenses related to the upkeep of such a home office. These include office equipment (laptop, tablet, etc.) and supplies (pens, paper, etc.). No matter how small and insignificant these costs might look, they can quickly add up. So, you should keep accurate records from the beginning.

Travel and transportation expenses. Whether you have a vacation rental property out of state or close to home, you must visit it occasionally. You need to ensure that your rental is in good condition and meets all safety regulations. You can claim your business travel expenses as tax deductions no matter what types of transportation you use.

Bottom Line

Owning an Airbnb rental comes with many important benefits, including the different tax deductions you can claim to lower your taxable income and increase your profit. No matter how small a cost might look, savvy hosts always try to take advantage of all available opportunities to lower the operating expenses of their STR business.

podcast_Amanda Han

Learn About The Vacation Rental Tax Loophole

We unveil the benefits of understanding and applying specific tax loopholes and offsetting techniques tailored for short-term rentals (STR) with the help of no other than Amanda Han, Tax Strategist and Managing Director at Keystone CPA.

Masterclass-Amanda & Matt

Tax Savings for Vacation Rental Hosts

The latest Hospitable Masterclass with tax-saving experts Amanda Han and Matt MacFarland from Keystone CPA guides vacation rental hosts through the tax season with ease — whether it is the basics of correctly filing tax returns or identifying often overlooked deductions.

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