While it’s true that having a vacation rental property is a good way to boost your income, it is also true that there are some expenses related to this kind of property. By learning more about these expenses, property owners are able to adjust their prices and get the most from their vacation rental property. In addition, they can figure out how to deduct some of these expenses.
Top Vacation Rental Property Expenses
We will start this list with the most obvious expenses related to vacation rental properties – repairs and maintenance. Even if your property is completely new, it will need some repairs and regular maintenance after a while. For example, you need to take care of the air conditioning system every once in a while. You may need to fix a broken window or door, malfunctioning appliances and more. Of course, you can do this yourself or hire a professional to do this job for you.
Next, vacation rental property owners must take care of the insurance. We are not talking only about regular home insurance, but some additional types of insurance like hurricane insurance for example. It all depends on the region where your property is located and the risk involved. Additionally, there is a liability insurance too. Some popular vacation rental property sites including Airbnb have a certain level of insurance, but this won’t take care of every possible accident or incident.
Another example of vacation rental property expenses is marketing expenses. This type of expenses can be avoided, but if you stay away from marketing, you risk losing many potential guests. It was much easier ten years ago when only a small number of people were using sites like Airbnb, but today the situation is completely different. The competition is fierce and you must do everything you can to attract new guests and marketing is one of the things you should probably use. From using professional photos in ads in local newspapers to using animated videos on different websites – the marketing opportunities you have as a vacation rental property owner are virtually endless. Of course, this activity costs money.
Finally, don’t forget that there are taxes and fees involved in this process. You will have to cover the utility bills too, take care of the accounting process, pay all the taxes and more.
Deducting Vacation Rental Property Expenses
The expenses we’ve mentioned before may sound intimidating to some of you, but you should keep two things in mind. First of all, you can get a lot of money by renting your attractive property. Second, you can actually deduct the abovementioned expenses which will definitely help your business.
So, the repairs and maintenance we’ve mentioned before can be deducted. Obviously, we are talking about professional repair and maintenance services. If your air conditioner was cleaned or repaired by a professional, keep the invoice because you can use it to cut the expenses. The same goes for painting your property, repairing the roof and any other professional service.
The good news is that you can deduct the expenses related to utilities and taxes too. Every year, vacation rental property owners spend a significant amount of money on water, electricity, heating, Internet and other similar utilities. Obviously, you should pay these utility bills regularly and keep the receipts because you will get a chance to deduct some of the expenses at the end of the year.
As previously mentioned, having insurance for your rental property is a must. The more extensive the coverage is the better. But, this also means that you have to be prepared to pay a lot of money on insurance. Fortunately, the tax authorities in almost every country consider these expenses to be deductible expenses. Once you get the insurance bill and pay it, keep it safe because this is the evidence needed for getting deductions.
Although many people are not aware of this fact, the truth is that marketing expenses are deductible too. In some cases, even the account fees linked to the website you use (Airbnb) are part of the deductibles you can expect.
Keep in mind that these are just some of the many deductions that thousands of vacation rental property owners use every year. It is crucial to keep the bills and receipts associated with the things we’ve mentioned before in order to get these deductibles. Feel free to talk to a professional accountant or even hire one if you want to cut the vacation rental property expenses.
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