The first question: does the 14-day rule apply to you?
Before anything else, check one number: how many days did you rent your property this year?
If the answer is 14 days or fewer, you may qualify for the 14-day rule — which means your rental income is completely tax-free and doesn't need to be reported. See our 14-day rule guide for the full details.
If you rented for 15 days or more, the rules in this guide apply to you.
Rental days: How many days the property (or room) was rented to paying guests.
Personal use days: How many days you (or family members at no charge) used the property. These two numbers determine which rules apply and how you allocate expenses.
Which tax form do you use? Schedule E vs Schedule C
Rental income is generally reported on Schedule E. However, some hosts must use Schedule C. The difference matters because Schedule C income is subject to self-employment tax (15.3%) while Schedule E income is not.
| Your situation | Form to use | Self-employment tax? |
|---|---|---|
| Renting a room or property without substantial services for guests | Schedule E — Supplemental Income | ❌ No |
| Providing substantial services primarily for guests' convenience (such as regular cleaning, changing linen, or maid service) | Schedule C — Business Income | ✅ Yes (15.3%) |
| Renting is part of a trade or business as a real estate dealer | Schedule C — Business Income | ✅ Yes (15.3%) |
Routine turnover cleaning between guests does not by itself determine Schedule E vs. Schedule C. If you provide substantial services primarily for your guests' convenience — such as regular cleaning, changing linen, or maid service — Publication 527 says to report on Schedule C. If you're unsure where your services fall, get professional advice.
What counts as rental income?
Report the gross amount you received from guests — before Airbnb deducts its host service fee. Your 1099-K from Airbnb shows gross payments. You then deduct the fees as a business expense.
Rental income includes:
- Nightly rental payments from guests
- Cleaning fees charged to guests (even if you pay a cleaner — that's a deductible expense)
- Pet fees, extra guest fees, or any other charges to guests
- Security deposits you keep (if the deposit becomes income when applied to damage or not returned)
Your 1099-K from Airbnb shows the total amount guests paid — including Airbnb's portion of the cleaning fee and before Airbnb deducts its host service fee. Don't assume the 1099-K matches what you actually received in your bank. Report the gross amount shown on the 1099-K, then deduct Airbnb's host service fee separately as an expense.
What can you deduct?
Airbnb hosts can deduct a wide range of expenses. The key rule: expenses must be ordinary and necessary for your rental activity, and they must be allocated between rental use and personal use if you also use the property yourself.
How to allocate expenses for mixed-use properties
If you rent out your primary residence or a property you also personally use, you must allocate expenses between rental and personal use. IRS Publication 527 divides expenses based on the number of days used for each purpose:
Days-based allocation
Divide rental days by total days used (rental days + personal use days).
Personal days: 30
Total days: 90
Rental %: 60/90 = 67%
The method described in IRS Publication 527
Depreciation allows you to deduct the cost of your property over time — even though you didn't actually spend that money in the current year. For residential rental property, you can depreciate the building value (not the land) over 27.5 years. On a $400,000 property where the building is worth $350,000, that's about $12,727 in annual depreciation — a significant deduction that many self-managing hosts forget to claim.
Important: when you eventually sell the property, the IRS will "recapture" this depreciation and tax it. This is called depreciation recapture. Keep track of what you've depreciated each year.
The most common Airbnb tax mistakes
- Not tracking personal use days — If you (or family members) use the property and you don't keep records, you could either over-deduct (an audit risk) or under-deduct (leaving money on the table). Keep a calendar log.
- Reporting net instead of gross income — Your 1099-K shows gross rental payments. Report the gross amount, then deduct Airbnb's fee separately. Don't just report what hit your bank account.
- Missing depreciation — Many hosts skip this because it's complex to calculate. A CPA can set up your depreciation schedule correctly in the first year, and then it runs automatically afterward.
- Not separating rental and personal expenses — Deducting 100% of expenses that should only be partially allocated is a red flag in an audit.
- Forgetting local permits and taxes — Operating an unpermitted short-term rental can result in fines that aren't deductible and may attract scrutiny of your tax reporting as well.