Share on FacebookTweet about this on TwitterPin on PinterestShare on RedditEmail this to someone

0202151124

With tax season now upon us it’s time for Airbnb hosts (at least in the U.S.) to start thinking about how they’ll file their taxes and what deductions they may be eligible for.

Having personally gone through this last year, I’m familiar with the pain and uncertainty but I am by no means an expert. So that’s why I called upon Derek Davis of Shared Economy CPA to contribute this guest post.

Top 5 Tax Deductions for Airbnb Hosts

There are some great tax deductions available if you’re an Airbnb Host that can help you mitigate your tax liability.  Below provides a list of some of the top tax deductions that can save you money.

1. Rent – Rent can be one of your biggest personal expenses on a monthly basis and if you’re renting your home and hosting it for Airbnb, it can be one of the best tax deductions available to you. To figure out how much rent you can deduct for tax purposes, use the following equation:

a. [Monthly Rent Expense] x [Days rented out/Days in Month] = Amount you can deduct for Tax Purposes

2. Cleaning – The expenses can range from hiring a professional cleaning service to buying toilet bowl cleaner, windex, and vacuum. There are many day-to-day cleaning expenses that you can incur to keep you place clean for guests which are deductible!

3. Furniture – This is a great tax deduction, especially if you purchased furniture for your purposes of Airbnb. Such expenses can include: Beds, Desks, Drawers, and other household items. There may be special rules that are applied to furniture so please be sure to speak with a competent professional regarding this. Mention “Darebnb” when booking at Shared Economy CPA for special pricing.

4. Electricity/Cable TV/Water and Sewer – This is often the most overlooked tax deduction but it can save you a pretty penny when it comes around to tax season time. To figure out the amount you can deduct for these expenses, use the following formula:

a. [Amount spent on Electricity, Cable, etc] x Days rented out/Days in Month] = Amount you can deduct for Tax Purposes

5. Food – This is a great little tax deduction if you provide food for your guests and it’s an ordinary and necessary part of running your Airbnb listing. Make sure to keep track of every expense that’s related to business as opposed to personal food.

Overall, there are some great tax deductions that are available to you. It is important to provide adequate records of your expenses if they ever get called into questioning. To receive $50 off your tax return this upcoming season, please mention “Darebnb” when signing up for The Shared Economy CPA services. Happy Savings!

Share on FacebookTweet about this on TwitterPin on PinterestShare on RedditEmail this to someone

22 Comments

Karen · May 19, 2015 at 6:39 pm

Hi Chris, I am an AirBnB host in the UK. Our apartment has been very successful on the site and we have made several thousand pounds over the last 12months. Please could you create a similar post to the above for how taxes work in the UK?

Thanks,
Karen

Chris

Chris · May 23, 2015 at 3:51 pm

Hi Karen, thanks so much for reading! Taxes are such a tricky problem. Every area will have completely different rules. Even in the US the tax laws very so much county by county and state by state. That being said, it’s great to get feedback like this from UK readers. Knowing what readers want is extremely helpful! In the future I’ll try to do a bit more research in the UK market knowing that it’s what readers want.

Gemma · July 2, 2015 at 1:13 am

Hi Chris,

This information is so useful – thank you! We’re just about to start renting a small guest house we’ve renovated on our property and are trying to figure out how best to do it. All of your posts have been really useful. Two questions. We are in a remote-ish location in upstate NY. Are all the five sites you list as AirBnB go to’s (e.g., Superhost) city based services or everywhere based services? I haven’t looked at the sites yet but will – just figured I’d ask. Secondly, all your info on the guest book and house rules was very useful. I couldn’t find mention anywhere however, about personal liability coverage. I understand that AirBnB overs comprehensive coverage for property, but nothing that would prevent an renter suing you if they incurred an injury, even if you had provided all the necessary health and safety equipment and instructions (e.g., a burn or fall). DO you have any advice on this? Many thanks!

Chris

Chris · July 6, 2015 at 11:04 pm

Hi Gemma,

Thanks so much for reading, glad you’re enjoying the site! I’m actually from Upstate NY originally (just south of Albany) good to see an Upstate NY reader. Most of the services I’ve suggested for automating are location-based (i.e limited to large cities for the time being) but there are some location agnostic remote options. https://www.keycafe.com/ is a solid choice for remote check-ins. Also, there are loads of wi-fi connected door locks these days that you can check out, here is one that I like on Amazon http://amzn.to/1S49Lpa You bring up a great point about personal liability coverage. Of course, I’m not a lawyer so I suggest you do further research on that if you’re interested. But I’d say the chances of getting personally sued by a guest are fairly slim. Home owners or renters insurance should be a given for many reasons beyond Airbnb! Thanks again for reading, hope that helps!

Leah · September 18, 2015 at 1:07 pm

Hi Chris,

I am wondering if you still need to report AirBnb income – if it is lower than your overall rent and was just a way of subsidising my rent, by renting out one room in my 2 bed flat. I have read elsewhere – you can’t “operate at a loss,” but what if there was no real profit since it was just a way of lowering my overall monhtly rent?

Thanks!

Leah

Chris

Chris · September 22, 2015 at 5:13 pm

Hey Leah,

Thanks for reading! This is still such a sticky topic. The overall rule of thumb is yes, you should report any and all income you receive from Airbnb (and any other income really). It shouldn’t matter if the income is lower than your rent since that doesn’t really come into play when reporting taxable income. Now having said all that, laws will vary depending on where you’re located. Do your homework for your city, state, or country. For instance, in San Francisco the laws differ slightly depending on if you rent your entire home versus just one room. But yes, the income should technically be reported regardless. Some may say that very small amounts won’t matter much in the grand scheme of things, but you’re always at risk of being audited and held responsible for income reported or not. Hope that helps!

Daniel · December 19, 2015 at 7:21 pm

Hi Chris, can you deduct home repairs?

Chris

Chris · December 19, 2015 at 7:46 pm

Hey Daniel,

Thanks for reading! In some cases you can deduct home repairs but it will vary from location to location based on tax laws. The idea is that the repairs should be for areas that are primarily used for rental. So if it’s a repair to a spare bedroom that doesn’t get used for much else besides renting on Airbnb that could be valid deduction. Of course, to be certain it’s best to consult your local tax preparer.

Hope that helps!

krescent · February 18, 2016 at 1:02 am

Hi Chris,
Thanks for the article.
I am wondering under what section you can deduct the rent in if you are a tenant renting out your apartment via air bnb. Currently I have it under commisions as an expense. Is this correct? Also, a table of mine was damaged due to careless air bnb guests. I had to have it refinished which cost $700. Can I deduct this repair?

Thanks!

Chris

Chris · February 19, 2016 at 10:31 pm

Hi Krescent,
Thanks for reading! I’ll preface this by saying that I am absolutely not an accountant, haha. Obviously, tax laws very quite a bit by country, state, and even county. Listing it under commisions as an expense sounds right to me but definitely reach out to a local tax preparer if you have specific concerns. As far as the table goes, I’m not sure that you can deduct that repair. Did you charge the guests for the damage? Was Airbnb involved at all in paying for the repairs? My inclination would be that if you were fixing something structural (i.e guests put a hole in the wall or they broke the toilet) it would be deductible. I’m not sure that a table would be considered something included as part of the unit to deduct from. You may also want to reach out to Derek Davis at http://www.sharedeconomycpa.com/ he’s a great guy and has more tax training than yours truly. Good luck!

Johnny · February 25, 2016 at 12:34 pm

Hi Chris,

Where do you make the deduction for furniture expenses? I’ve been choosing office expenses but not sure if that applies here.

Also, would you recommend schedule c or e (i know this is the age old question for airbnb hosts) if I own my apartment but rent it out part time. Thanks!

Chris

Chris · March 5, 2016 at 5:07 am

Hi Johnny,

Thanks for reading! Office expenses sounds like the logical place for furniture expenses, I think you made the right call. It really is an age old debate on schedule c or e, but in your case I’d probably lean towards e. Seeing how you are the owner of the property e seems more applicable. Now of course I’ll say again that I am not a trained professional when it comes to taxes. Do be sure to talk to a local professional who can give you some more insight. Or check out our friends at http://www.TheSharedEconomyCPA.com

Ralph Chesley · July 21, 2016 at 10:31 pm

My wife and I own our home and rent out our downstairs in-law unit. A new roof is necessary and we’re thinking of including a solar electric system once the new roof is completed. We live in California. Is any part of the cost of the solar system deductible, what about the roof.

Chris

Chris · August 10, 2016 at 1:50 am

Hey Ralph, thanks for reading! While I do live in California, I’m not an expert on all tax deductions. To my knowledge, both the roof and the solar system would be deductible as they are part of the structure containing your rental unit. That’s my take on the manner, but I encourage you to seek out a professional opinion too. My friend Derek at the http://www.thesharedeconomycpa.com is also based in California, and may be able to give you more clarity.

Ticu Patel · October 19, 2016 at 8:55 pm

Great feedback and recommendations for AIR BNB hosts.

For Condo’s that have an Monthly Association Fee, can this be considered a expense that can be deducted for the AIRBNB days?

Chris

Chris · October 25, 2016 at 5:26 pm

Thanks for reading Ticu! Obviously, each situation will be different so I recommend you look into your particular Condo Association. My gut reaction would be yes, they could be deducted if you’re the owner of the space and those rentals don’t break any Condo Association rules. Hope that helps!

valismoth · January 31, 2017 at 7:34 am

I can’t to find your e-mail subscription link or newsletter service.

Chris

Chris · January 31, 2017 at 7:13 pm

Hi Valismoth! Thanks for checking out the site. You can submit your e-mail at the top of the homepage at http://www.darebnb.com. Then you’ll be subscribed to our e-mail list/newsletter. We don’t spam your inbox very often, but there are some exciting things coming in the not-to-distant future.

Joni · February 15, 2017 at 6:10 pm

If I stay at a hotel while I am renting out my apartment on AirBNB can I deduct the hotel cost. I am only staying in town?

Chris

Chris · February 15, 2017 at 6:16 pm

Good question Joni! My gut instinct is that you unfortunately can’t deduct the hotel cost. Of course, I would check with a tax professional in your area for a second opinion. Thanks for reading!

Kathryn · August 13, 2017 at 3:18 pm

If I build a house specifically to use for an Air BnB, will all costs be deductible?

Chris

Chris · August 16, 2017 at 5:38 pm

Hi Kathryn,

Thanks for reading! Unfortunately, it’s not that simple. It definitely depends on the local laws and tax codes for where you’re building the house. There will likely be many aspects of it that are tax deductible but without knowing all of the specifics of your region, I couldn’t say for sure. Feel free to send me a note at info@darebnb.com if you want to talk about things in more detail. My best advice would be to reach out to a tax professional in your area who has experience dealing with rental properties.

Thanks,
Chris

Leave a Reply

Your email address will not be published.

Related Posts

Uncategorized

What to Consider When Buying a Property For Airbnb

Today’s story is a guest post from our friends at Short Term Stays. Their goal is to keep your Airbnb calendar full while keeping things simple. What a novel idea! These people know what they’re Read more…

Uncategorized

The Top 5 Mistakes That Hosts Make When Pricing Their Airbnb Listing

Today’s guest post comes from Ian McHenry of Beyond Pricing. Beyond Pricing is focused on developing pricing software to help hosts & owners maximize the performance of their vacation rental properties. Sounds pretty good right? Read more…