Before You Buy Your Next Airbnb: The One Tax Rule Every Host Should Understand

[William Thompson]

When most people talk about short-term rentals, they focus on cash flow — nightly rates, occupancy, cleaning fees, all that.

But here’s the thing no one told me early on…
How your Airbnb is taxed can make or break your profits.

If your average guest stay is under 7 days and you actively manage the property (responding to guests, coordinating cleaning, setting prices), your Airbnb income might actually be considered active, not passive.

Why does that matter?
Because it means you could qualify to use your rental losses — from depreciation, upgrades, or cost segregation — to offset your other active income, even W-2 income in some cases.

That one distinction can mean thousands in tax savings.

So before you set up your next listing, take a moment to make sure you’re classifying your property correctly and tracking your hours.
A few minutes of good tax planning can easily beat weeks of chasing higher nightly rates.

Curious — do you track your Airbnb hours or just rely on your CPA to handle it at tax time?

[John Underwood]

This is NOT for properties listed on Airbnb only it is for ALL STR's!