Every Airbnb Host’s Tax Guide Fifth Edition

Book Preface

This book—the first of its kind—is a guide to the income tax issues faced by people who rent out all or part of their homes to short-term guests. We refer to such people as “short-term rental hosts.” The information here applies to rentals arranged through online rental platforms, such as Airbnb, VRBO, FlipKey, and others. It also applies to short-term rentals made through Craigslist, or made offline through local advertising, word of mouth, or any other means.
This book provides the tax knowledge rental hosts need whether they rent out all or part of their main home, vacation home, or
any other property they own or rent, like a cottage or separate unit attached to their home. The tax rules for short-term rental hosts are different from those that apply to traditional landlords. If you’re a traditional landlord who rents property full time to long-term tenants (or if a short-term guest ends up being a long-term tenant), refer to Every Landlord’s Tax Deduction Guide, by Stephen Fishman (Nolo), for in-depth guidance on all the tax issues you face.
Taxes are complicated enough for traditional landlords, but they can be even more difficult for short-term rental hosts. Online rental platforms provide little or no tax guidance—they’re in the rental business, not the tax advice business. Many tax professionals have little understanding of the unique tax problems posed by short-term rentals. This book is intended to fill that void. It provides all the information short-term rental hosts need to minimize their taxes and stay out of trouble with the IRS, including:

• when short-term rentals are tax free
• how to identify, allocate, and maximize short-term rental deductions
• IRS reporting for short-term rentals
• how to deduct short-term rental losses

• completing your tax return (IRS Schedule E), and
• record keeping for short-term rentals.
More than ever, you need guidance when it comes to taxes for your

short-term rental activity. In 2017, Congress enacted the most sweeping changes to the tax code in over 30 years when it passed the Tax Cuts and Jobs Act (TCJA), which took effect in 2018. Now, in an effort to stave off economic devastation in the wake of the COVID-19 pandemic, Congress revised the nation’s tax laws yet again, temporarily suspending many of the harshest provisions of the TCJA. We explain how all these changes affect hosts. We also cover new tax reporting rules that take effect in 2022 that greatly impact short-term hosts.
Even if you work with an accountant or other tax professional, you need to understand these tax issues. Doing so will help you provide your tax professional with better records, ask better questions, obtain better advice, and, just as importantly, evaluate the advice you get from tax professionals, websites, and other sources. If you do your taxes yourself, your need for knowledge is even greater. Not even the most sophisticated tax preparation software provides the insights and specialized guidance you’ll find in this book.
Minimizing the taxes you pay on your rental income can make your hosting activity far more profitable—indeed, it can spell the difference between making and losing money. The time to start planning to reduce the taxes you’ll need to pay on your short-term rental income is now. You can’t wait until April 15—by then it will be too late to implement most of the tax savings strategies and procedures covered in this book.