Georgia is the land of peaches, sprawling magnolias, and southern charm. From the quaint countryside to the buzzing capital, Georgia has a unique allure beckoning hundreds of millions of domestic and international tourists each year. 

If you’re contemplating becoming a rental property owner, learn how to make the most of rental property tax deductions. 

What’s considered a short-term rental?

A STR is any residential rental property, apartment unit, or room rented out for 30 consecutive days or less. In Georgia, most short-term rental owners are required to get a license. Most permits are regulated at a local level. 

When should I report rental income on my short-term rental?

Tax day in the United States is nearing on April 15, 2024. If you’re a first-time vacation rental property owner, talk to a tax professional to maximize your returns. Online platforms like Airbnb handle taxes for hosts in specific jurisdictions, but you may still need to keep track of guest occupancy taxes.

While rental earnings are taxable income, there’s a 14-day rule exemption for rentals. Platforms like Airbnb and VRBO must also report all earnings. If you’re within the 14-day limit, add your rental income to your tax return, note it as additional income, and use the 14-day exception.

Do I always need to report rental income on my short-term rental?

Even with the 14-day rule, you need to report taxes, but you may be able to deduct operating expenses. In Georgia, Airbnb collects a state hotel occupancy tax of 4% for stays of 89 nights or less.

Airbnb guests in Georgia may also pay extra taxes as part of their reservation. County and local sales tax ranges between 2% and 5% for stays of 89 nights or less, which includes a cleaning fee. There is a hotel-motel tax that is $5 per night for stays of 30 days or less.

How do I report rental income for my short-term rentals?

Keeping detailed records of your rental activities and holding onto receipts can make tax reporting more manageable and help you make the most of your deductions.

Follow these steps to navigate the filing process:

Step 1: Collect the necessary forms

If you’re managing the property yourself, ensure you have all your rental expenses and receipts ready.

Rental expenses can include everything from your property taxes, maintenance costs, cleaning supplies, and repair costs. 

Here’s a detailed guide on reporting rental income.

Step 2: Decide if your short-term rental income is active business income or passive rental

Active income involves providing services like regular maintenance and cleaning or investing pre-determined weekly hours into work. It is taxed at higher rates, while passive income earned from managing rentals allows deductions for related expenses like repairs. Ordinarily, a short-term rental falls under the category of a passive income. Rental income is taxed just as active income is taxed. 

Step 3: Reporting rental income with a Schedule E (Form 1040)

In Georgia, when guests book a place with Airbnb, they must pay occupancy taxes, which varies from city to city and is usually between 0% and 8%.

The W-9 form collects information from Airbnb, so you can avoid having your rental income withheld. Reporting this income on your tax return, specifically on a 1040 form, ensures you receive the total amount earned from Airbnb.

Key tax deductions for short-term rentals

As a landlord tending to vacation homes, rooms in their primary residence, and apartment units, knowing the ins and outs of tax write-offs is the ticket to meaningful profits. Whether it’s property taxes or upkeep bills, being savvy about deductible expenses can mean the difference between a healthy bottom line and a financial strain.

For those running short-term rentals, keep a log of your expenses, including property taxes, utilities, depreciation, and the cost of maintaining the space.

Travel expenses to and from your short-term rental property may also count as a business deduction.

Use this template to help track your rental expenses. 

FAQ: Taxes on short-term rentals in Georgia