![]() ![]() Like the "B&B" in Airbnb, think of your rental as a bed-and-breakfast. ![]() You are entitled to deduct all “ordinary and necessary” expenses to operate your rental business. "I ended up paying hefty taxes and investing a lot of time in trying to figure out my tax deductions and finances. "The first year, I accepted guests for two one-week stays, plus 10 days over Christmas," Chan says. These days, Alice is careful to keep the total rental time under 14 days-a recommended tactic to others. Portland resident Alice Chan earns extra income by renting out her vacation home on the Oregon Coast several times a year. If you meet the requirements of the 14-day rule, you do not have to report the income on your taxes and you don't deduct any expenses as a rental expense. Use the vacation house yourself 14 days or more during the year.Rent the property for no more than 14 days during the year AND.Under this rule, you don't report any of the rental income you earn from the short-term rental, as long as you: Tax laws are full of exceptions, but the 14-day rule-sometimes called the "Masters exception" because of its popularity in Georgia during the annual Masters golf tournament-is the most important for anyone considering renting out a vacation home. You can deduct all “ordinary and necessary” expenses to operate your rental business, including guest-service fees.If you rent for longer than the 14-day exception period, detail the dates precisely so you can properly calculate personal and business expenses.If a company like Airbnb, HomeAway, or VRBO reports income for a short-term rental to the IRS on a Form 1099-K, simply show the IRS that the income qualifies for the 14-day exception.Under the 14-day rule, you don't report any of the income you earn from a short-term rental, as long as you rent the property (or room) for no more than 14 days during the year and you use the property for 14 days or more during the year. ![]()
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