STR hosts who manage their rental from a dedicated home workspace can deduct that space under IRC §280A(c)(1) — but only if it is used exclusively and regularly for STR business, and only for your management office, not the rental property itself. You have two calculation methods: the simplified method ($5 per square foot, max $1,500) and the regular method (actual expenses × business percentage).
The home office deduction under IRC §280A(c)(1) allows a taxpayer to deduct expenses for the portion of a dwelling used regularly and exclusively as the principal place of business. For STR hosts, this means the room or dedicated area in your personal home where you conduct management activities — reviewing bookings, responding to guests, managing your listing, coordinating with cleaners, and maintaining business records.
The critical word is exclusively. The IRS does not allow partial or occasional personal use of the space. A corner desk in your bedroom used for both TV browsing and booking management does not qualify. A spare room containing only a desk, computer, and STR files — used only for STR management — does qualify.
Hosts managing multiple STR properties, running a co-hosting business, or spending several hours a week on STR-related tasks have the strongest claim. A host who checks messages occasionally from the couch likely does not have a qualifying home office.
The home office deduction applies to your personal residence where you manage the STR — not to the STR property itself. Your rental property's expenses (utilities, insurance, repairs, depreciation) are already fully deductible as direct expenses on Schedule C. The home office deduction is separate: it covers the pro-rata share of your home's costs attributable to the management workspace.
Rev. Proc. 2013-13 introduced the simplified method, which eliminates the need to track actual home expenses. You deduct $5 per square foot of qualifying home office space, with a maximum of 300 square feet — yielding a maximum deduction of $1,500 per year.
Example: Your dedicated STR management room is 180 square feet. Simplified method deduction = 180 × $5 = $900.
The advantages of the simplified method are significant for many hosts:
The main limitation is the $1,500 cap. Hosts with large home offices or high-cost homes (expensive rent, large mortgage, high utility bills) may find the regular method yields a substantially larger deduction.
The regular method calculates the deduction as a percentage of your home's actual expenses. The business percentage is typically: (Home office square footage ÷ Total home square footage).
Eligible expenses include:
The most significant drawback of the regular method is depreciation recapture upon sale of your home. When you sell your personal residence, IRC §121 allows you to exclude up to $250,000 of gain ($500,000 married filing jointly). However, any portion of the home that was used as a home office and depreciated is subject to unrecaptured Section 1250 gain, taxed at up to 25% — even if the overall gain is excluded.
The simplified method sidesteps this entirely: because no depreciation is claimed under the simplified method, there is no recapture when the home is sold.
| 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 |
Regardless of which method you choose, maintain the following records:
DeductFlow helps STR hosts capture every deduction — from home office to supplies to depreciation — automatically categorized for Schedule C.
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