Can STR hosts claim a home office deduction?

Yes. An STR host who uses a dedicated space in their home exclusively and regularly to manage their short-term rental business qualifies for the home office deduction under IRC §280A(c)(1). The space must be used exclusively for STR management — responding to guests, managing listings, maintaining records, coordinating cleaners — and no other purpose.

What is the difference between the simplified and regular method for home office?

The simplified method (Rev. Proc. 2013-13) deducts $5 per square foot of home office space, capped at 300 square feet for a maximum deduction of $1,500. The regular method deducts actual home expenses (mortgage interest, rent, utilities, insurance, depreciation) multiplied by the percentage of your home used for business. The regular method often yields a larger deduction but requires more recordkeeping and creates depreciation recapture risk upon sale.

Does the home office deduction apply to the STR property itself?

No. The home office deduction under IRC §280A(c)(1) applies only to the space in your personal residence where you manage the STR business — a dedicated desk, room, or workspace in your home. It does not apply to the STR property itself, which is deducted separately as a rental property with its own direct expense deductions on your tax return.

What is depreciation recapture risk with the regular home office method?

When you sell your personal residence, you normally exclude up to $250,000 ($500,000 married) of gain under IRC §121. However, the portion of your home claimed as a home office under the regular method is subject to depreciation recapture taxed at up to 25%. The simplified method avoids this recapture risk because no depreciation deduction is taken.

Home Office Tax Strategy April 6, 2026

Home Office Deduction for STR Hosts: Simplified vs Regular Method

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Depreciation recapture on home sale. Depreciation claimed under the regular method creates a taxable gain upon sale that is not shielded by the §121 exclusion. Hosts who plan to sell their home within a few years should weigh this risk carefully and may prefer the simplified method.

The simplified method sidesteps this entirely: because no depreciation is claimed under the simplified method, there is no recapture when the home is sold.

Simplified vs Regular: Side-by-Side Comparison

Factor	Simplified Method	Regular Method
Calculation	$5 × sq ft (max 300)	Actual expenses × business %
Maximum deduction	$1,500/year	No cap
Recordkeeping	Minimal (just sq footage)	Extensive (all home expenses)
Depreciation taken?	No	Yes (creates recapture risk)
Best for	Small offices, plan to sell home	Large offices, high home costs, long hold
Can switch methods?	Yes, year to year	Yes, year to year

Documentation Requirements

Regardless of which method you choose, maintain the following records:

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Floor plan or measurement: Document the square footage of your home office and total home. Photographs help.
Exclusive-use evidence: The space should contain only business equipment and files. Photographs taken periodically support this.
Regular use evidence: A log showing the types of STR management activities performed in the space and their frequency.
Regular method: Keep all receipts for home expenses (mortgage statements, utility bills, insurance statements, repair invoices).

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Run both calculations. Each year, calculate your deduction using both methods before filing. You are free to choose whichever is larger (or the simplified method if you want to avoid recapture risk). There is no commitment to one method permanently.

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Home Office Deduction for STR Hosts: Simplified vs Regular Method

Simplified vs Regular: Side-by-Side Comparison

Documentation Requirements

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