Will I need to Report and Pay taxes on Airbnb? What can I deduct?
If you rent more than 14 days in a calendar year, yes you will need to file a supplementary rental income form with your taxes. But don’t worry it’s easy, just try to spend a few minutes each month to keep track of your Airbnb Income and any deductions you can claim for taxes.
Disclaimer: The information contained in this post is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.
There are some helpful tax deductions available if you’re an Airbnb Host that can help you lower your tax liability on your vacation rental income. Keep all your receipts and use a free online accounting tool like Wave to keep track each month. This can be exported to your accountant at the end of the year with just one click. Block out a few minutes each month and enter your profits and expenses, while its still fresh in your mind.
What can I deduct?
There are some great tax deductions that are available to you. It is important to keep records of your expenses and to save those receipts in a folder and highlight any purchases you made for your Airbnb.
Here are 7 money-saving deductions you can make:
- Cleaning – You can deduct the costs of a professional cleaning service or if you do-it -yourself you can deduct your cleaning products and any supplies.
- Furnishings – If you purchased furniture for your Airbnb. Expenses can be deducted such as: beds, desks, side tables, drawers, and other household essentials.
- Utility Costs– Gas,electricity,water and sewer. These bills can add up over the year, but they are partially deductible even it your renting a percentage of your home. Take your home’s total square footage and the rentals footage and then deduct that portion) ex if your home is 1000 Sq and the rental is 500 Sq then 50% of your house is your Airbnb. Your utilities can only be deducted from the number days it was rented out per month. for example, If it was rented 15 out of 30 days you could deduct 25% from that month.
- Food Items –If you provide food items for your guests such as breakfast? Make sure to keep track of the items related to business as opposed to your own food.
- Rent –If you’re renting your home and then hosting on Airbnb, this is a deduction that will save you quite a bit. To calculate how much rent you can deduct for tax purposes some of your monthly rent payment based on the number of days you had guests each month.
- For homeowners, add up your costs (mortgage interest, real estate taxes, etc.) you spent each month during the year so you can calculate your vacation rental deductions based on your occupancy rate .
- Matienence – Collect any receipts for airbnb related service work done by plumbers, electricians, painters etc
Where do I find My Occupancy Rate , Nights booked and Booked Earnings?
You can find this information easily in The Airbnb App. Go to the section called Progress. Here you will find your booked earnings, nights booked, and occupancy rate. For a complete checklist of what you will need to complete your individual tax return your tax preparer will be able to clarify for you specifically what you’ll need. I hope this article helps you prepare and be ready with those receipts. If you haven’t been saving them then now is a great time to start!
For more great hosting tips be sure to read my book The Ultimate Super Host Guide. The book comes with a free 100% Customizable Guest Welcome book to make your life easier!
rafFebruary 4, 2019 at 2:15 AM
This is a pretty good start. If you really need help pro-rating or finding a specific deduction you should consult a CPA that knows short term rentals. I write about AirBnb taxes on my blog here.http://www.gatortaxprep.com/what-about-airbnb-taxes/