Short-Term Rental Tax Deductions: The Complete List for Hosts

Most hosts know they can deduct cleaning fees and supplies. That's table stakes. The hosts who actually minimize their tax bills think bigger: depreciation creates thousands in paper losses every year without spending a dollar, bonus depreciation can front-load all of that into year one, and material participation is what makes it usable against your W-2 salary.

Here's every meaningful deduction available to STR owners. The big structural stuff, operating costs, the ones most hosts miss, and the participation rules that determine whether any of it actually reduces your tax bill. For the broader picture of how STR income is taxed, see our Airbnb tax deductions overview.

The Big Structural Deductions

These are the deductions that actually move the needle. Not tied to what you spent on toilet paper last month. Built into the structure of owning investment property.

Depreciation

Depreciation is the single most valuable deduction an STR owner has. The IRS lets you deduct the cost of the building (not the land) over 27.5 years, even as the property appreciates and you spend nothing extra. Pure paper expense. It reduces your taxable income every year automatically.

One thing to plan for: depreciation recapture. When you sell, the IRS taxes your previously claimed depreciation at 25%. That doesn't eliminate the benefit — money now is worth more than money later — but you need to account for it in your exit math.

Bonus Depreciation and Cost Segregation

Bonus depreciation is the single biggest tax advantage STR owners have over long-term rental investors. A cost segregation study breaks your property into components — appliances, flooring, cabinetry, fixtures, land improvements — that qualify for 5-year, 7-year, or 15-year depreciation schedules instead of 27.5 years. Bonus depreciation lets you deduct all of that at once in year one.

The One Big Beautiful Bill Act (enacted July 2025) restored 100% bonus depreciation for qualifying property placed in service after January 19, 2025. For a typical STR property, 20-35% of the purchase price can be reclassified into shorter-lived assets through cost segregation. On a $350,000 property, that could be $70,000 to $120,000 in deductions taken in year one — potentially enough to wipe out multiple years of rental income or offset W-2 wages if you materially participate.

Cost segregation studies typically run $3,000 to $10,000 for residential STRs. The math pencils out if your property is worth $200,000 or more. Verify current bonus depreciation rules with your CPA — this is one area of tax law that's changed a lot in recent years.

Mortgage Interest

If you financed your STR with a mortgage, the interest is fully deductible as a rental business expense — not subject to the same $750,000 loan limit that applies to your primary residence. On a $350,000 property with a 7.5% mortgage rate, you might pay $24,000 in interest in year one. That entire amount reduces your taxable rental income.

Mixed-use properties are the exception. Personal use beyond 14 days or 10% of rental days (whichever is greater) means you can only deduct the rental-use portion of mortgage interest. Keep track of your days. This is one of the things that gets audited.

Property Taxes

Property taxes on your STR are fully deductible — no cap. This is different from your primary residence, where the SALT deduction is limited to $10,000. Rental properties don't have that limit. A $4,500/year tax bill is a straight $4,500 reduction in rental income.

Operating Expense Deductions

The IRS allows deductions for all "ordinary and necessary" expenses. That's basically everything it actually costs to run the place.

Platform Fees

Every dollar you pay Airbnb or VRBO in service fees is deductible. Under Airbnb's split-fee model, that is 3% per booking. Under the host-only model (required for some channel managers), it is 14-16%. VRBO charges 5% under the pay-per-booking model or 8% annually. These are not trivial amounts — on $50,000 in gross revenue with Airbnb's host-only model, you are paying $7,000-$8,000 in platform fees that all come off your taxable income. See our breakdown of Airbnb host fees for the exact structure.

Cleaning and Turnover Costs

Professional cleaning between guests, laundry services, cleaning supplies, and restocking consumables are all fully deductible. If you charge guests a cleaning fee, you still deduct what you actually pay cleaners — the fee you collect is gross income, and the cleaning cost is an expense that offsets it.

Utilities and Internet

Electric, gas, water, trash, and internet are all deductible. Full amount for a dedicated STR; rental-use percentage only for mixed-use. Fast internet matters for guest reviews anyway, so at least the bill is working double duty.

Insurance

STR insurance premiums are deductible. This is your own policy — not Airbnb's AirCover program, which is Airbnb's money, not yours. STR-specific policies typically run $700 to $3,500 per year depending on property value and coverage. That entire premium reduces your taxable rental income.

Supplies and Guest Amenities

Shampoo, coffee, paper towels, dish soap, welcome baskets, spare toiletries — all deductible. These feel small on a per-booking basis, but a well-stocked STR running 200 nights per year can easily spend $1,500 to $3,000 annually on consumable supplies.

Repairs and Maintenance

Repairs are deducted in the year you pay for them. The key distinction: a repair restores something to working condition. An improvement adds value or extends the useful life of the property. Fixing a broken dishwasher is a repair. Replacing it with a brand-new model is an improvement that gets capitalized and depreciated. The line isn't always obvious, so document what you did and why.

Property Management and Co-Host Fees

Property management software, co-host commission, and dynamic pricing tool subscriptions are all deductible. If you pay a co-host 20% of revenue on a property generating $60,000 per year, that is $12,000 in deductions from management fees alone.

Professional Services

CPA fees, bookkeeping software, attorney fees, and cost segregation study costs are all deductible. A good CPA who specializes in real estate will save you more in taxes than they charge. That's not always true of professional services, but it really is here.

Furnishing and Startup Cost Deductions

Getting a property ready to rent costs real money. Most of it's deductible, and a lot of it can be deducted faster than you'd expect. For actual numbers on what furnishing costs, see our guide on how much it costs to furnish an Airbnb.

Furnishings: Bonus Depreciation vs. Section 179 vs. De Minimis Safe Harbor

You have three ways to deduct furniture, appliances, and equipment:

Startup Costs

Costs incurred before your rental is live — professional photography, initial supplies, permit fees, interior design consultation, LLC formation — are deductible as startup costs. The IRS lets you deduct up to $5,000 in the first year. Anything above that gets amortized over 180 months. Most new hosts miss this entirely. Keep receipts from day one, before the first booking ever comes in.

Travel Deductions

If you travel to your rental to manage it, you can deduct the trip — whether you're driving across town or flying across the country to a beach house you run remotely.

What Qualifies

• Mileage: 70 cents per mile (2025 IRS rate) for driving to and from your rental for management purposes.
• Airfare: Fully deductible if the primary purpose is business, not personal use.
• Lodging: Deductible when you stay near the property for business purposes (not in the property itself during the trip).
• Meals: 50% deductible for meals during business travel.
• Tolls and parking: Fully deductible.

The IRS test is primary purpose. Spend 4 days on renovations at your Gulf Shores condo and 1 day at the beach? Business trip. Spend 4 days at the beach and squeeze in one walkthrough with a contractor? Not a business trip. Keep a dated log of what you actually did each day.

Home Office Deduction

If you manage your rental from a dedicated workspace in your home, you can deduct a portion of your home expenses. This is most legitimate for remote managers — rental in Nashville, you're in Denver, you have an actual office where you handle bookings and guest communication.

The space has to be used regularly and exclusively for business. A corner of your living room doesn't qualify. A spare bedroom set up as a dedicated management office does. Two calculation methods: simplified ($5 per square foot, up to 300 sq ft, so max $1,500) or actual expenses (your office's share of total home square footage, applied to your real mortgage interest, utilities, and insurance).

The actual expense method usually yields more, but requires documentation. The simplified method is easier to defend and $1,500 is still $1,500.

The 14-Day Rule (Brief Version)

If you rent the property for 14 days or fewer per year and personally use it for at least 14 days, the rental income is tax-free under IRC Section 280A(g). You don't even report it. You also can't deduct rental expenses. For anyone running a serious STR, this is academic — you'll blow past 14 rental days in the first month. But if you own a vacation property you use most of the year and rent out a handful of weekends, it's worth knowing.

Material Participation vs. Passive Activity Rules

This is the section most hosts gloss over. It's also the one that determines whether all those deductions above actually reduce your tax bill, or just sit suspended on a shelf collecting nothing.

Under default tax rules, rental income is passive and rental losses are passive. Passive losses can only offset passive income. So if your STR generates a $20,000 paper loss through depreciation and cost segregation but you have no other passive income, that loss gets suspended. It carries forward, but you can't use it against your salary today.

Two exits from passive activity treatment:

There's also the $25,000 passive loss allowance. If your MAGI is under $100,000 and you actively participate in the rental (a lower bar than material participation — just making management decisions counts), you can deduct up to $25,000 of passive rental losses against ordinary income. It phases out between $100,000 and $150,000. Above that, losses carry forward.

Common Mistakes STR Hosts Make at Tax Time

Not Tracking Hours for Material Participation

You can't claim material participation without documentation. "I spent a lot of time on it" doesn't hold up in an audit. Log your hours throughout the year — guest communication, cleaning coordination, maintenance visits, booking management, market research. A spreadsheet is fine. The mistake is starting in December when you're scrambling to reconstruct a year of activity from memory.

Treating Improvements as Repairs

Replacing a broken water heater is a repair. Installing a new deck is a capital improvement. The temptation is to expense everything in the current year, but improvements have to be depreciated. Getting this wrong is one of the more common audit triggers for rental property owners.

Missing Startup Cost Deductions

Photography, initial furnishing, permit fees, LLC setup — anything you spent before your first booking is deductible as a startup cost. First-year hosts either don't track these or assume they don't count. They do.

Forgetting to Depreciate Furnishings Separately

If you buy a furnished property, you need to break out the furniture from the building on your depreciation schedule. Furniture depreciates over 5-7 years, not 27.5. Lump it all into the building value and you're depreciating a couch over three decades.

Not Adjusting for Mixed-Use Properties

Use your STR personally — even a few weeks a year — and you can't deduct 100% of anything. The deductible percentage is rental days divided by total use days. Claiming 100% on a property you also vacation in is an audit flag.

Not Using a CPA Who Understands STR

Most general CPAs don't know the STR loophole, cost segregation, or material participation rules. Using one who doesn't understand short-term rental tax treatment can easily cost you tens of thousands in missed deductions. Find someone who actually specializes in real estate investors. It's a narrower slice of the CPA world than you'd think.

Frequently Asked Questions

Related Resources

• Airbnb Tax Deductions: Every Write-Off STR Hosts Should Know — overview of how STR income is taxed and where deductions apply
• How Much Does It Cost to Furnish an Airbnb? — actual furnishing costs by property type and size
• Airbnb Startup Costs — full breakdown of what it costs to get a property listed and ready for guests
• DSCR Loans for Short-Term Rentals — how rental income-based financing works for STR investors
• STR Deal Analyzer — model net cash flow and returns before you buy