If you're renting out a property on Airbnb or VRBO, the income you earn is generally considered taxable. However, the IRS allows rental property owners to deduct certain expenses related to managing and maintaining their rental property, which can significantly offset taxable rental income.

The key to maximizing eligible deductions is understanding what may qualify and keeping detailed records throughout the year — not scrambling to find receipts in April. This guide provides an overview of common STR deductions, but your specific eligibility depends on your circumstances. Work with a CPA to determine what applies to your situation.

The Big Three: Mortgage Interest, Property Taxes, and Insurance

According to the IRS Publication 527 (Residential Rental Property), these are typically among the largest deductions available for rental property owners. If your property is used exclusively for rental purposes, the full amount of mortgage interest, property taxes, and insurance premiums may be deductible. If you also use the property personally, these expenses generally need to be allocated based on the percentage of rental use versus personal use.

Your lender provides Form 1098 each year showing how much mortgage interest you paid. Note that only the interest portion of your mortgage payment is deductible — not the principal.

Common Operating Expenses

The IRS generally allows deduction of "ordinary and necessary" expenses for rental activities. Common categories for STR owners include:

Cleaning and turnover costs — Whether you hire a cleaning crew or buy supplies yourself, these are generally considered deductible business expenses. This includes laundry services, cleaning supplies, and turnover coordination fees.

Repairs and maintenance — Fixing a leaky faucet, replacing a broken appliance, or repainting a room are typically deductible in the year they occur. The IRS distinguishes between repairs (generally deductible immediately) and improvements (which typically must be depreciated over time). See IRS Publication 527, Repairs and Improvements for details.

Utilities — Electric, gas, water, sewer, internet, and cable for your rental property. If you use the property personally part of the year, these should be prorated based on rental days.

Platform fees — The service fees Airbnb, VRBO, or Booking.com charge are generally deductible as commissions or fees.

Supplies — Towels, linens, toiletries, kitchen essentials, and other items you provide for guests are generally considered deductible supply expenses.

Professional Services

Fees paid to professionals for your STR business may be deductible, including CPA or tax preparation fees related to the rental, attorneys for rental-related legal matters, bookkeeping services, and property management software subscriptions.

Depreciation

According to the IRS Publication 946 (How to Depreciate Property), depreciation allows property owners to recover the cost of income-producing property through yearly deductions. For residential rental property, the recovery period is typically 27.5 years. While depreciation doesn't involve an out-of-pocket cost each year, it can significantly reduce taxable rental income.

Cost segregation studies may allow certain property components (furniture, appliances, landscaping) to be depreciated on an accelerated schedule. With 100% bonus depreciation restored by the One Big Beautiful Bill Act for property placed in service after January 19, 2025, this strategy has become particularly relevant. Discuss with your CPA whether this applies to your situation.

Mileage and Travel

Trips to your rental property for management purposes may be deductible. The IRS offers two methods: the standard mileage rate or actual vehicle expenses. Either way, the IRS requires a detailed log of each trip. See IRS Standard Mileage Rates for current rates.

The Importance of Record-Keeping

The single most important thing STR owners can do is maintain organized, detailed records of every expense. The IRS may require documentation to support deduction claims, especially in the event of an audit.

DeductFlow is designed to help STR hosts organize their records in one place — expenses categorized by Schedule C line, mileage logs, and active hours tracking — so that when it's time to meet with your CPA, everything is ready.