If you rent out a room on Airbnb, share your car on Turo, or list storage space on Neighbor, you might be missing out on serious income without even realizing it. Many rental side hustle earners forget that certain tax breaks and deductions apply to their earnings. The result? You’re leaving money on the table, year after year. Here are five ways to take advantage of tax loopholes.
1. The Hidden Deduction Problem
Most people treat their rental app income as “extra cash,” so they either underreport expenses or skip deductions entirely. But the IRS treats side-hustle rental earnings like business income, meaning you can offset them with related costs. Don’t be afraid to take as many deductions as possible. That could include cleaning fees, maintenance, utilities, repairs, insurance, depreciation, and even part of your internet bill.
2. The IRS’s 14-Day Rule
Here’s a big one almost no one talks about: If you rent your home for 14 days or fewer in a year, you don’t have to pay federal income tax on that rental income at all. It doesn’t matter how much you made. This is known as the “Master’s Exemption”. Augusta homeowners use it during the Masters golf tournament. If you know how to plan for it, you can legally pocket short-term rental money tax-free.
3. Platform-Specific Perks
Some platforms track your expenses and mileage for you, but only if you enable the feature. Turo, for example, logs miles driven for rentals, which can help with depreciation calculations. Airbnb lets you export reports that make filing easier and more accurate. These tools can save you hundreds during tax season if you take advantage of them.
4. State and Local Loopholes
Not all tax savings are federal. Certain states offer property tax credits, reduced licensing fees, or deductions for local business expenses related to rentals. If you don’t check your state’s rules, you could miss out entirely. These benefits can vary widely, even between neighboring counties.
5. Keep Receipts Like It’s Your Job
Whether it’s cleaning supplies for your Airbnb or oil changes for your Turo car, documentation is your safety net. Without receipts, you can’t prove your expenses, which means you can’t claim the deduction. That’s pure profit lost. Plus, you’ll want to implement a system to help you stay organized in case you get audited.
Maximizing Your Rental Side Hustle Income
Rental side hustles can be lucrative, but only if you play the tax game smart. The government isn’t going to tell you about every loophole. So, it’s on you to learn them, track your expenses, and make the most of your earnings. Every missed deduction is money you worked for but didn’t keep. A little research each tax season can translate into hundreds or even thousands more in your pocket. Over time, these savings can compound into a significant boost to your long-term income.
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Teri Monroe started her career in communications working for local government and nonprofits. Today, she is a freelance finance and lifestyle writer and small business owner. In her spare time, she loves golfing with her husband, taking her dog Milo on long walks, and playing pickleball with friends.
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