Let’s be honest — taxes aren’t the sexiest part of owning a short- or mid-term rental. But you know what is sexy? Keeping more of your profits.
The right tax strategies can mean the difference between “just okay” returns and “wow, this property is printing money” returns. Here’s how to make the IRS work for you instead of against you.
Operating expenses — cleaning fees, repairs, utilities, marketing — are all deductible. But many investors forget about smaller items like linens, kitchenware, or even your Netflix subscription if it’s for guest use.
Investor tip: Keep meticulous records and save receipts. Every little deduction adds up.
Depreciation lets you write off the cost of your property over time, reducing your taxable income. For STR/MTR owners, this can be a game-changer — especially if you own multiple properties.
Investor tip: Work with a CPA who understands the nuances of STR tax treatment so you don’t leave money on the table.
This advanced strategy breaks your property into separate components (roof, flooring, appliances) and depreciates them faster. Translation? Bigger tax deductions now instead of later.
Investor tip: This is best for higher-value properties, but even one successful study can create massive cash flow.
If you actively manage your STR and meet certain IRS criteria, you could unlock even more deductions and offset other income.
Investor tip: Track your management hours — it might be the difference between a standard return and a tax windfall.
Some states offer credits or incentives for property improvements, eco-friendly upgrades, or historic preservation.
Investor tip: A quick call to your local tax authority could uncover thousands in potential savings.
Bottom Line:
You can’t avoid taxes — but you can outsmart them. A little strategic planning now could mean a lot more money in your pocket at year’s end.