What expenses can Airbnb hosts deduct?
Airbnb hosts can deduct the ordinary and necessary costs of running their rental. This includes direct operating expenses, a share of property costs, and the fees you pay to Airbnb itself.
Direct operating expenses are fully deductible. Cleaning costs between guests, supplies like linens and toiletries, minor repairs, and consumables you provide all count. If you hire a property manager or co-host, those fees are deductible. Professional photography for your listing qualifies. So does the cost of any welcome baskets or guest amenities you provide.
Platform fees are straightforward. The service fee Airbnb takes from each booking is a deductible business expense. If you use other booking platforms or payment processors, those fees count too.
Property costs need to be allocated based on rental use. Mortgage interest, property taxes, insurance, and utilities are deductible in proportion to how much you rent the property. If you rent a dedicated vacation rental full-time, you deduct these costs fully. If you rent out your primary residence occasionally, you only deduct the portion that corresponds to rental days versus personal days.
Furnishings and improvements get more complicated. Items that cost less than $2,500 can often be expensed immediately. Larger purchases like furniture sets or appliances may need to be depreciated over time. Improvements that extend the property’s life or add value get added to your basis and depreciated, while repairs that maintain the property are deductible in the year you pay for them.
Depreciation is a significant deduction that many hosts overlook. You can depreciate the building itself over 27.5 years, which creates a paper expense that reduces your taxable income even though you’re not writing a check. Just be aware this affects your tax basis and can create taxable gain when you sell.
Travel expenses related to managing the property count if the property is in a different location from where you live. Mileage to check on the property, meet contractors, or handle guest issues is deductible. If you travel specifically to manage the rental, lodging and meals during the trip can qualify.
The 14-day rule matters for properties you also use personally. If you rent a property for fewer than 15 days a year, you don’t report the income at all but you also can’t deduct rental expenses. Above that threshold, you report the income and deduct expenses based on the ratio of rental days to total use days.
Good records make all of this work. Keep receipts, track which expenses relate to the rental, and document rental versus personal use days. Working with bookkeeping services in Santa Fe NM that understand rental properties helps ensure you capture every legitimate deduction while staying on the right side of IRS rules.
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More Questions
How do I handle occupancy taxes for vacation rentals?
New Mexico vacation rentals face state lodgers' tax at 5% plus local taxes that vary by city. You need to register with state and local authorities, track taxes collected as a liability in your books, and verify what platforms like Airbnb actually remit on your behalf.
Read answerShould I use QuickBooks or property management software?
Property management software handles operations like tenant tracking and rent collection. QuickBooks handles actual accounting and financial reporting. Many property managers use both, with PM software syncing to QuickBooks for clean books.
Read answerHow do I set up invoicing in QuickBooks?
Complete your company info, customize your invoice template, set up products and services, and connect a payment option. Use recurring invoices for regular clients and track outstanding balances from the Sales tab.
Read answerWhat chart of accounts should a general contractor use?
A contractor's chart of accounts needs separate categories for materials, labor, subcontractors, and equipment costs so you can track job profitability. The default QuickBooks templates don't work for construction.
Read answerWhat do I do if my books are a mess?
Stop adding to the pile, gather your bank and credit card statements, and assess how far back the problem goes. Whether you clean it up yourself or hire help depends on how many months you're behind and how tangled things are.
Read answerWhat records do I need to keep for Airbnb taxes?
Keep income records from all booking platforms, receipts for every expense by category, property documents for depreciation, and a calendar tracking rental vs personal use days. In New Mexico, you'll also need GRT and lodgers' tax documentation.
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