As a vacation rental owner, finding and deducting the expenses that are related to the operation of your vacation rental business can offer significant tax savings. Unfortunately, there are many vacation rental hosts who fail to take advantage of all the deductions they are eligible for.
As a vacation rental host, you need to keep track of your expenses so that you can prepare your taxes each year. Here are the expenses that you can deduct to save money on your taxes.
1. Rent. If you rent your home, your rental expenses are a tax deductible expense and can potentially offer you one of the greatest opportunities for tax savings.
2. Utilities. Utilities, such as electricity, cable TV and internet, water and sewer, are tax deductible expenses.
3. Cleaning Fees. If you hire a professional cleaning service or purchase cleaning supplies to help keep the rental clean for guests, you can deduct these expenses on your taxes.
4. Vacation Rental Commission Fees. You should obtain a statement of your earnings from the vacation rental company so that you have a record of the commission fees that were deducted from your earnings. These commission fees that are charged by the vacation rental platform are a tax deductible expense.
5. Membership Fees. If you are a member of an organization that exists solely for educational purposes, such as VRMA, you can deduct the membership fees on your taxes.
6. Furniture. If you purchased furniture for your guests, you can deduct these costs. However, some special rules apply to deductions for furniture so you should consult a tax professional.
7. Amenities. If you provide food, toiletries or other amenities exclusively for use by your guests, these expenses are considered as an ordinary and necessary part of running your vacation rental business. Make sure that you keep track of the items that are used exclusively for your business separately from any personal items.
This list of deductions is designed to apply to the most common vacation rental host situations. However, it is not a comprehensive list. Consult a tax professional if you are a real estate professional, or if you also use your home for your own personal purposes.
At Shared Economy CPA, we've helped thousands of vacation rental owners with preparing their taxes and managing their finances. Thanks to our extensive experience with Airbnb, Homeaway, VRBO and other vacation rental portals, we've been able to determine the best ways for you to reduce your taxes.