Can I Deduct a Rental Loss on my Airbnb Rental?
My tax professional tells me that I cannot deduct a rental loss on my Airbnb rental. She says the Morcos case limits my expenses to the amount of my rental income.
My Airbnb rental is a full bedroom and bath, accessible from a separate entrance. I had the rental in place for six months during the year 2023 with the first listing on July 1. I rented it seven times during the year for a total of 25 days.
We have no personal use of the Airbnb bedroom. The sole purpose of that Airbnb bedroom is rental.
I read the Morcos case, and it did not seem to apply to me.
Question: Can I Deduct a Rental Loss on My Airbnb Rental
Do you think I can deduct all the bedroom expenses against the rental income and show a deductible rental loss for the year?
Answer: You Can Deduct Your Rental Expenses Against Your Rental Income
Yes, based on your circumstance, you can deduct all of your rental expenses against your rental income and also deduct the rental loss against your other income.
The Morcos case does not apply to you. The court decided this case on the basis of “long-term boarders such as students.”
You rented your bedroom as if it were a hotel room to what the tax code calls “transients.” Here are four technical points:
Conclusion: Airbnb Rental Expenses
You rented your bedroom as if it were a hotel and materially participated in the rental. Assuming you were in this activity to make a profit, you qualify to deduct all of your expenses of rental against the rental income. If that creates a loss, you deduct the loss against all your other income.
For more information about airbnb deductions contact Ken-Mar Tax.
Related Blog Posts:
Do I Need to Pay Self-Employment Tax on Airbnb Rental Income?
For Tax Purposes Are You a Real Estate Dealer or a Real Estate Investor?
Attention Real Estate Professionals: Are You Paying Too Much in Taxes?
Tax Strategies to Increase Profits on Real Estate Investments and Rentals
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