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:
- Rental
agency fees
- Credit
checks
- Cleaning
expenses
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.
Additional Resources:
