VaultSTROur take
STR owners overpay taxes for a boring reason: not missing exotic strategies, but failing to capture ordinary expenses. A short-term rental is an operating business, and essentially everything spent running it reduces taxable income. The owners who capture it all share one habit — a dedicated bank account and card for the property from day one.
Below is the working list we’d hand any new owner, roughly ordered by dollar impact.
The big four
Depreciation — the building over 27.5 years, accelerated by cost segregation and bonus depreciation. Usually the largest line and the one most often left on the table. Mortgage interest — fully deductible against rental income (business use, not the personal cap). Property management — the 15–25% a manager takes is fully deductible. Furnishings — the full furnishing budget deducts, either immediately under bonus/Section 179/de minimis rules or over 5 years. Our furnishing calculator doubles as the deduction checklist.
Operating expenses, the full sweep
Cleaning and turnover fees. Laundry. Consumables — coffee, toiletries, paper goods. Utilities including internet and streaming subscriptions guests use. Dynamic pricing software, PMS fees, channel fees, and the OTA commissions Airbnb and Vrbo skim. STR-specific insurance premiums. HOA dues. Repairs and maintenance. Pest control, snow removal, landscaping, hot-tub service. Permits and lodging-tax filing fees. Accounting and legal. Photography. Guest damage not covered by deposits.
Two commonly missed: mileage to and from the property for legitimate work at the standard rate, and travel for property-related trips — documented, ordinary, and necessary, with personal days carved out.
The personal-use trap
Use the property personally more than the greater of 14 days or 10% of rented days, and it becomes a residence under Section 280A: deductions get prorated and losses get capped. The line between “personal stay” and “work trip” is documentation — a weekend spent painting and deep-cleaning with receipts is a work trip; a weekend with the family and one lightbulb changed is not.
Records that survive scrutiny
Dedicated account and card. Receipts photographed into a folder or bookkeeping app the day they happen. The PMS revenue report reconciled monthly. A mileage log. An hours log if claiming non-passive treatment. None of this is sophisticated — it is just done or not done, and audits turn on which.
What to tell your client
“Before closing, open the property bank account and pick a bookkeeping tool. Every furnishing receipt from day one is a deduction. Here is the furnishing list with projected costs — hand the total to your CPA with the closing statement and the cost seg study, and year one’s taxable income from this property will likely be negative on paper while the account cash-flows.”
Bottom line
The deduction list is long and mostly unglamorous. Capture rate is a systems problem, not a knowledge problem — set up the account, automate the records, and let the CPA fight over the interesting 5%.
This article is research, not tax or legal advice. The rules described here have thresholds, exceptions, and documentation requirements that depend on individual facts. Involve a CPA who works with short-term rentals before acting on any of it.