Tax deductions short-term rentals

[Leon Meytin]

Hello all, had a few questions regarding short term rental deductions

1)For those doing short-term rentals, do you typically get the 20% Pass through deduction, and if so, how?

2)Do most repairs (not large capital improvements) count? and if so, does it lower your total AGI or only affect taxes paid on money earned from the rental property?

3)For most short term rentals, is the PMI, home owner insurance, property taxes deductible?

Thank you in advance, 

Leon

[Joe Splitrock]

1. The 20% pass through deduction applies on your tax net income on the rental (QBI). This is after all expenses.

2. Repairs count as an expense and affects net income of your rental property. If your expenses exceed rental income, then you don't get the 20% pass through deduction from question 1, because there is no income. If you have a net loss on your rental properties, you can potentially offset regular income. It depends on passive income loss limits based on your income, unless you have real estate professional status.

3. Yes, PMI, mortgage interest, property insurance and property taxes are deductible. The principal portion of your mortgage payment is not deductible.

Also be aware of rules for personal use versus rental use apply. If the STR is strictly a rental, then 100% can be deducted. If you live in the property or use it part of the year, there are prorated formulas.

Here is more explaining the 20% pass through deduction. 

https://www.nolo.com/legal-enc...