Secrets to Short Term Rental Loopholes Explained

Let’s be honest—most of us got into short-term rentals for one of three reasons: to make extra cash, to “accidentally” spend more time in a cool vacation home, or to write off a new espresso machine under “guest amenities.” But what if I told you your Airbnb could do more than just cover your mortgage and impress your in-laws?

What if it could actually slash your tax bill?

Welcome to the wild, wonderful world of short-term rental loopholes—where the IRS treats your seven-day-or-less guest stays like a full-blown business and suddenly you're not just a host, you're a tax-saving genius.

Here’s the Lowdown:

If your average guest stay is under seven days, congratulations—your rental qualifies as a short-term rental in the eyes of the IRS. Why does that matter? Because unlike your cousin’s long-term rental empire (that quietly bleeds money with no immediate tax break), you can potentially deduct losses this year against your regular income.

Yes, even your full-time job income. Mind = blown.

But here’s the catch: you’ve got to be actively involved. That means at least 100 hours a year doing stuff like coordinating cleanings, managing bookings, answering “how do I turn on the hot tub?” texts at midnight. If you’re putting in the work, the IRS gives you the gold star—and the deductions.

What Can You Deduct?

Just about everything short of the marshmallows you left in the welcome basket:

  • Mortgage interest
  • Property taxes
  • Insurance
  • Utilities
  • Repairs and maintenance
  • Bookkeeping and legal fees
  • Depreciation (hello, magic money)

Bonus Round: The Augusta Rule

If you rent out your place for 14 days or fewer in a year, you can pocket that income tax-free. That’s right—zero tax. It’s like a legal cheat code, especially if you live near a big event or tourist hotspot.

Real Talk Examples:

  • Client #1: Short-term rental. $20K income, $45K expenses. Boom—$25K loss. Active participation? Check. Deducted straight off their other income. Tax savings galore.
  • Client #2: Long-term rental. Same income, smaller loss—but couldn’t deduct it due to passive income rules. Loss carried forward, tax savings delayed.

TL;DR:

Short-term rentals aren’t just a hospitality hustle—they’re a tax strategy in disguise. And if you know how to play the game, you can unlock real benefits that help you earn more, pay less, and keep more money in your pocket (where it belongs).

Want to use these loopholes to your advantage without accidentally setting off an audit? That’s where we come in. At Calculated Moves, we help short-term rental owners turn smart decisions into big returns—and sleep easy at night.

Let’s make your rental do more than pay the bills. Let’s make it build your future.

Connect with us!

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Donna Bordeaux, CPA with Calculated Moves

Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly, and knowledgeable can be a part of your relationship with your CPA, as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.