airbnb tax deductions

Airbnb Tax deductions: Top Expenses to Write-Off Against Rental Income

tax deductionAirBnB tax deduction ideas for hosts:  advice for Whether you’re looking to make some cash off your own home or simply rent out a vacation home, Airbnb is your go-to site. Over the last five years, this way of making a secondary income has become one of the most popular in the US, and for good reason.

Renting a property out to tourists is a secure way to gain a little extra money while meeting new people. Of course, Airbnb is not the only way forward; there’s also the likes of HomeAway, FlipKey, and, indeed, Vrbo.

If you’ve made a nice profit from these sites, there are a couple of things that you absolutely need to consider. You see, few people realize that they need to pay Airbnb income tax. Getting the help and advice you need is crucial. Luckily, you’ve come to the right place. We’ve got all the information you need about Airbnb tax deductions and how they really work. Here’s everything you need to know:

vacation home rental taxes

UTILITIES are a tax deduction

When you’re paying for utilities, you can actually claim some taxes back on them. After all, these fees count as business expenses when you are letting out a property. Some of the best Airbnb tax advice we can give you is to make sure that you work out how much you can deduct ahead of time.

To figure out how much you can deduct from your taxes, you just need to stick to a simple equation.

  • First, you should multiply the amount you spend on basic utilities (Cable TV, water, electricity etc.) by the days you rented out your property in any given month.
  • When you have that sum, you will need to divide it by total number of days in the month.
  • That final amount should be how much you can deduct when you complete your taxes.

FURNITURE can be a deduction

If you happened to furnish the place specifically for the purposes of letting it out on Airbnb (or any other letting site), you can claim some tax back for that. However, there are very strict rules when claiming tax for this fee, and so it’s very important that you speak to an expert when it comes to filing your return.

CLEANING FEES are a deduction

shady renter

Sorry, I threw up on your couch…

Do you pay cleaning fees on your property? It might actually be worth your money to do so since you can deduct these fees from your taxes. If you happen to work with a professional cleaning service, you should be able to deduct their total fees for the financial year.

However, if on the other hand, you clean the rented property yourself, you should keep a tally of the cost of cleaning products and the like. You may be able to deduct these expenditures when filing your return. Remember, the more accurate your accounts, the easier this will all be!

RENT is a potential deduction

If you don’t own the property that you’re letting out, you may be paying rent on a month by month basis. When the time comes to complete your Airbnb tax deductions, you cannot overlook this fee or it will cost you greatly.

First of all, you should divide your monthly fee by the days in the month to get your daily fee. Then, you will need to multiply that fee by the amount of days you’ve rented out the space. That final sum should be the amount you can deduct from your return.

FOOD can be a tax deduction

Of course, some AirBnB hosts or property owners actually offer food to their guests. If your rental includes breakfast or the like, you can claim some money back for this. One of the best pieces of Airbnb tax advice is that you must keep a record of your receipts.

When you purchase products for your guests, be certain to make a note of how much you spent. The cost of food is yet another thing that you ought to be able to deduct from your taxes.

Remember to keep records of rentals & expenses!

Of course, if you want to keep your finances in check, it’s essential that the records you keep are 100% accurate at all times. In fact, this is a legal requirement, and so it’s not something that you can ignore. You should always have a record of when people stayed, how much they paid, and any expenses that you have to cover during that period.

It might help to start a basic spreadsheet or sharable Google Doc detailing all of this information in full. The more detailed your document, the easier it will be to make sure that your taxes are in order.

AirBnB may issue you a 1099 form

1099 airbnb formIf you earn more than $20,000 via Airbnb and issue more than 200 transactions during the financial year, you need to take extra action. You can get issued the Airbnb 1099 forms from your account with sheer ease. Toward the end of January each year, you should find that these forms are available in your Payout Preferences on the site itself.

If you only have one Airbnb account, you should expect to get just one form. If like many people, you have multiple accounts, you will get more than one. If you have any questions regarding this aspect of the site, it’s well worth contacting the support team.

Make sure you get adequate tax preparation software or consult a tax professional

Renting your home or vacation home presents a number of tax implications, so don’t go with a free tax software, or “basic” version. You’ll need an edition of software like TurboTax (view coupons & discounts) or H&R Block (view coupons & discounts) that specifically includes “rental properties.”

For TurboTax, this is their “Premier Edition,” and for H&R Block it’s their “Premium” edition. If you’ve turned your vacation rental into significant income or business, consider the “H&R Block business” or TurboTax “self-employed edition” of their software.

Looking for a rough estimate of what your refund will be, or what you’ll owe the IRS? Consider running your numbers through a free online tax calculator from one of the top names. Although they don’t get specific, you’ll get a ballpark number to help avoid a big surprise during tax season.

More resources:

About kevin

Hi, I'm Kevin McCormick. I graduated from Rutgers U., and now live in Philadelphia with my wife, three kids, and a dog. I enjoy blogging in my free time, especially about finance and the history of taxation. Thanks for stopping by Mighty Taxes!

1 thought on “Airbnb Tax deductions: Top Expenses to Write-Off Against Rental Income

  1. Bertha Valdez

    Thanks for these air bnb deductions. i can use as many deductions as possible, as i spend a lot to maintain / rent out our place.

Comments are closed.