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The rent you pay for your apartment will be rent expense on your IRS Schedule E reporting the rental income. You must prorate the rent expense for the number of days you sublet the property. The following information will provide more information when renting your property using Airbnb.
Renting Out a Room on Airbnb or FlipKey - How Much You Owe in Taxes
Renting for 15-days or more changes everything
Step over the annual 14-day limit, even by one day, and you'll be in completely different tax territory. The Masters exemption disappears, and rental income — including the amount you made in the first 14 days — becomes taxable. Your tax rate will vary depending on the total amount of income you report on your state and federal tax returns.
The bright side is that you can deduct 100% of direct rental expenses from the short-term rental income, including:
Other expenses, like mortgage interest and property taxes, must be split up between personal and business use of your residence.
Note, that the money you make from short-term vacation rentals is considered rental income for tax purposes even if you are a renter yourself and don't own the property.
Some cities and states charge occupancy taxes on short-term rentals. Although the guest usually owes the amount of this local tax, you, as the host, may have to collect and pay it. Sometimes the rental company collects and pays the local tax for you.
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