Towels and Linens as an asset or expense in a short term rental

[artisan1475]

I see responses that say you "can" take towels and linens and an expense, but can you list them as an asset and have them depreciate over 5 years?  Maybe I'm overly optimistic about them lasting over a year, but I am hopeful.

Thank you!

[DianeW777 · Accepted solution]

These items (towels and linens) should be used as an expense on your short term rental such as supplies or other expenses.  They are not assets. Keep good records of your expenses for your activity.

[artisan1475]

Thank you for your very specific reply.  We placed our short term rental into use at the end of November, so do not have much rental income for 2023.  However, we bought all of our supplies in 2023.  Can we report them as expenses in 2024 when we have more income?  I'm afraid having a large loss will trigger an audit.   Thank you, Valerie

[SusanY1]

Having a large loss the first year renting your property isn't likely to trigger an audit.  This is a common experience. 

However, audits can be random, too.  Simply keep the proof of those expenses and you'll not have any issues.  Some of your loss from this year may carryover to next year to offset income depending on the other factors on your tax return but you should always record the expense in the year actually paid when you are a "cash basis" taxpayer (which you almost certainly are.)