Short-term rental income is taxable, but all ordinary and necessary rental expenses are deductible. This includes cleaning fees, supplies, repairs, utilities, mortgage interest, property taxes, insurance, and depreciation. The 14-day rule (Augusta Rule) may apply if you also use the property personally.
Getting the deduction right is not just about whether it is allowed — it is about how you set it up.
Track all rental days vs personal use days. Expenses are prorated if the property is used personally.
Save all receipts for cleaning, supplies, repairs, and utilities. Keep a rental calendar.
Report on Schedule E. Prorate expenses if mixed personal/rental use.
Do not deduct 100% of expenses if you also use the property personally.
Cost segregation can accelerate depreciation on a short-term rental property significantly.
When structured correctly, this deduction can significantly reduce your taxable income.
Here is how this deduction typically works in real situations:
A homeowner rents a spare bedroom on Airbnb 200 days/year.
An LLC owns a vacation rental rented 300 days/year.
Owner deducts 100% of expenses on a property used 50% personally.
Key Takeaway: The difference between a valid deduction and a denied one usually comes down to documentation, usage percentage, and proper structuring. The same expense can be fully deductible, partially deductible, or not deductible at all — depending on how it is handled.
Cleaning fees, supplies, repairs, utilities, mortgage interest, property taxes, insurance, and depreciation -- prorated for rental days.
Yes -- Airbnb income is taxable. But rental expenses offset the income, often significantly reducing the tax owed.
