Year-End Tax Guide for Austin Airbnb Hosts

Disclaimer: This guide is for informational purposes only and does not constitute tax advice. Consult a qualified CPA or tax professional familiar with short-term rental taxation for guidance specific to your situation.

Austin Airbnb hosting generates real income — and real tax complexity. Between federal income tax, Texas hotel occupancy tax, Austin city hotel tax, and the specifics of how short-term rental deductions work, there's a lot to manage. Most hosts we work with are either underpaying (and exposed to audit risk) or overpaying (by missing legitimate deductions).

This guide covers the key areas every Austin host should understand before year-end, organized by what you owe, what you can deduct, and what you need to document.

What You Owe: Texas and Austin STR Taxes

Texas has no state income tax, which is one of Austin's big draws for property investors. But short-term rental hosts in Austin do owe hotel occupancy taxes, which are separate from income tax.

Hotel Occupancy Tax (HOT)

Austin short-term rentals are subject to three layers of hotel occupancy tax:

• State HOT: 6% of gross rental receipts
• City of Austin HOT: 9% of gross rental receipts
• Travis County HOT: 2% of gross rental receipts

Total: approximately 17% in hotel occupancy tax on gross rentals.

Airbnb automatically collects and remits state and local occupancy taxes on behalf of hosts for most Austin bookings. However, you are still responsible for verifying this is happening and for filing your own HOT returns with the City of Austin and Travis County. Airbnb's remittance does not substitute for your filing obligation.

Critical HOT filing note: The City of Austin requires HOT filings even in months where Airbnb remitted taxes on your behalf. File monthly if your monthly receipts exceed $1,000; quarterly otherwise. Missing filings result in penalties and interest regardless of whether the tax was actually paid.

Federal Income Tax: The Basics for STR Hosts

Short-term rental income is reported on Schedule E (Supplemental Income and Loss) on your federal return if the property is not your primary residence, or Schedule C if it qualifies as an active trade or business. The classification matters significantly for deduction treatment and self-employment tax.

The 14-day rule is important: if you rent your property for 14 days or fewer in a year, the income is generally not taxable. Most Austin hosts exceed this threshold easily, but if you're doing occasional weekend rentals while primarily using the property yourself, check with your CPA.

If your property is rented more than 14 days and you personally use it for more than 14 days or 10% of rental days (whichever is greater), mixed-use rules apply and deductions must be prorated. This is a common issue for Austin hosts who live in one unit of a duplex and rent the other.

Deductions You Shouldn't Miss

This is where most Austin hosts leave money on the table. A qualified CPA familiar with STR taxation can often find $3,000–$8,000 in legitimate deductions that hosts miss on self-prepared returns.

Depreciation

Residential rental property is depreciated over 27.5 years under MACRS. On a $400,000 property with $80,000 attributed to land (non-depreciable), the annual depreciation deduction is approximately $11,600. Most self-filing hosts miss this or calculate it incorrectly. A cost segregation study can accelerate depreciation on certain components and generate even larger deductions in early years.

Mortgage Interest and Property Taxes

If you have a mortgage on a rental property, the interest is fully deductible as a rental expense on Schedule E (not subject to the $750,000 mortgage cap that applies to personal residence deductions). Travis County property taxes are also deductible.

Property Management and Platform Fees

Co-host and property management fees are fully deductible. Airbnb's 3% host service fee is a deductible business expense. If you use tools like PriceLabs, Hospitable, or Breezeway, those subscription costs are deductible.

Repairs and Maintenance

Repairs that restore the property to working condition are fully deductible in the year incurred. Improvements that add value or extend useful life must be capitalized and depreciated. The distinction matters: replacing a broken toilet (repair, fully deductible) versus adding a new bathroom (improvement, capitalize and depreciate).

Deductible Expense Category	Examples
Cleaning & supplies	Cleaning fees, paper products, soap, linens
Platform & tools	Airbnb fees, PriceLabs, Hospitable, Breezeway
Professional services	Co-host fees, CPA, attorney
Repairs	Plumber, HVAC service, appliance repair
Utilities	Electricity, water, WiFi (prorated if mixed-use)
Insurance	Homeowner's, STR-specific coverage
Photography & marketing	Professional photos, listing optimization
Travel to property	Mileage at IRS rate for maintenance visits

Short-term rental passive activity rules: STR losses can be deducted against ordinary income (unlike long-term rental losses, which are passive and subject to the $25,000 passive activity loss limitation) if you materially participate in the activity. This is a significant tax planning opportunity that many Austin STR hosts are unaware of. Ask your CPA about it specifically.

Year-End Documentation Checklist

Before you hand anything to your CPA, gather these documents:

• ☐ Airbnb 1099-K (issued if you received $600+ through the platform)
• ☐ All reservation income records (download from Airbnb's transaction history)
• ☐ HOT filing confirmations for all 12 months
• ☐ Receipts for all cleaning, supply, repair, and maintenance expenses
• ☐ Property management / co-host invoices or statements
• ☐ Mortgage statement (annual interest paid)
• ☐ Travis County property tax statement
• ☐ Homeowner's and STR insurance premiums paid
• ☐ Utility statements (electricity, water, internet) — prorated if needed
• ☐ Mileage log for property visits (date, destination, purpose, miles)
• ☐ Capital improvement documentation (any work costing $2,500+)

Finding the Right CPA

Not all CPAs understand short-term rental taxation. Look for someone who has experience with Schedule E filings for STR properties, understands the material participation rules for STR active loss deductions, and is familiar with Texas HOT filing requirements. Austin has several CPA firms that specialize in real estate investors — they're worth the premium over a general practitioner.