Tax benefits (deuction from W2 and 1099 income) from Short-term rental

[Mohammad Murad]

Hi, I'm purchasing a duplex for 285K in downtown Lincoln, Nebraska. I am planning to rent long-term one unit and rent the other through Airbnb. My Wife will manage everything, including cleaning of the property, so it will easily be more than 150 hours per year. My household income is around 230k/ year. Will I be able to deduct my W2 and 1099 income? How much I will be able to deduct, approximately.

[Collin Hays]

Your rental is like a business. All of the expenses count against the income, and you owe income tax on the net profit.  If your rental "loses" $10K per year, sure that's tax deductible, but it's certainly not a tax credit. It just means you made a poor investment.

Folks look at rentals as some sort of fantastic tax haven, but they are not. Uncle Sam always wins.