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!