How to Track Airbnb Rental Expenses to Simplify Your Taxes
Useful tips for tracking Airbnb expenses to help maximize income tax deductions and make filing easier.
Airbnb hosts share more than 6 million listings around the world.
The platform has become a lucrative side hustle (and even full-time job) for many entrepreneurs across the globe.
Maybe you’re taking advantage of this income stream by offering an inexpensive room in your house for the weekend. Or perhaps you’ve started construction on a garage with an apartment on top just for Airbnb (and of course all your adventure gear).
It’s important to understand how income from Airbnb can affect your tax filing. Based on my experience as an Airbnb host with a partner who’s an accountant, here are tips for tracking Airbnb expenses to help simplify tax time.
It’s a business
The not-so-great news is any money you earn from Airbnb is taxable income. You will need to include this income on your tax return, and expect to pay tax on it.
However, the good news is if you carefully track expenses associated with running your Airbnb listing, you can reduce your taxable income by subtracting those expenses.
Additionally, Airbnb offers reporting and the proper tax documents your accountant will need to help you understand the taxable income from Airbnb.
Read: Should I expect to receive a tax form from Airbnb?
Consider the space
Where your space is located may affect how you track expenses associated with Airbnb.
For example, if you’re renting a portion of your home, where you also physically live, some of your utilities, like electricity, water, and the internet, can be counted toward Airbnb expenses.
This depends on the number of days rented and also whether you were also living in the space. Your accountant can help you come up with the percentage that can be counted as a business expense.
This might be based on the number of days that the house or space was rented throughout the year, which you can get from Airbnb’s reporting options.
Your listing location will also determine whether occupancy taxes are withheld automatically or whether you’re expected to pay those.
These occupancy taxes are separate from the tax you’re expected to pay on earned income from Airbnb.
Consult a tax professional and Airbnb directly about the occupancy tax for your listing.
What counts as an Airbnb expense?
Beyond utilities, there are tons of other expenses associated with managing an Airbnb listing.
The big ones likely to help include cleaning and general supplies. If you pay someone to clean and prepare your Airbnb space, that’s a valid business expense.
All the toilet paper, paper towels, soap, shampoo, and other toiletry type supplies can also be tracked as Airbnb expenses. Any startup costs like the purchase of towels, furniture, and linens should be tracked and counted.
More complex spending, like the purchase of a home or construction of a space specifically for Airbnb rental, should be reviewed with your accountant or tax professional.
How to track Airbnb expenses
We recommend tracking your expenses in a spreadsheet. Tiller Money can make this easier since it automates the data into a spreadsheet for you.
All you have to do is categorize the transactions and then it’s available in a nice neat package for your accountant to review.
It’s easiest to keep the spending and earnings separate when possible. So perhaps set up a separate checking account just for the inflow and outflow for Airbnb.
At the very least consider using a separate credit card for all your Airbnb specific expenses and purchases. This makes it easier to identify which transactions are for Airbnb and which are for personal expenses.
If you’re sharing your home, this may be more challenging and you’d need to manually deduct the portion of utilities that you can count for Airbnb. Talk with your accountant about this scenario.
If you keep the financial transactions totally separate from your personal finances (e.g. separate accounts for Airbnb specifics) you can create a separate Tiller Money-powered spreadsheet just for Airbnb tracking.
If you have the Airbnb expense transactions co-mingled with your personal financial accounts you can set up a category schema that is organized to help you easily keep track. One option is to use a group for all things Airbnb and then a set of categories to reflect the common expenses.
It’s also a good idea to keep receipts for these business expenses. You can snap a quick picture on your phone, save it to your Google Drive, and then add the link to the file in your Transactions sheet for that specific transaction. This is especially important for large purchases.
All in all, Airbnb is opening the door for entrepreneurs to make money using tools that are already within their means. Most of the guidelines here could also be applied to Airbnb Experiences. It’s exciting to see this brand grow and empower more individuals and families to expand their own potential and financial future.