A Comprehensive Guide to Understanding Airbnb Tax Deductions

The process of understanding Airbnb tax deductions becomes complex as it involves interpreting laws that affect short-term rental properties. Property owners frequently struggle to determine which expenses qualify for deduction along with their tax deduction effects.  

Airbnb hosts need to understand both which expenses they can deduct and the amount they can deduct and when capital gains tax applies during property sales. A large number of property owners encounter unexpected situations at this point.  

Airbnb property owners who fail to claim their tax benefits potentially lose money in terms of potential deductions. The knowledge of available deductions will generate substantial tax savings at the end of the year.

Understanding Airbnb Tax Deductions  

Airbnb hosts can decrease their taxable income by using qualified tax deductions that connect to their short-term rental operations. Tax deductions enable you to receive greater tax refunds and maintain a higher amount of your income.  

Airbnb hosts require tax deductions to decrease their tax-related financial liability. Any expense linked to managing and maintaining your rental property falls under business expense categories which leads to applicable deductions.  

The IRS gives specific rules to identify which expenses qualify for deductions between business and personal activities. Airbnb owners can deduct property maintenance expenses as well as cleaning services and guest supply costs since these costs directly support their Airbnb operations. The IRS does not permit deductions for costs that you use on your home such as household cleaning products. The distinctions between business and personal costs enable you to maintain tax compliance while taking full advantage of your tax benefits.

Top Airbnb Tax Deductions You Shouldn’t Overlook  

As an Airbnb host, knowing which expenses you can write off can save you thousands at tax time. Here are some of the most valuable deductions to help lower your taxable income.  

1. Cost Segregation: Maximizing Depreciation Benefits

If you’ve made significant improvements to your Airbnb—such as installing a pool or upgrading the kitchen—you may want to look into cost segregation. This tax strategy allows you to break down your property’s components into different depreciation categories, rather than applying the standard 27.5-year depreciation schedule to everything.  

For example, personal property (like appliances or furniture) typically depreciates over 5–7 years, while land improvements (such as driveways or landscaping) can be depreciated over 15 years. A cost segregation study can help your accountant properly categorize these expenses, allowing you to write off depreciation more quickly and reduce your tax burden.  

2. Depreciation: A Major Write-Off for Property Owners

Depreciation is one of the biggest tax benefits for Airbnb hosts, allowing you to deduct a portion of your property’s value each year. Under the Modified Accelerated Cost Recovery System (MACRS), most residential rental properties are depreciated over 27.5 years.  

To calculate depreciation:  

• Determine your basis in the property (purchase price plus closing costs and eligible fees).  

• Separate the land value from the building value—this breakdown is often found in your latest real estate tax assessment.  

• Apply the building’s percentage to your basis, giving you the amount eligible for depreciation.  

• If you’ve made renovations—such as adding a deck, remodelling a bathroom, or upgrading electrical systems—you may need to adjust your depreciation calculations. 

Some Airbnb hosts may also need to use the Alternative Depreciation System (ADS) if they rent out their property for less than half the year or have tax-exempt usage. Consult an accountant to determine which method applies to you.  

3. Cleaning & Maintenance Costs

Keeping your Airbnb spotless is a non-negotiable part of running a successful rental, and the costs can add up fast. Whether you hire a professional cleaning service between guest stays or handle minor maintenance tasks yourself, these expenses are fully deductible.  

Cleaning fees, routine maintenance (such as fixing leaks or replacing broken fixtures), and deep-cleaning services all qualify as business expenses. Be sure to keep detailed records of these costs to maximize your deductions.  

4. Marketing & Advertising

Even if your Airbnb is in a prime location, potential guests need to know it exists. Investing in marketing is essential to attract bookings, and fortunately, these costs are tax-deductible.  

Eligible expenses include:  

• Social media ads  

• Professional photography  

• Website hosting and domain fees  

• Hiring graphic designers for promotional materials  

Tracking your marketing expenses throughout the year ensures you don’t miss out on valuable deductions.  

By understanding and leveraging these Airbnb tax deductions, you can keep more of your hard-earned income while staying compliant with tax laws. Always consult a tax professional to make sure you’re maximizing your write-offs!

5. Furniture and Décor

While you can list your Airbnb as-is, upgrading the interior with stylish furniture and décor can make your rental far more appealing to guests. Think about how you choose a place to stay—listings with a well-designed space are often more attractive.  

Fortunately, furniture purchases for your Airbnb qualify as business expenses and are tax-deductible. This includes items like:  

• Couches, beds, and chairs

• Dining tables and nightstands

• Lamps, artwork, and decorative pieces

Keep receipts and invoices for all purchases to ensure you can properly claim them when tax time comes around.  

6. Airbnb Commissions and Service Fees

Airbnb charges hosts a commission on every booking—typically around 20% of your listing earnings. Since this fee is taken out before you receive your payout, it might not seem like an expense, but it is!  

For tax purposes, you only report the income Airbnb pays you after fees, but you can still deduct the commission as a business expense. Additionally, many jurisdictions require Airbnb to collect lodging or occupancy taxes on your behalf. If your area is included, you don’t need to worry about handling these taxes yourself. However, this isn’t the case everywhere, so it’s best to check with a tax professional about your specific obligations.  

7. Mortgage Interest, Insurance, and Property Taxes

If you have a mortgage on your Airbnb property, you can deduct the mortgage interest on your taxes—just like with a personal home loan. But there’s more:  

• Private mortgage insurance (PMI) may also be deductible, especially if you purchased your Airbnb with an FHA loan or put down less than 20%.  

• Property insurance for your Airbnb can also be written off since it’s considered a business expense. This is different from homeowner’s insurance, which typically isn’t deductible for a personal residence.  

• Property taxes may also be deductible, depending on how you report your rental income. If you pay your property taxes early in the year, you may be able to claim that deduction on your tax return.  

8. Other Indirect Expenses

Running an Airbnb comes with additional costs that might not seem obvious at first. Some of these indirect expenses include:  

• Property management fees (if you hire a manager to handle bookings and guest communications)  

• Travel expenses (if you need to visit or maintain the property)  

• Utilities and internet (since they’re necessary for guest stays)  

• Property management software subscriptions (for scheduling, accounting, or booking management)  

Some of these costs may also qualify for a Qualified Business Income Deduction (QBI deduction), which allows eligible hosts to deduct up to 20% of their business income. If you’ve made eco-friendly improvements, such as installing solar panels, you may also be eligible for additional tax credits.  

Final Thoughts

Airbnb tax deductions can add up quickly, so keeping track of your expenses throughout the year is crucial. Whether it’s furniture, commissions, insurance, or maintenance costs, these deductions can significantly lower your taxable income and help you keep more of your Airbnb earnings. Consulting a tax professional can ensure you’re maximizing your savings while staying compliant with tax laws.