I rent my home and my landlord doesn't mind that I occasionally let an Airbnb guest stay in my apartment. Are there any tax deductions available to me in this situation?
Assuming your landlord has clearly approved this arrangement (especially important if your lease prohibits subleases without your landlord's approval), there may be tax benefits of renting out your home. Here's how it works.
When you sub-lease your apartment you become a landlord in your own right and are entitled to deduct the expenses you incur to do so as long as they are ordinary, necessary, and reasonable in amount. This includes:
The cost of items used by both your and your guests—such as utilities, Internet access, and cable TV--may be partially deductible. The amount you can deduct depends on the amount of time the item is used by your guests. For example, if you host guests for 30 nights a year, you’ll be able to deduct 8% of the annual cost of your utilities (garbage, electricity, water, gas), cable TV, and Internet service. (30 is 8% of 365 days.)
If you purchase new interior furnishings such as a bed, couch, or chairs, the cost is also a deductible expense. The amount you can deduct again depends on the percentage of item you rent your apartment. The cost of furniture and similar personal property must be depreciated—deducted a portion at a time—over five years.
It’s very important to keep good records of all your deductible expenses. This includes receipts, credit card statements, cancelled checks, and similar records. Absent such records, the IRS may disallow all or part of your deduction in the event of an audit. By far, the main reason taxpayers lose deductions when they are audited is lack of adequate records.
For more on the subject, see the Nolo article Tax Issues When Renting Your Home on Airbnb or VRBO.