Which Kitsch In Your Vacation Rental Property Is Tax Deductible?

Your guide to tax deductions like lava lamps, tiki torches, and even wine and coffee

The rising popularity of vacation and short-term rentals here in the Coachella Valley, including room rentals for the Coachella Music Festivals in April, means Valley residents are finding opportunities for an additional source of income, and another chance to get the amount of space between the mirror and the mantel right.

Let’s take a look at some of those stylish tchotchkes you bought for your rental.  Did you know qualified tax deductions for your vacation and short-term rental might include:

  • New towels
  • Dishes
  • Lounge chairs
  • Décor
  • Upgrades, such as painting and repairs
  • Coffee, condiments and other welcoming amenities (who knew?)
  • Host fees from services like Airbnb and HomeAway

Keep Calm and Rent On. Taxes on rental income can be minimized, or even eliminated when you know the rules:

The “14-Day Rule”:

  • Vacation rentals: Stay for 14 days and rent it out for 14 days or less, and the income is not taxed.  Sweet!
  • Primary residence: Rent it out for 14 days or less and the income is tax-free.
  • Rooms: The 14-day rule applies as well and you don’t have to report the income, but you can’t take deductions either.
  • If you rent for more than 14 days, keep track of both rental days and those days you used the residence.

Expenses:

You are entitled to deduct “ordinary and necessary” expenses to manage your rental.

  • Divide out personal and business expenses, like mortgage interest.
  • Check with the city in which your rental is located to determine your city ordinances on rentals and your possible occupancy tax liability.

A tax advisor can inform you about particulars for room rentals versus entire house rentals and a variety of other possible deductions.

If you need tax filing assistance, tax planning for vacation rentals, or expert advice for any other area of tax law, barton CPA provides a complimentary consultation and has4 locations and can provide a complimentary consultation.

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