Frequently asked questions
How does the “short-term rental tax loophole” work?
If you rent your property for 14 days or fewer in a year, while using it yourself for more than 14 days or 10% of rental days (whichever is greater), you may be able to exclude that rental income from your return.
If you use this 14-day rule, you generally can’t deduct rental expenses tied to those rental days. Confirm the details with a tax professional.
What rental property tax write-offs can I claim?
If your rental income is reportable, you may be able to deduct mortgage interest, property taxes, insurance, advertising, cleaning, maintenance, utilities, repairs, property management fees, platform service fees and depreciation.
Repairs often qualify in the year you pay them. Improvements generally get capitalized and recovered through depreciation over time. Personal use of the property can limit or require you to allocate certain expenses.
Can I deduct rental losses against my salary?
Usually not. Most rental activity is treated as passive, which means losses generally offset only passive income, not salary, wages or other ordinary income.
There are exceptions. Some investors may qualify for a limited passive-loss allowance of up to $25,000 (in 2026), subject to income limits and other IRS rules.
In addition, some short-term rental owners who materially participate may be able to treat the activity as non-passive, allowing losses from rental expenses and depreciation to offset ordinary income such as W-2 wages or business income. Consult a tax professional before claiming the deduction.
Do I pay self-employment tax on Airbnb income?
Often, short-term rental income is reported on Schedule E and isn’t subject to self-employment tax. But if you provide substantial, hotel-like services, daily cleaning during a stay, meals, concierge help or transportation, the IRS may treat the activity as a business and self-employment tax may apply. That could shift reporting to Schedule C. Confirm the rules with a tax professional.
How do you document rental activity for tax purposes?
Good documentation is essential no matter which route you take. Track rental days, personal-use days and every expense, with receipts, invoices and bank statements to back it up. Platforms like Airbnb, VRBO and HomeAway may report your earnings on Form 1099-K. Even if an exception applies, clean records help you reconcile what was reported and support your position if questions come up.
What happens if I sell my rental at a loss?
If you sell for less than your adjusted basis, you may have a deductible loss, since rental property is generally treated as a business asset. That loss could offset other income, subject to IRS rules. Any suspended passive losses may also become available when you dispose of the property. Because the outcome depends on your basis and prior deductions, confirm the details with a tax professional.
What happens if I receive a 1099-K?
A Form 1099-K reports the gross payments processed by a platform. Your taxable amount may differ, since it leaves out refunds, service fees and adjustments. You’ll typically capture those through your reporting as deductions.
Report the income as required, even when you also qualify for the 14-day exception. If you meet that exception, your records can prove the income qualifies. Keep clear documentation and confirm reporting requirements with a tax professional.
