Can You Write Off Airbnb Expenses on Your Taxes?

When you rent out a property through platforms like Airbnb, the income you generate is generally subject to taxation. You can offset this taxable income by deducting certain expenses incurred in operating your rental. Understanding which costs qualify for these deductions is important for hosts to accurately report financial activities and minimize tax obligations.

Determining Eligibility for Deductions

The ability to deduct expenses for your Airbnb rental depends on whether your activity is considered a rental activity with a profit motive by the Internal Revenue Service (IRS). An activity is presumed to be for profit if it generates a profit in at least three out of five consecutive tax years, including the current year. If your rental activity does not meet this presumption, the IRS may classify it as a hobby. This significantly limits deductions, generally allowing them only up to the amount of income generated.

A property qualifies as a rental property for tax purposes when it is rented out for income. However, the exact tax treatment varies depending on the level of personal use. The rules surrounding personal use, often referred to as vacation home rules, can significantly influence the eligibility and amount of deductible expenses.

Identifying Deductible Expenses

Hosts can deduct a variety of ordinary and necessary expenses incurred in operating their Airbnb rental property. An expense is ordinary if it is common and accepted in the short-term rental industry, and necessary if it is helpful and appropriate for the rental activity. These expenses directly reduce your taxable rental income.

Deductible expenses include:
Mortgage interest paid on the loan used to acquire the rental property.
Property taxes assessed on the rental property by state and local governments.
Utilities, including electricity, gas, water, sewer, and internet services used for the rental unit during guest stays.
Insurance premiums, such as homeowner’s insurance, landlord insurance, or specific short-term rental policies.
Costs associated with cleaning and maintenance, including payments to professional cleaning services, cleaning supplies, and routine upkeep like lawn care or pool service.
Expenditures for repairs, such as fixing a leaky faucet or patching a wall. Improvements, like adding a new room, must be depreciated over their useful life rather than deducted in a single year.
Supplies provided for guests, such as toiletries, fresh linens, towels, and basic kitchen essentials.
Professional fees paid for services related to the rental activity, including property management fees, accounting services, legal fees, and service fees charged by the Airbnb platform.
Advertising and listing fees, which are costs incurred to market the property and secure bookings.
Depreciation, a non-cash expense that allows you to recover the cost of the property and its improvements over time. Residential rental property is generally depreciated over 27.5 years.
Travel expenses, if you travel away from your tax home primarily to manage or maintain your rental property. This includes transportation, lodging, and meals incurred during trips specifically for property oversight.

Accounting for Personal Use

When a property is used for both rental and personal purposes, special rules, known as the vacation home rules, apply to determine expense deductibility. The “14-day rule” is a key consideration for properties with limited rental activity. If you rent out your property for fewer than 15 days and also use it personally, the rental income is not taxable. However, you cannot deduct any rental expenses beyond those claimable as itemized deductions, such as mortgage interest and property taxes.

Personal use days include any day the property is used by the owner, a family member, or under a reciprocal use agreement. It also includes days when the property is rented at less than fair market value. Rental days are when the property is rented at fair market value to a non-family member.

For properties rented for 15 days or more with personal use, expenses must be allocated between rental and personal use. This is based on the number of days rented at fair market value compared to total days used (rental plus personal). For example, if a property was used for 200 days (150 rental, 50 personal), only 75% (150/200) of shared expenses like utilities, insurance, mortgage interest, and property taxes can be deducted as rental expenses. The remaining portion of mortgage interest and property taxes may still be deductible as itemized deductions on Schedule A.

Documenting and Reporting Your Expenses

Maintaining meticulous records is foundational for managing your Airbnb rental for tax purposes. These records provide evidence to substantiate deductions in the event of an IRS inquiry or audit. Without proper documentation, claimed expenses may be disallowed, potentially leading to additional tax liabilities, penalties, and interest.

Records should include receipts and invoices for expenses, such as cleaning services, repairs, supplies, and utility bills. Bank and credit card statements can corroborate expenditures. A detailed rental calendar is also important, documenting rental dates, income received, and personal use days.

While physical paper records are acceptable, many hosts opt for digital record-keeping systems, such as spreadsheets, accounting software, or cloud storage. Consistency and organization are important for efficient tax preparation.

Most individual Airbnb hosts report rental income and expenses on Schedule E (Form 1040), Supplemental Income and Loss. This form allows you to list gross rental income and subtract deductible expenses, arriving at a net income or loss.

In some cases, if the Airbnb activity is substantial and provides significant services to guests (beyond basic lodging), it might be considered an active trade or business and reported on Schedule C (Form 1040), Profit or Loss from Business. This is less common for typical short-term rental hosts.

You may receive Form 1099-K, Payment Card and Third Party Network Transactions, from Airbnb or other booking platforms. This form reports the gross amount of payments processed through the platform for your rental activity. You must reconcile the income reported on your 1099-K with the actual rental income you report on your tax forms, accounting for any platform fees or commissions.