Why Is It Important to Track Airbnb Expenses and Income?
As an Airbnb host, it’s important to track your expenses and income. Keeping a meticulous record of this information is essential to keep your business running smoothly.
Any small expense related to your Airbnb property — batteries, linens, cleaning supplies, and more — are all worth including in your financial records to help you take maximum advantage of tax savings. When tax season comes around, you or your accountant can use this information to ensure your taxes are filed correctly and even help you get more money in your return.
Keep reading to learn efficient ways to record and track your Airbnb income and expenses, examples of tax-deductible Airbnb expenses, and three top Airbnb expense tracking apps that are useful to download.
5 Tips for Recording Airbnb Expenses and Income
It’s fairly common for a vacation rental owner to struggle with Airbnb bookkeeping, but there are ways to alleviate some of the stress.
Whether you’ve just started your Airbnb business or are an experienced host looking for better ways to manage multiple rental properties, we’ve provided 5 tips to help you efficiently track your Airbnb expenses and income.
1. Open a Bank Account for Your Business
Having two or more bank accounts may sound like extra work, but it’s actually the opposite. By opening a separate bank account for your Airbnb business, you will know exactly which vacation rental expenses go along with your business.
Keeping both personal and Airbnb income and expenses in one place may save you a few bucks every month. However, it will make tracking much more complicated when tax season comes around. Having an extra bank account for your Airbnb business may also allow you to redeem a portion of the monthly bank fee as a tax deduction.
2. Choose the Right Credit Card Processor
To better keep track of your Airbnb payments from direct booking sites and upsell services, choose a reputable card processor like Stripe.
Not only will this ensure that guests can simply and quickly send you payment, but you will also be able to manage revenue and receipts while preventing potential issues like losing records and payment errors.
By centralizing income transactions in a secure, scalable, and reliable credit card processor, you will find collecting income data to be much easier and faster.
3. Hire an Accountant
Hiring a Certified Public Accountant (CPA) can give you helpful advice on what vacation rental hosts should keep track of.
Because accountants are knowledgeable about local tax laws, they can help you find tax-deductible Airbnb expenses that many vacation rental hosts overlook. These include office equipment, property taxes, HVAC improvements, and more.
According to short-term rental expert Richard Fertig, by meeting with your CPA, “you’re going to be really surprised by how much you can write-off legally against your business.”
Working with an accountant and getting professional assistance will give you peace of mind knowing that your taxes are being filed properly and on time.
4. Save Your Receipts
To lower your taxable Airbnb income, it is crucial that you save receipts.
Receipts will prove that your vacation rental expenses were for your business and not for personal use. Providing receipts is a form of validating your deductions to the Internal Revenue Service (IRS). Reduced tax liability can significantly influence the amount of profit your Airbnb business actually generates.
In the next section, find a list of tax-deductible Airbnb expenses to write off so you know which receipts are necessary to save.
5. Automate Your Airbnb Expenses and Income
Keeping up with receipts and bank statements manually is now becoming a thing of the past for busy Airbnb hosts.
Suppose you have vacation rental properties on different booking sites such as Vrbo, Booking.com, and Airbnb. In order to view your specific payments and expenses for each property, you’d have to log into each different site. Additionally, it can be extremely difficult to keep all of your receipts and invoices organized, especially if you have multiple properties.
To keep efficient records, stay organized, and save time, consider automating your Airbnb expenses and income. Keep reading to learn our top three Airbnb expense tracking apps to use to streamline your business.
List of Tax-Deductible Airbnb Expenses to Write Off
A tax-deductible Airbnb expense is any ordinary or necessary business expense that “lowers your taxable income and thus reduces your tax liability,” according to NerdWallet.
Below is a list of tax-deductible Airbnb expenses that you may not know about.
Professional Cleaning Services
Keeping your vacation rental home clean is vital to your business. Hiring a professional cleaning service to clean after every check-out can save time and energy. Best yet, it’s considered tax-deductible.
Repairs, Maintenance, and Tools
It’s common for things in any vacation rental to get worn down, break, and need fixing over time. Any amount you spend to maintain and repair your short-term rental property — such as patching drywall, fixing pipes, and repairing the HVAC system — can be deductible for tax season.
Utilities and Subscriptions
Utilities like electricity, water, and gas make up a large chunk of your monthly spending. Luckily, they are tax-deductible. Don’t forget about subscriptions for cable, Wi-Fi, and even Netflix.
Insurance and Mortgage Interests
It’s essential to protect your rental property from accidents and natural disasters. Insurance is another example of a tax-deductible Airbnb business expense.
Additionally, according to Avalara MyLodgeTax, “you can also claim a deduction for private mortgage insurance (PMI) premiums on rental property for the year they were paid.”
Appliances, Furniture, and Supplies
Furnishing your vacation rental property is necessary — but it can be expensive. Fortunately, spending on bedsheets, kitchen appliances, lamps, and other items for your Airbnb can count as tax deductions.
Further, if your Airbnb has a pool, jacuzzi, or other amenities that need cleaning services, include them in your possible deductions.
Improving your listing through high-quality pictures, flyers, and online marketing goes a long way. That said, you’ll likely need to spend to reach a large audience of travelers. Luckily, marketing expenses are tax-deductible.
Top 3 Airbnb Expense Tracking Apps
Manually tracking rental property expenses is a thing of the past. Get ready for tax season and make the most of your possible deductions by downloading a rental property expense tracker app.
Here are some of our favorite Airbnb expense tracking apps:
- Hurdlr: Hurdlr is a secure platform that links with your bank and credit card to seamlessly manage your Airbnb income and expenses. According to Shared Economy Tax, Hurdlr can “streamline the accounting process for your business and even helps you save money on your taxes by maxing out deductions.”
- Quickbooks: Quickbooks is another rental property expense tracker and is often considered the best accounting software for small businesses. The platform boasts numerous features — such as mileage tracking, batch invoices, and business analytics — to make Airbnb hosting life easy.
- Stessa: Stessa is also a great option for tracking Airbnb expenses and income and getting you prepared for tax time. According to Melissa of Beach Life Bliss, the software is “easy to use and has everything you need to track income and spending.”
Each of the Airbnb expense tracking apps listed above is available in website and mobile app form. This means you can track your money and run your vacation rental business from anywhere and at any time.
Simplify Your Airbnb Expenses and Income
It can be hectic to stay organized and on top of your rental property income and expense tracking responsibilities. Following the tips above can help save you time, energy, and money — making Airbnb worthwhile all year long, especially when tax season comes around.
If you want to learn more about improving your Airbnb financial performance, check out our other resources for running a rental business.