The Airbnb 14 Day Rule and Your Taxes
Understand the key tax distinction for short-term rentals. The number of days your home is rented determines whether you must report income or can deduct expenses.
The 14-day rule is a provision within the U.S. tax code for homeowners who occasionally rent out their property. This rule is a federal regulation found in Internal Revenue Code Section 280A, not a policy created by a rental company. If you rent your home for 14 days or fewer during the calendar year, you generally do not have to report that rental income on your federal tax return.
This tax treatment applies to various properties, including houses, apartments, condominiums, and mobile homes. The rule is part of the tax law designed to simplify tax obligations for minimal rental activity.
Qualifying for the 14-Day Rule
To benefit from the 14-day rule, a homeowner must meet two specific conditions. The first is that the property must be rented for a total of 14 or fewer days during the tax year. These rental days do not need to be consecutive, as the cumulative number of rental days within the year determines eligibility.
The second condition is that the property must qualify as the taxpayer’s personal residence, which involves a personal use test. To meet this test, you must have used the dwelling for personal purposes for more than 14 days OR more than 10% of the total days it was rented to others at a fair market price, whichever is greater. For example, if you rented your home for 100 days, you would need to have used it for personal reasons for more than 14 days, since 14 is greater than 10% of 100 days (10 days). Personal use days include days used by you, other family members, or friends who do not pay a fair rental price.
Tax Implications When You Qualify
Meeting the requirements of the 14-day rule has direct tax consequences. The rental income you earn from renting your home for 14 or fewer days is not included in your gross income for federal tax purposes. You do not need to report this income on your Form 1040 or its accompanying schedules.
This benefit comes with a trade-off. Because the rental income is not reported, you cannot deduct any expenses associated with the rental, such as cleaning fees or platform commissions. Homeowners can, however, continue to deduct qualified expenses they would normally be entitled to, like mortgage interest and property taxes, on Schedule A (Itemized Deductions).
Tax Treatment for Rentals Exceeding 14 Days
When you rent your property for 15 or more days during the tax year, the tax situation changes. All rental income you receive must be reported to the IRS on Schedule E (Supplemental Income and Loss), which is filed with your Form 1040. This applies regardless of whether the property is your main home or a vacation property.
Since you are reporting the income, you can deduct rental-related expenses. Because the property is used for both personal and rental purposes, you must allocate expenses between the two uses based on the number of days for each purpose. For example, if you rented your home for 90 days and used it personally for 210 days, you could deduct 30% (90 rental days / 300 total days of use) of your eligible expenses.
Common deductible expenses include:
- A portion of your mortgage interest, property taxes, homeowners insurance, and utilities
- Direct rental expenses such as platform service fees, cleaning and maintenance costs, and supplies for your guests
- A deduction for depreciation for the wear and tear on the property and furnishings
Essential Record-Keeping and Reporting
Diligent record-keeping is fundamental, regardless of whether you expect to qualify for the 14-day rule. Maintain a clear log that distinguishes between personal use days and rental days throughout the year. This log is the primary evidence for determining if you meet the personal use test and for allocating expenses if you exceed the 14-day rental limit. You should also keep detailed records of all rental income received and retain receipts for every expense related to the property.
You may receive a Form 1099-K from the third-party payment network that processed the payments from your guests. This form reports the gross amount of payments processed on your behalf and is also sent to the IRS. If you do not qualify for the 14-day rule, you will use this form along with your own records to report your income on Schedule E.
If you do qualify for the 14-day rule, the income is not taxable even if you receive a Form 1099-K. You do not file Schedule E for this activity. It is wise to keep the form with your tax records along with your log of rental and personal use days to substantiate why the income was not reported if the IRS ever has questions.