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10 Essential Tax Deductions Every Vacation Rental Owner Should Know

Owning a short-term vacation rental property is more than just the sunsets and the downtime; it's about the tax perks that come with it! To take full advantage of the tax deductions—and to avoid trouble with the IRS—there are a few rules you need to know. In this blog post, we're going to share the 10 essential tax deductions every vacation rental owner should know.

When Your Vacation Spot Qualifies for Tax Breaks

First things first. If your guests stay for more than 14 days, you're officially in business in the eyes of the IRS. If you're renting out your place while also using it for personal vacations, there's a special set of rules just for you.

  • You need to have your property available for rent for at least 14 days a year.

  • Your personal time there can't go over 14 days or 10% of the total rental period. For example, if you're renting it out for 200 days, you can stay there for no more than 20 days.

The 14-Day Rule

If you rent out your personal vacation home for less than 14 days a year, the money that you collect is tax-free. However, you won't be able to claim any rental expenses either. That my friends, is the 14-Day Rule.

Don't Forget State and Local Taxes

Depending on your rental's location, state and local taxes might enter the stage. Each state and locality can have its own set of rules for taxes related to rentals. Make sure you're up to speed on these potential obligations to keep everything above board.

Top 10 Tax Deductions for Vacation Rental Owners

When it comes to your overall tax picture, and your rental income is just part of it. Let's talk about how other deductions come into play:

  • Property Taxes – No $10,000 cap here; deduct those taxes in full, as a business expense.

  • Repairs and Maintenance – From leaky faucets to new roofs, it's all on the deductible menu.

  • Property Improvements – Big upgrades? You can deduct those, too. Don't forget about Section 179 for things like security systems.

  • Mortgage Interest – That interest can lighten your tax load as a business expense.

  • Guest-Service Fees – You can deduct platform fees from Airbnb, VRBO, and others.

  • Insurance Premiums – Schedule E is your friend for deducting insurance.

  • Cleaning and Maintenance – Keep your rental sparkling and deduct the costs!

  • Utilities – Power, water, gas, internet, and cable—all for the guests, all deductible.

  • Depreciation – Spread out the cost of property wear and tear over time.

  • Advertising – From online listings to print, if it's for the rental, it's deductible.

Smart property owners and investors know how to increase their vacation rental potential profitability through smart tax advantages. Being familiIRS rules is the key to making the most out of your property. However, it's best to consult with a tax pro to make sure you're playing by the rules and getting all the deductions you deserve.

On the hunt for practical tips to boost your vacation rental business? Meet us over at the Vacation Rental Designers Collective.

Our members include vacation property owners and investors, hosts, interior designers and realtors, all seeking to enhance their business while sharing their expertise and unique skills. You’ll learn how to run a successful vacation rental business while gaining insider insight and innovative strategies, all designed to ensure you maintain coveted five-star reviews.

Become a part of something big. Find your tribe, attract new clients, and watch your business thrive. Join us in redefining the vacation rental industry—one beautifully profitable space at a time.

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