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Keeping Vacation Rentals Compliant with Rental Taxes and Property Laws
The rise of AirBNB, Vrbo and other vacation rental services by property owners has made it a little more complicated for local governments to police and tax those rental properties. At the same time, though, these short-term vacation rentals represent a tax revenue opportunity for municipalities — one that should not be missed.
Here is a brief rundown of some of the rules of taxes and tax deductions for vacation rental property owners as used by some jurisdictions:
The 14-Day Rule
Every property owner should know about the 14-day rule, which means a rental property is tax-exempt if the owner rents it out for no more than 14 days. The owner is also required to stay in the property for 14 days or more once per year. This rule goes for renting a room in your home, too. Chances are that most vacation rental property owners will go over the 14-day limit, and will thus owe taxes
Tax Deductions for Rental Property Owners
There are also guest service fees that are charged to the guests if the property owner uses a rental management service, which is also tax-deductible. The property owner should receive a 1099 showing the rental income and the property managers’ fees that were associated with the property rentals. It’s important for vacation rental owners to keep receipts and records for every item that they’re planning to deduct, whether it’s for interior paint or for new towels.
Even if a homeowner only rents a room in their home, they can deduct a portion of their mortgage interest when paying the taxes for the room rental.
Keeping up with what taxes are owed by which property owners in your municipality can be challenging, but LODGINGRevs simplifies the process and helps make vacation rental compliance much more achievable! Try our demo today to see how it can help you capture every rental.