Summary of What This Blog Covers:
- Explore Essential Tax Strategies for Short-Term Rentals
Learn how to reduce your tax burden through smart planning like expense tracking, depreciation, and understanding how to classify your rental income for maximum savings. - Unlock Hidden Deductions and Tax-Free Opportunities
From deducting pre-service costs and home office expenses to leveraging the 14-day rental rule for tax-free income, discover overlooked ways to keep more of what you earn. - Get Pro Tips on Compliance and Filing Requirements
Understand what forms (like W9s, 1099 NEC, and FBAR filings) you need to stay compliant, and how to avoid common pitfalls with help from a licensed CPA and trusted tax advisor. - Partner with a Trusted Austin CPA for Year-Round Support
See how Insogna CPA—one of the top CPA firms in Austin, Texas—offers proactive, concierge-level service tailored specifically to real estate investors and short-term rental hosts.
Running a short-term rental isn’t just about guest messages and five-star reviews. It’s a business. One that can bring in excellent income if you manage it wisely. And that includes your tax strategy.
At Insogna CPA, a highly rated Austin, Texas CPA firm, we help rental property owners not just survive tax season, but use it as a launchpad for bigger financial wins. From first-time hosts to seasoned real estate investors, we work with clients across the country to turn short-term rental income into long-term wealth.
So grab your notebook (or your favorite accounting app), and let’s break down 7 powerful tax strategies that can help you keep more of your hard-earned income.
1. Track Every Expense Like a Pro
If you want to keep your taxes lean, you’ve got to track everything. And we mean everything.
That includes:
- Cleaning and turnover costs
- Property management fees
- Airbnb, VRBO, or platform commissions
- Utilities, insurance, and HOA dues
- Repairs, supplies, and small upgrades
Every deductible expense lowers your taxable income and it adds up fast. But the IRS won’t just take your word for it. You need clean records.
Tools like QuickBooks Self-Employed or other expense management apps can streamline this, especially if you’re juggling multiple properties. Or we can help you build a spreadsheet or connect software that syncs with your bank.
And as your CPA near you, we’ll help you categorize those expenses correctly, so you don’t miss a single deduction or trigger a red flag during an audit.
2. Supercharge Depreciation with Cost Segregation
Cost segregation is one of the most powerful but underutilized tax strategies available to short-term rental owners.
Here’s how it works: Instead of depreciating your property evenly over 27.5 years (for residential rentals), we break down your property into categories:
- Appliances and interior finishes → depreciated over 5 years
- Flooring and lighting → 7 years
- Landscaping and outdoor features → 15 years
By front-loading your depreciation, you unlock larger tax deductions in the early years when most property owners need the cash flow most.
At Insogna CPA, we coordinate with certified engineers to conduct IRS-compliant cost segregation studies, then integrate those results into your return. If your rental is worth over $500,000 or has recently been renovated, this is a must-explore strategy.
It’s one of many reasons we’re a go-to small business CPA in Austin for real estate investors.
3. Deduct Pre-Service Expenses
Did you start racking up costs before your first guest ever checked in? Good news. You may be able to deduct them.
Eligible pre-service expenses include:
- Repairs to get the space rent-ready
- Furniture and appliances
- Professional photography and advertising
- Mortgage interest while prepping the property
The catch? You need to officially place your property “in service” before December 31 to deduct these expenses in the current tax year. That means it must be ready and available for rent even if it doesn’t have a booking yet.
We’ll help you document this correctly, so your return reflects every eligible expense and aligns with IRS expectations. As your experienced Austin, TX accountant, we’ve helped dozens of clients time this correctly to maximize their deductions.
4. Choose the Right Tax Classification (It Matters)
Depending on how you operate your short-term rental, your income may be considered:
- Passive income (Schedule E)
- Active business income (Schedule C)
Here’s the difference:
- Schedule E: You don’t provide substantial services (like daily cleanings or meals). You avoid self-employment tax, but can’t deduct business-related expenses like a home office.
- Schedule C: You offer guest services. You can deduct more, but you’re also subject to self-employment tax so planning is key.
As your dedicated Austin tax accountant, we’ll help you assess how you operate, calculate your self-employment tax, and choose the setup that saves you the most money while keeping you compliant.
5. Deduct Travel Expenses When You Visit Your Property
Whether your property is across town or across the country, travel for business purposes is often deductible.
Eligible expenses include:
- Mileage and fuel (track it!)
- Flights and lodging
- Rental cars or rideshares
- Meals while traveling for repairs, maintenance, or management
Keep receipts and a mileage log. As your certified public accountant near you, we’ll ensure you know what’s deductible, what’s not, and how to keep everything audit-proof.
Even better? We’ll set you up with templates and systems to automate the process.
6. Claim the Home Office Deduction (The Right Way)
Do you use a dedicated space in your home to:
- Manage bookings and guest communication
- Track finances
- Coordinate vendors or maintenance
- Store supplies?
If so, you may qualify for the home office deduction.
This deduction lets you write off:
- A portion of your rent or mortgage
- Utilities and internet
- Office supplies or tech
To qualify, the space must be used exclusively for business but it doesn’t have to be a whole room. A dedicated desk or section of a room can work.
As a highly rated Austin accounting service, we’ll assess your setup and make sure your home office deduction is calculated accurately and fairly.
7. Tap into the 14-Day Rule for Tax-Free Income
Here’s a sweet tax loophole you don’t want to miss.
If you rent your home (or second property) for 14 days or fewer in a calendar year, you don’t have to report that income at all.
You read that right. It’s completely tax-free. This applies even if you rent it out at peak rates during festivals or major events.
The bonus? You may still be able to deduct property taxes and mortgage interest, depending on how the home is used for the rest of the year.
Need help deciding whether this applies? We’ll run the numbers. As your reliable tax consultant near you, we specialize in short-term rental strategy so you’ll always have a clear picture of your best move.
Bonus: Stay Compliant with the Right Tools and Forms
To keep your deductions safe and your return bulletproof, make sure you’re working with the right tools and filings:
Common tax forms and filings for short-term rental owners:
- W9 forms for contractors or service providers
- 1099 NEC forms for vendors paid over $600
- 1099-K forms if you earn over $20,000 or have 200+ transactions on Airbnb/VRBO
- Schedule C or Schedule E, depending on how you’re taxed
- FBAR filing, if you have foreign accounts holding rental income
- A self-employment tax calculator to estimate quarterly payments (when applicable)
We keep our clients organized and compliant with IRS standards. Whether you need help issuing 1099s or filing your FBAR on time, we’re the CPA firm in Austin, Texas that handles it all.
Why Choose Insogna CPA?
Let’s be honest. There’s no shortage of tax firms or online tools out there. But if you want strategy, precision, and a team that treats your rental like the business it is, Insogna CPA is your partner.
We offer:
- Year-round tax strategy, not just seasonal filing
- A hands-on, concierge approach to every client
- Real estate and rental tax expertise tailored to your goals
- Transparent, proactive communication every step of the way
Whether you need help with a 1031 exchange, cost segregation, self-employment tax planning, or just want to know what that Airbnb 1099 form actually means, we’re here for it.
As one of the most trusted CPA firms in Austin, we help rental owners grow with confidence.
Ready to Make Your Short-Term Rental More Profitable?
You’ve already built something valuable. Now let’s make it more rewarding.
Schedule a consultation with Insogna CPA and get personalized, proactive advice on how to lower your tax burden, increase your cash flow, and make smarter financial decisions for your short-term rental.
It’s time to turn your side income into a long-term asset with strategy, clarity, and the support of a certified CPA near you who actually cares.