10 Vacation Rental Tax Deductions

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Owning a holiday property has benefits, including surprising tax savings. By renting out your property short-term on platforms like Airbnb, VRBO, and HomeAway, you can reduce or eliminate income tax. However, eligibility for these tax breaks and deductible expenses depends on IRS classifications. To qualify as a holiday let, the property must be available for rent for more than 14 days per year, with limited occupancy by the owner or their family. For homeowners planning to rent their primary residence, it’s categorized as personal, not rental. Mixed-use homes have specific tax regulations, allowing deductions based on rental and personal use ratios. Renting a personal residence for less than 14 days annually doesn’t require reporting as rental income, but no expenses can be deducted. Overall, understanding tax rules and deductions is crucial for holiday rental property owners.

Vacation rental income is taxable, but you can reduce it with deductions. Here are some tax deductions for vacation rentals:

  1. Property Taxes: Fully deduct property taxes as a business expense.
  2. Repairs and Maintenance: Deduct costs for property upkeep.
  3. Property Improvement: Deduct major improvements.
  4. Mortgage Interest: Deduct interest payments on mortgages.
  5. Guest-service Fees: Deduct fees charged by platforms like Airbnb.
  6. Insurance Premiums: Deduct insurance premiums.
  7. Cleaning and Maintenance: Deduct costs for cleaning supplies and housekeeping.
  8. Advertising: Deduct costs for advertising your rental property.
  9. Depreciation: Recover property costs through depreciation.
  10. Legal Fees: Deduct fees for accounting and legal services.

Consult a CPA or tax professional for more deductions. Remember to keep records and receipts for maximum savings, and hope you profit from your rental property with these tax benefits.

Discover investment opportunities in holiday lettings today! 

Running a vacation rental can be a rewarding venture, but the highest rental earnings usually come from owning multiple properties. Instead of handling all the responsibilities on your own, you can choose to invest in vacation rentals through Foothold. With options suitable for almost any budget, browse the available homes and consider where you might want to invest today.

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