Home sharing through sites like Airbnb, VRBO and HomeAway are becoming more and more popular. My family jumped on the Airbnb hosting train recently, and we made a tidy little side income in January renting out our spare room. I won't have to pay taxes on that income until next tax season, but I'm already wondering what expenses I can write off.
It turns out that lots of Airbnb host expenses are deductible, and those deductions work for other home-sharing services as well. (If you're wondering about other ways to save on your taxes, check out Credit.com's tax learning center.)
The Basics of Taxes & Home Sharing
Renting out a part of your home is similar to becoming a landlord for an entire property, and it's a lot like running a small business. The general IRS rule is that you can deduct expenses that are "both ordinary and necessary" for your business. But you'll pay taxes on any income that you earn over and above those deductions.
There's one caveat: the 14-day rule. If you rent part or all of your primary residence to others for less than 15 days out of the year, you don't have to report that rental income, but you can't deduct any expenses.
If you really like being a host, though, and rent all or part of your home for 15 days or more, you'll have to report the income. So you'll want to take all the deductions you possibly can. When it comes to deductions for rentals, you need to be careful, though. You can only deduct expenses that were spent on your business.
So if you buy new bath towels that your renters just happen to use in your shared bathroom, you can't deduct the full cost of the bath towels. But if you buy linens just for your Airbnb renters, you can deduct the full cost.
With that in mind, below are some expenses you might deduct.
9 Expenses You Could Deduct
1. Service Fees: Most short-term rental services charge hosts a fee that comes off the top of the rent paid by the guest. Even if this fee comes out of the guest payment before it hits your bank account, you can deduct it as a business expense.
2. Advertising Fees: If you pay for any advertising outside of that offered by the rental company (and, therefore, covered with your service fees), deduct those expenses.
3. Cleaning & Maintenance Fees: If you buy cleaning supplies for your rental room, deduct those. If you pay a professional for cleaning, deduct that expense, too. Any maintenance costs related to the rental property are also deductible. If you pay for whole-house maintenance, such as a furnace tune-up or a roof replacement, a part of that cost will be deductible.