Short-Term Rental Loophole

Unlock tax benefits for your short-term rentals, even without real estate pro status. Ideal for platforms like Airbnb or VRBO.

Get startedLearn more

Table of Content

Discover how Short-Term Rental Loopholes work

The Short-Term Rental Loophole allows property owners to access tax advantages typically available only to real estate professionals. To qualify, properties must be rented out for an average of 7 days or less per tenant. 

Alternatively, if the average rental period is 30 days or less and significant personal services are provided to tenants, the property owner may also qualify. This can lead to substantial deductions for expenses like mortgage interest, property taxes, maintenance, and depreciation against ordinary income, resulting in significant tax savings, particularly for high-income earners.

Required documents

o access the Short-Term Rental Loophole, you will need to provide specific documentation, including:

  • Rental agreements and contracts to verify rental terms
  • Records of rental income and expenses for tax filing
  • Documentation of personal services provided (if any), to meet specific IRS criteria
  • Property tax statements as proof of property ownership
  • Mortgage interest statements to substantiate financial costs
  • Receipts for maintenance and repairs for expense tracking
  • Cost Segregation Study documentation for potential huge savings

Important considerations 

Meticulous record-keeping is crucial when utilizing the Short-Term Rental Loophole. Ensure that the rental periods and the services provided meet IRS criteria to qualify for the tax benefits. 

It’s essential to maintain accurate documentation of all rental activities and related expenses. Consulting with a tax professional is highly recommended to help maximize the tax advantages and ensure compliance with all tax regulations.

For more information, please refer to the IRS publication on Residential Rental Property.

Tax AI

Stay ahead with our advanced TaxAI

Get tax answers, useful insights, and proactive solutions to keep your tax affairs in perfect order.

 Grow your business

Take the financial stress off your business’ shoulders

Let CFOmate handle your finances so you can enjoy peace of mind while focusing on growing your business.