In this post, I will share how to keep track of vacation rental expenses or Airbnb expenses and income in the simplest way possible.
These tips can be applied to ANY BUSINESS. I am personally using this for real estate rental properties but can be used for pretty much any type of income/expense tracking and documentation.
As a new Airbnb host, I have done the research for you!
Keeping track of your vacation rental or Airbnb expenses and income does not have to be daunting! Use these tips to get started in tracking and managing your vacation rental expenses.
Starting a vacation rental or Airbnb can be super exciting and a dream!
But with that excitement comes the reality of having to keep up with the money you spend and money you earn while renting it out.
The big question – How To Keep Track Of Vacation Rental Expenses??
I started my own vacation rental last year and did a lot of research trying to figure out the best way to keep track of expenses.
As Airbnb hosts, this can be a little over whelming but following a process and being consistent will help so much!
Your Investment Should Be Treated Like A Business
Treat your short term rental like a business. There are going to be expenses, repairs, income, etc that you’ll need to report on your taxes every year.
NOTE: I am not a tax professional and this is just my own experience. Please consult your own tax pro for questions.
Rental income is taxable income. As rental owners of any kind, you will need to report all of the money made by your rental.
On the flip side, there will also be deductions for your Airbnb business.
Short-term rentals are their own category of small businesses. If you’re not sure how to report deductions or write offs on your yearly taxes, consult a tax professional.
Keep A Separate Bank Accounts For All Expenses And Income
Open a completely separate bank account. This will segregate all of your expenses for your rental property and make it so much easier to keep track of.
Get an account that has the ability to have a credit or debit card associated with it (like a checking account). You can use this debit card for online or in store purchases you need to make that are specifically for your rental. It’s a good idea not to mix business and personal expenses.
I’ve used this same method with my first long term rental.
At the end of the month or year, you’ll have everything in one spot. Keep up with your expenses and it will make doing your yearly taxes that much easier!
Again, having separate accounts that have nothing to do with personal use are a key first step to success.
Use A Free Tool To Categorize Expenses
Stessa is a free online tool that you can use to track your vacation rental expenses.
They are geared towards rental properties and structure the reporting for property investors. I have found it easy to use and has everything you need to track income and spending.
The good news is they also have a mobile app so that you can look at everything from your phone.
Stessa allow you to import information from bank accounts and credit cards on an ongoing basis so that you can start categorizing things as they come in!
Instead of downloading credit card statements and loading them into excel spreadsheets, let this tool do that for you.
This is one of the reasons I consider Stessa one of the best Airbnb tools for hosts out there.
Their transactions screen allows you to select a property and category for each line of income or expense.
This categorization process is key for tax time. At the end of the year, there is a tax package report that will show you the exact amount of tax deductions for each category.
You can also manually add information for your mileage tracker. If you drive your vehicle to your property, you may be able to write-off the miles.
As I mentioned earlier in this post, I also use Stessa for my long term rental property. That’s why this tool is amazing for any type of real estate rental business.
I am not even going to talk about using google sheets to keep track of income and expenses. To me, it is way too manual and leaves room for human error.
Stessa is a simple tool to auto-track expenses and income, use real estate friendly categories, product a financial report for any type of need, and have great integration with banks and credit cards.
Be Diligent About Keeping Up With Spending
Make sure not to passively spend, spend, spend without being cognizant of WHAT you’re spending the money on. We too often do this in our personal lives (I’m just as guilty of this!) but make sure not to do this with your vacation rental, like any small business owners or company would do.
Another thing to keep in mind is that a lot of your Airbnb rental expenses will be tax-deductible expenses at the end of the year. That’s another reason to use an expenses tracker. You don’t want to lose out when it comes time for taxes.
Have A Tax Strategy
Using an expense tracker for your short term rental business will take the guess work out when it comes to filing your income taxes. If this is your first year as an Airbnb host, it may be confusing how to report taxable Airbnb income.
Note: You can always get tax advice from a professional. I personally use TurboTax with Live assisted support. Another great option is to hire a CPA to help you each year.
You want to have an easy way to run a report with all financial transactions throughout the year. This includes payouts of property taxes, HOA fees, taxable Airbnb income, cleaning fees, etc.
The best ways to do this is to use a property management expense tracker like Stessa (mentioned earlier in this post).
Keep Things Simple
- Treat your vacation rental property like a business
- Use a completely separate bank account for all money going in and out
- Stay on top of categorizing your spending
- Use an online tool to be prepared with your financial information at all times
Thanks so much for reading my thoughts on how to keep track of your vacation rental expenses from my AirBnb hosting experience!
I hope you found this information helpful. If you have any questions, please leave a comment below!