Is occupancy tax deductible from income

[BBK1]

I rent a home via AirBnB but need to properly pay state occupancy tax. Is that deductible on Schedule E?

[MichaelMc · Accepted solution]

Yes, state and local taxes imposed on your rental income are deductible for federal income tax purposes. Report these taxes on Schedule E, Line 16.

[bloomieorig]

This is being prorated based on the room to house ratio.  Is there a way to override this in TT? For instance, my occupancy tax is $240, but only $14 is showing on Schedule E, Line 16

[MichaelMc]

I'm sorry. My original answer was too general. Most taxes would be handled well by the instruction I gave you, but I did not consider that the "occupancy" tax was specific to the rental function, and was not a "common expense" attached to the whole house. Remove the occupancy tax from the page listing "common expenses." a few pages later, you will find a page that asks "Any other expenses?" Fill in "Occupancy tax" and the amount. Items entered on this page should report out at the full amount, and not be prorated.

[theburts11]

I have this same issue, and when I enter my Occupancy tax (nowhere to actually enter the label) in the "Other Expenses" page, it doesn't show up in the summary of expenses, and isn't deducted from the income.  Help?

[jblackmantx]

I have the same issue.  Appreciate the help.  How best to deduct Occupancy taxes to state and local on Turbo Tax?

[Jenesano]

Is state income tax deductible on a Schedule E, rental property?

[KathrynG3]

When you are in the interview for your AirBnB or other short-term/vacation rental, wait until the very end to enter the Occupancy Tax. There is a list for Miscellaneous Expenses that only apply to the rental.

Entering the Occupancy Tax here would deduct 100% of the expense, not a fraction of it. 

[paulabushardt]

so i enter the occupancy tax in the "other expenses" instead of "other taxes"?  or is that only when it is a partial rental?  Also, VRBO/AirB now take the tax from the tenant and pay the government directly (NC rules).  Can I still deduct that?

[ErnieS0]

@paulabushardt The instructions mentioned by Tax Expert @KathrynG3 about entering occupancy tax as "other expenses" applies to a partial rental—when you are either renting part of your home, e.g. a bedroom or renting your whole home for a period of time, e.g. six weeks. 

If the property was not used for personal purposes, the occupancy tax would be entered under taxes as @MichaelMc mentioned.

According to Airbnb you can still deduct the occupancy tax because the tax is part of the service fees deducted from your payment.

See: How does occupancy tax collection and remittance by Airbnb work?

[rmm1051]

@ErnieS0(or others who care to weigh in in case this old thread is otherwise inactive!), I have a follow-up to your response on this question.

Lenders back the taxes on line 16 back out of expenses for a property when qualifying someone for a mortgage (presumably because they assume line 16 on the schedule E only includes property taxes?).  I have about $8K in local occupancy taxes and $2K in property taxes on an all-year, whole-house rental.  Before I enter the total on line 16, I wanted to get a second look.  Should I still be entering the total on line 16, or should it go under miscellaneous expenses?  Thanks in advance to anyone who might respond!

[Cynthiad66]

@rmm1051

Yes.  You should claim the Occupancy Tax as a Miscellaneous deduction on Schedule E and clearly identify what this is occupancy tax.  That way it is fully deducted but will not interfere when lenders are using the Schedule E for information.