Short-Term Rental Tax Deductions

Short-term rental tax deductions are the one area where the government actually hands you money back for running a business properly. Miss them and you've left real cash on the table. I've done that — more on that in a minute.

This isn't a generic "consult your CPA" page. I'm going to walk through every deduction I claim on my Columbus, GA property, the specific numbers, and the mistakes I made in year one that cost me real money. Take this to your own CPA and show up knowing what questions to ask.

The 14-Day Rule — It Changes Everything

Before any deduction math matters, you need to know where you stand. The IRS uses Section 280A — what most people call the 14-day rule — to decide whether your rental is a business or a personal residence with a side hustle.

If you rent your property for more than 14 days per year AND your personal use stays below 14 days (or 10% of rental days, whichever is greater), you have a rental business. You file on Schedule E. Nearly all your expenses are deductible against rental income.

If you rent for 14 or fewer days per year, that rental income is tax-free — but you also can't deduct anything rental-related. This is the "Augusta Rule" that circulates in STR Facebook groups. It's real, but it mostly applies to second-home owners near a major annual event. If you're running a real STR operation, you're almost certainly in Schedule E territory. That's where the serious deductions live.

Seven Categories I Actually Deduct

1. Depreciation

This is the largest deduction most new hosts miss entirely. The IRS lets you depreciate the structure of your rental property — not the land value — over 27.5 years. On a property with a $220,000 structure value, that's roughly $8,000 per year in a non-cash deduction that reduces taxable rental income without you spending an extra dollar.

If you haven't had a cost segregation study done, you're almost certainly underdeducting. A basic study ($1,500–$4,000 from a real estate CPA) can front-load depreciation into the first few years through bonus depreciation on components with shorter useful lives — appliances, smart locks, flooring, furniture. I had a study done on my Columbus property in late 2024 and it reclassified $31,000 of components into 5-year property. That's accelerated depreciation in a single tax year rather than spread over 27.5 years.

2. Mortgage Interest and Property Taxes

If you carry a mortgage, the interest is fully deductible against rental income. Property taxes are also deductible on Schedule E with no $10,000 SALT cap — that cap only applies to personal returns on Schedule A. On Schedule E for a rental business, there's no ceiling.

3. Supplies and Consumables

Every roll of paper towels, every set of pillowcases, every bottle of dish soap bought for the property is deductible. I track these through a dedicated Amazon Business account that exports a clean expense CSV at year-end. In 2025, I spent $2,340 on supplies across two properties. Fully deductible, documented with a single download.

4. Smart Home Equipment

Here's where it gets interesting if you're a tech-forward host. My Yale Assure 2 smart locks ($229 each), ecobee SmartThermostat Premium units ($249 each), and TP-Link Deco X55 mesh WiFi nodes ($159 each) are all depreciable business assets. Under Section 179 or bonus depreciation rules, I can deduct the full purchase cost in the year I place them in service at the rental — rather than spreading it over five to seven years.

For a two-property setup with two locks, two thermostats, and a WiFi system, that's roughly $1,500 in equipment you can write off immediately in year one. If you're evaluating which locks to install, the guide at Airbnb smart lock setup and costs covers the full installation breakdown and which hardware holds up in a vacation rental context.

5. Professional Services and Software

CPA fees, attorney fees for lease reviews, property inspection costs — all deductible. If you use a property management system or channel manager, that subscription is a deductible operating expense too. Tools like Hospitable ($29–$99/month in 2026) or OwnerRez ($40+/month) are ordinary business expenses. So is your pricing tool, your cleaning coordination software, and your STR management platform.

6. Repairs vs. Improvements

This distinction trips up nearly every host I know. On the BiggerPockets STR forums, it's among the most common tax questions every quarter — and for good reason. Repairs are deductible in the year you make them. Improvements must be capitalized and depreciated over their useful life.

Replacing a broken faucet: repair. Replacing an entire bathroom: improvement. Replacing a 20-year-old water heater with a like-for-like unit: generally a repair under the IRS's Repair Regulations (finalized 2014, still current). Adding a tankless system that's materially better than what was there: closer to an improvement. When it's ambiguous, your CPA makes the call — but you need to know the distinction exists before you walk in the door.

7. Home Office

If you use a dedicated space in your primary residence exclusively for managing your STR business — answering guest messages, coordinating cleaners, reviewing financials — you may qualify for the home office deduction. The space must be used regularly AND exclusively for business. A desk in your living room doesn't qualify. A spare bedroom used only for STR management does.

My home office in Austin is 120 square feet out of 1,800 total — 6.7% of home expenses. On a $3,200/month mortgage plus utilities and insurance, that percentage translates to roughly $2,500 per year in additional deductible business expense. Not life-changing. Not nothing either.

How to Set This Up: Step by Step

1. Separate your finances from day one. Open a dedicated bank account and business credit card for STR expenses only. Mixing personal and business transactions is the fastest way to lose deductions at tax time.
2. Start a mileage log immediately. Every trip to the property, to a hardware store, to meet a repair person is deductible at $0.67/mile (the 2024 IRS standard rate). I log mine in a shared notes doc on my phone: date, destination, purpose, miles. Fifteen round trips to Columbus at 55 miles each way is $1,106 in deductions for doing nothing different.
3. Keep receipts digitally, organized by property and month. Snap a photo the moment you make a purchase. I use a simple naming system: COL_2025_03_HomeDepot_repair.jpg. Your CPA spends less time reconstructing your records, which means lower CPA fees — themselves deductible.
4. Commission a cost segregation study if your property basis is above $150,000. The accelerated depreciation in year one usually more than pays for the $1,500–$4,000 study cost.
5. Log every software subscription as a business expense. Every tool you use to run properties — Airbnb management software, pricing tools, channel managers — belongs in your expense log. Ordinary and necessary business expenses, all of them.
6. Ask your CPA about Section 199A QBI. The Qualified Business Income deduction can let qualifying STR hosts deduct up to 20% of net rental income. You generally need to document 250+ hours of rental activity per year to hit the safe harbor threshold. That's about five hours a week — realistic if you're actively self-managing.

The Mistake That Cost Me

In Q1 2026, I was reviewing my 2024 returns with my CPA and realized I hadn't tracked any mileage during my first year of STR operation in 2023. I knew I'd made at least 15 trips to Columbus that year. At $0.655/mile (the 2023 rate) and roughly 55 miles each way, that's $1,081 in deductions I couldn't claim because I had no contemporaneous log. The IRS doesn't allow reconstructed mileage from memory after the fact.

The fix was free: a shared notes doc I update on my phone every time I leave for a property. Date, destination, miles, purpose. Thirty seconds per trip. The lesson cost me over a thousand dollars to learn. You can have it for free.

Where This Gets Complicated

Mixed-use properties — STRs that also serve as your personal residence — are the hardest tax case. You have to allocate expenses between personal and rental use days using either the Bolton ratio or the IRS ratio, and they produce meaningfully different results. This is a CPA conversation, not a spreadsheet you build yourself.

I also want to be direct about what Koohost doesn't do: there's no built-in expense tracker, no tax reporting module, and no owner statement system. I track expenses in a spreadsheet and hand it to my CPA. If owner financial statements and per-property P&Ls are your top priority right now, OwnerRez ($40+/month) has a genuine advantage there. Koohost wins on the smart home operations and guest communications side. You can read a full breakdown of Koohost vs. other tools to see where each one fits. For staying current on STR regulations and industry trends more broadly, shorttermrentalz.com publishes solid coverage worth bookmarking.

One more warning: "real estate professional" status — the designation that lets you deduct unlimited rental losses against ordinary income — requires 750+ hours per year in real estate activities AND more time in real estate than any other profession. Most people who claim it don't survive an audit. Don't attempt it without a CPA who has specifically defended it before.

Koohost Notes for Current Users

If you're running Koohost, your subscription is a deductible business expense — $15/month for Solo Host or $30/month for Pro Host. The smart home hardware Koohost integrates with (Yale Assure 2 locks, ecobee SmartThermostat Premium units, TP-Link Deco X55 nodes) should each have a purchase receipt tied to the specific property it serves. That's your Section 179 documentation.

The operational data Koohost generates — reservation counts, occupancy rates, revenue by property — supports your CPA's QBI safe harbor hour calculations and mixed-use allocation math. It's not a tax platform, but the numbers it tracks are exactly what your CPA needs when you walk in. For context on where Koohost fits versus the alternatives, the Hospitable comparison and the full alternatives overview lay out the trade-offs clearly.

Tight operations — every expense documented, every deduction captured — is what makes STR hosting profitable at the portfolio level, not just at the individual booking level. The tax work is unglamorous. It's also where a significant portion of your actual profit lives. Try Koohost free for 30 days — no credit card.

FAQ

Does the 14-day rule apply to all rental platforms, or just Airbnb?

The 14-day rule (Section 280A) is federal tax law — it applies regardless of platform. Airbnb, VRBO, Hipcamp, direct bookings via your own website — all rental days count toward the same IRS threshold. The platform you use is irrelevant to the calculation.

Can I deduct the full cost of a smart lock or thermostat in year one?

Yes, under Section 179 or bonus depreciation. A Yale Assure 2 lock at $229 or an ecobee SmartThermostat Premium at $249 can be fully deducted in the tax year you place them in service at your rental property, rather than depreciating them over five to seven years. Keep the purchase receipt and note the installation date and property location.

What's the difference between Schedule E and Schedule C for STR income?

Most short-term rental income goes on Schedule E as passive rental income — no self-employment tax. Schedule C is for business income where you provide substantial hotel-like services (daily housekeeping, meals, concierge). If you're on Schedule C, you owe 15.3% self-employment tax on net income. For the vast majority of Airbnb and VRBO hosts who don't provide those services, Schedule E is the correct filing.

Do I owe self-employment tax on short-term rental income?

Generally no, if you file on Schedule E. Passive rental income on Schedule E is not subject to self-employment tax. If you end up on Schedule C because of services you provide, you do owe it. This practical consideration is one reason most hosts structure their operation to stay on Schedule E.

Can I deduct STR management software subscriptions?

Yes. Any software subscription used to manage your rental business is a deductible ordinary and necessary business expense on Schedule E. Hospitable at $29–$99/month, Koohost at $15–$30/month, PriceLabs at roughly $19.99/month — keep the invoices and put them on your expense log.

What records do I need to keep in case of an IRS audit?

Keep receipts for every expense — digital photos count. Maintain a mileage log with dates, destinations, and business purpose for every trip. Keep your rental calendar documenting which days had paying guests versus any personal use days. The IRS can audit up to three years back, and up to six years for substantial underreporting. Store records accordingly, and don't rely on memory for anything the IRS will want documented in writing.