Can I deduct the rental listing fees Airbnb, HomeAway, and FlipKey charge me?

How to deduct listing fees for short-term home rentals.

Question

I often rent my house through short-term rental websites such as Airbnb, HomeAway, and Flipkey. Can I deduct the rental listing fees these companies charge me?

Answer

Yes you can. When you rent your home you're entitled to deduct all your ordinary and necessary expenses. These include fees or commissions you pay to others to help you find tenants, whether short-term or long-term renters. The fees that short-term rental and listing websites such as Airbnb, HomeAway, or Flipkey charge you are all deductible on this basis. These fees can be substantial, so this can be a valuable deduction. For example, Airbnb charges a "host service fee" equal to 3% of the cost of each reservation. Hosts who use the Homeaway service can either pay a flat $349 annual fee or 10% per booking.

Theses fees are typically deducted from each host's payout by the listing service. However, when the listing service sends you (and the IRS) an IRS Form 1099-MISC each year reporting the rental payments you’ve received, the total will typically include these fees. This is because the listing service is required to report to the IRS the gross income you receive from your rentals, not your net income after subtracting the service's fees. Everything works out okay as long as you report your gross rental income and then deduct from it your rental fees.

Be sure to keep careful track of all such charges and list them along with all your other rental expenses and income on IRS Schedule E, Supplemental Income and Loss. You can list these either in line 8, “commissions,” or as “other” expenses in line 19.

Example: You earned $10,000 from renting your home during the year, and pay the listing services you used $1,000 in fees. The listing services send you and the IRS Form 1099-MISCs listing gross your rental income as $10,000. When you file your Schedule E, you also list your gross rental income as $10,000. You then deduct the $1,000 in fees as commissions or other expenses. The result is that you only pay income tax on $9,000 in net rental income, not $10,000.

The only exception to the rule that you can deduct your expenses for listing your home through Airbnb or similar services, would be where you rent your home for no more than 14 nights per year. In this event, you’re allowed to deduct none of your expenses. But this isn’t so bad because you don’t have to pay any tax on the income you earn. You don’t even have to report it to the IRS. Nor need you file an IRS Schedule E with your return.

For more on the subject, see the Nolo article Tax Issues When Renting Your Home on Airbnb or VRBO.

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