The 14-Day Rule: The Most Important Tax Rule for STR Hosts
This rule determines how your rental income is taxed and how many deductions you can take. Everything else follows from it.
Rented 14 days or fewer
Rental income is tax-free. You don't report it. But you also can't deduct rental expenses beyond what you'd claim as a personal residence.
Rented 15+ days
All rental income is taxable and reported on Schedule E (or Schedule C if you provide substantial services). But you can deduct a proportional share of nearly every expense.
If you're also using the property personally, the IRS requires you to allocate expenses between personal and rental use based on the number of days rented vs. total days used. Track your rental days carefully — this ratio drives your entire deduction calculation.
Schedule E vs. Schedule C: Which One Are You?
Most short-term rental hosts file on Schedule E (Supplemental Income and Loss). But if you provide significant services to guests — like hotel-style cleaning, concierge, or daily breakfast — the IRS may consider you a business and require Schedule C (Profit or Loss from Business).
Schedule E (most STR hosts)
- • Passive income treatment
- • Losses can offset other passive income
- • No self-employment tax on net income
- • Standard for hosts who don't provide daily services
Schedule C (hotel-like services)
- • Active income treatment
- • Subject to 15.3% self-employment tax
- • Losses can offset ordinary income
- • Potential QBI deduction eligibility
When in doubt, consult a CPA. The Schedule E vs. C distinction can significantly affect your total tax liability. Most occasional Airbnb hosts who don't provide daily cleaning or other hotel-like services use Schedule E.
Every Deduction Available to Airbnb Hosts
Every deductible expense for STR hosts. For mixed-use properties, multiply each by your rental-use percentage (rental days ÷ total days used).
01 Mortgage Interest & Financing
The rental-use percentage of your mortgage interest is deductible on Schedule E. For a dedicated rental property (100% rental use), the full mortgage interest is deductible. For mixed-use, prorate it.
- ✓ Mortgage interest (rental-use portion)
- ✓ Loan origination fees (amortized over loan term)
- ✓ Refinancing costs (amortized)
- ✓ HELOC interest used for rental improvements
02 Property Taxes & Insurance
- ✓ Property taxes (rental-use portion)
- ✓ Homeowners insurance (rental-use portion)
- ✓ Short-term rental insurance or landlord policy (100% if dedicated rental)
- ✓ Flood or earthquake insurance
- ✓ Umbrella liability policy (rental-use portion)
03 Repairs & Maintenance
Repairs that keep the property in working condition are immediately deductible. Improvements that add value or extend the property's useful life must be capitalized and depreciated. The distinction matters.
Immediately deductible (repairs)
- • Fixing a broken appliance
- • Patching a roof leak
- • Repainting interior walls
- • Replacing broken fixtures
- • HVAC filter changes and tune-ups
- • Pest control
- • Drain cleaning and plumbing fixes
Must be depreciated (improvements)
- • New roof
- • Kitchen or bathroom remodel
- • New HVAC system
- • Addition to the structure
- • New flooring throughout
- • New windows or doors
04 Supplies & Guest Amenities
- ✓ Toiletries, soap, shampoo, coffee, and welcome supplies
- ✓ Paper towels, toilet paper, cleaning products
- ✓ Linens and towels (smaller items expensed immediately; larger sets may be depreciated)
- ✓ Kitchen supplies: cookware, utensils, dish soap
- ✓ Small appliances under $2,500 (Section 179 or immediately expensed under the de minimis safe harbor)
- ✓ Furniture and furnishings (items under $2,500 per invoice can be immediately expensed)
05 Utilities
For dedicated rentals, utilities are 100% deductible. For mixed-use, prorate by rental days.
- ✓ Electricity
- ✓ Gas/heating oil
- ✓ Water and sewer
- ✓ Internet (often 100% if required for the rental)
- ✓ Cable/streaming services provided to guests
- ✓ Trash collection
06 Professional Services & Fees
- ✓ Property management fees (Airbnb, VRBO, or third-party manager)
- ✓ Cleaning and turnover services
- ✓ Bookkeeper and accounting fees
- ✓ CPA and tax preparation fees (rental portion)
- ✓ Attorney fees for lease agreements or disputes
- ✓ Permit and license fees
- ✓ HOA fees (rental-use portion)
07 Advertising & Marketing
- ✓ Professional photography for your listing
- ✓ Paid ads on Google, Facebook, or Instagram
- ✓ Website hosting and domain costs
- ✓ Software subscriptions used for the rental
- ✓ Smart lock and keypad systems
- ✓ Channel manager software
08 Mileage & Travel
Every trip to the property for maintenance, cleaning checks, guest check-ins, or supply runs is deductible. The IRS standard mileage rate for 2025 is 70 cents per mile.
- ✓ Driving to the property to check on it
- ✓ Supply runs (hardware store, grocery store for guest supplies)
- ✓ Meeting vendors or contractors at the property
- ✓ Driving to pick up or drop off keys
- ✓ Trips to the bank, post office, or accountant for rental business
Documentation required: The IRS requires a mileage log with the date, destination, purpose, and miles driven for each trip. Apps that automatically track location make this easy. Keen Owner's mileage tracker logs trips with the IRS rate built in.
09 Depreciation: The Biggest Deduction Most Hosts Miss
Depreciation is a non-cash deduction that lets you write off the cost of the building (not the land) over 27.5 years for residential rental property. It's typically the largest single deduction for STR hosts — and the most commonly missed.
Residential property
Depreciated over 27.5 years using the straight-line method. If you purchased a rental home for $400,000 (building value $320,000, land $80,000), your annual depreciation deduction is approximately $11,636.
Appliances and furnishings (personal property)
Depreciated over 5 years. A $3,000 washer/dryer, $2,000 mattress, and $1,500 couch all qualify. Bonus depreciation and Section 179 may allow you to deduct the full cost in year one.
Cost segregation
A cost segregation study reclassifies parts of the building (carpeting, lighting, landscaping) into shorter depreciation categories of 5, 7, or 15 years. For larger properties, this can accelerate hundreds of thousands in deductions. Worth the cost for properties over $500K.
10 Home Office
If you manage your rental from a dedicated office space in your primary home, you may be able to deduct a portion of your home expenses as a business expense. The space must be used regularly and exclusively for the rental business.
- ✓ Simplified method: $5 per square foot, up to 300 sq ft ($1,500 max)
- ✓ Regular method: actual home expenses × office percentage
- ✓ Deductible expenses include: rent/mortgage interest, utilities, insurance, internet
The Documentation the IRS Expects
Claiming deductions is only half the job. You need to be able to prove them. The IRS can audit STR hosts up to 3 years after filing (7 years if income is substantially understated). Keep records for at least 3 years after the tax return they apply to.
For every expense
- • Date of purchase
- • Amount paid
- • Vendor or payee name
- • Business purpose
- • Receipt or bank record
For mileage
- • Date of each trip
- • Starting and ending location
- • Business purpose of the trip
- • Miles driven
- • Total business miles for the year
For depreciation
- • Purchase price and closing documents
- • Land value (from assessment or appraisal)
- • Date property was placed in service
- • Prior depreciation taken (Form 4562)
For rental use
- • Total days rented at fair market price
- • Total days of personal use
- • Booking records (Airbnb, VRBO exports)
- • Any days blocked but not personal use
The 5 Biggest Tax Mistakes STR Hosts Make
1. Not tracking mileage
At 70 cents per mile, 200 supply-run miles per month is $1,680 in deductions annually. Most hosts don't log a single trip.
2. Missing depreciation
Depreciation is the largest deduction for most rental property owners and doesn't require spending any money. You're leaving real money behind if you don't take it.
3. Mixing personal and rental expenses
Using the same credit card for personal and rental purchases makes it nearly impossible to document correctly. Use a dedicated card for rental expenses.
4. Losing receipts for small purchases
$15 for cleaning supplies here, $30 for guest toiletries there. These add up to hundreds or thousands per year — but only if you can document them.
5. Not tracking the personal-use days
Every personal-use day affects your rental-use percentage and therefore your deduction limit. If you use the property personally and don't track it, you risk deducting more than you're entitled to.
Stop Losing Deductions at Tax Time
Keen Owner tracks every STR expense by tax category, logs your mileage at the IRS rate, and generates a Schedule E report your CPA can use directly. Free to try.
See Keen Owner for STR Hosts