Renting out your home—or even just a spare room—on platforms like Airbnb or Vrbo can be a great way to earn extra income during the busy summer travel season. With demand high in many areas, it’s tempting to jump in and start earning. But before you hand over the keys, it’s important to understand the tax rules that come with short-term rentals.
From the IRS’s 14-day rule to deductions, depreciation, and local lodging taxes, here’s what you need to know to stay compliant and make the most of your summer rental income.
The 14-Day Rule: When Rental Income Is Tax-Free
One of the most commonly misunderstood tax breaks for occasional hosts is the 14-day rule.
If you rent out your personal residence for 14 days or fewer in a calendar year, and you use it yourself as a residence the rest of the time, you don’t have to report that income at all. That means you can pocket the money tax-free—no need to report it on your tax return.
But here’s the catch:
You must personally use the home for more days than it was rented out
If you rent it out for 15 days or more, all rental income becomes taxable
So if you’re only looking to host for a couple of weeks during a big event or peak travel season, the 14-day rule is worth keeping in mind.
Renting for More Than 14 Days? Here’s What Changes
If you rent out your home or a portion of it for more than 14 days a year, the IRS considers you a landlord—even if you’re only hosting seasonally. That means you must report your rental income on Schedule E of your tax return.
The upside? You may also be eligible to deduct a range of expenses tied to the rental activity, including:
Mortgage interest (proportional to rental use)
Property taxes (partially deductible)
Utilities (electricity, gas, internet, water)
Cleaning services or supplies
Repairs and maintenance
Property insurance
Depreciation on the portion of the home used for rental
These deductions help reduce your taxable rental income—but you’ll need to carefully track and allocate costs between personal and rental use. The IRS generally expects this allocation to be based on days used for each purpose.
For example:
If you rent your home for 60 days and live in it for 305 days, only 60/365 (about 16%) of your eligible expenses can be deducted against rental income.
Recordkeeping Is Essential
As with any tax matter, documentation is your best friend. Make sure you:
✅ Track the exact number of rental and personal-use days
✅ Save receipts for all deductible expenses
✅ Keep communication logs and booking confirmations
✅ Use a spreadsheet or app to record income and categorize expenses
This will help you stay organized and prepared in case the IRS ever has questions.
What About Depreciation?
If you’re renting for more than 14 days a year, you may also be able to depreciate a portion of your home over 27.5 years, which can provide a significant tax benefit. This applies only to the part of the home used for rental, and it must be calculated carefully. Depreciation can lower your annual taxable rental income—but be aware that it may also affect your capital gains calculation when you sell.
Don’t Forget Local Lodging or Occupancy Taxes
In many cities, counties, and states, short-term rentals are subject to local lodging, occupancy, or hotel taxes. Some platforms like Airbnb may collect and remit these taxes on your behalf, but this isn’t guaranteed in all areas or for all bookings.
Do the following:
✅ Check your local government’s website for short-term rental tax laws
✅ Verify whether Airbnb or Vrbo collects taxes in your jurisdiction
✅ Register for any required permits or tax IDs
Failing to collect and remit these taxes could result in penalties or interest down the line.
Bonus Tip: Renting a Vacation Home You Don’t Use Often?
If your property isn’t your main home and you use it personally for less than 14 days a year (or 10% of total rental days), the IRS considers it a rental property, not a personal residence. That changes how you report income and expenses—and usually makes more deductions available.
Short-term rentals can be a fantastic source of summer income, but they also come with unique tax responsibilities. Understanding the rules—especially the 14-day exception, expense allocations, and local tax obligations—can help you avoid surprises and keep more of what you earn.
✅ Thinking of listing your home or vacation property this summer? We can help you stay tax-compliant and maximize your deductions.
📞 Let’s talk taxes:
👉 https://ilovedoingtaxes.net/schedule-now/
📱 Or call (678) 675-4268
