Tax Deductions And Short-Term Rentals - What Every Host Should Konw

Setting up your property for the first time? Products that equip your property and ready it for guests fit the bill as deductible business expenses. This extends to essentials like furniture, kitchenware, bedding, and home decor.

Did you recently update your property with a new paint color or some comfy new bedding? Good news, those new  FIX LINENS sheets and duvet covers  are deductible. Keep track of any purchases you make over the course of the year to insure your ungraded digs pay you back in more than just increased bookings.

As the saying goes, many hands make for light work. Most short-term rental hosts employ a number of services to make property management manageable. Both cleaning and laundry services are not only essential to a well managed property, they also are expenses that can be deducted. But don’t be short-sighted; there are many other services that can be deducted from your bottom line. Lawn or landscaping services, pool maintenance, exterminators, and even security services fall under this deduction umbrella. Doing the work yourself? Property owners can deduct tools and products used to maintain their rental properties.

Music and video streaming service subscriptions used in your property can also be deducted. The percentage of the deduction for services like these depends on if this subscription is used exclusively for the rental property or is shared with your primary living residence. For questions regarding this or any of the other listed deductions, consult an accountant or tax specialist who can provide guidelines for your specific situation. 

The expenses you incur from promoting your property also top the deduction list. Fees charged by property listing services such as Airbnb and VRBO are eligible for a write off. In addition, any of the materials or resources you use to create your property listing or advertisements can be deducted. This includes wages paid to photographers, copywriters and graphic designers.

Keeping your property in tip-top shape is something short term rental hosts prioritize.When making any repair or replacement, make sure you keep your receipts. Most maintenance costs can be deducted including plumbing, electrical or appliance repairs.

Replacement of appliances or heating and cooling systems can also be deducted. In fact, upgrading some elements of your property with energy efficiency in mind will not only save on your energy costs, but also can translate to a bigger deduction.

Property owners can also deduct some of the bigger costs associated with owning a short term rental property. Make a dent in that bottom line with these dedications:

• Mortgage interest and taxes

• Property taxes

• Renter or homeowner’s insurance

• HOA fees

• Utility bills such as gas, water and electric

Products guests use while visiting your property such as soap, trash bags, and paper towels can also qualify for a write off.

• Cleaning supplies such as laundry detergent and dishwasher tablets also make the list.

• Treat your guests to welcome gifts? That bottle of local wine or fully stocked coffee bar is also 100% deductible.

The most essential advice we would offer to all our short term rental hosts is to keep diligent and organized records of your expenses and purchases. There are many great apps and web based services like Stessa  that can be used to streamline this process.

In addition, when it comes to tax related questions or concerns, it is always best to consult a tax expert; or better yet, employ one. Having an informed tax specialist in your corner will make the process of preparing for tax season less taxing. And even better, many of these accounting fees may also be deductible!