Renting a room or a whole house on Airbnb is taxed very differently from a long-term lease. Enter your nightly revenue and property costs to see your Schedule E net income, 27.5-year depreciation write-off, and which passive-loss limit applies — the part most hosts get wrong.
Every row below was generated by the same formula the calculator uses. The point of the table is the last two columns: two hosts with identical rental losses can pay very different amounts of tax depending on their MAGI.
| Scenario | Gross | Net Schedule E | Depreciation | Loss allowed | Suspended | Tax effect |
|---|---|---|---|---|---|---|
| MAGI $85k, active | $30,000 | −$15,891 | $9,891 | $15,891 | $0 | −$3,814 |
| MAGI $120k, active | $30,000 | −$15,891 | $9,891 | $15,000 | $891 | −$3,600 |
| MAGI $175k, passive | $30,000 | −$15,891 | $9,891 | $0 | $15,891 | $0 |
| Profitable year | $62,000 | +$16,864 | $11,636 | n/a | $0 | +$5,396 |
| Rented only 12 nights | $9,000 | $0 | $0 | n/a | $0 | $0 |
Read the third row carefully. The host there has exactly the same $15,891 rental loss as the first two, but because their MAGI exceeds $150,000 and they do not materially participate, none of it is deductible this year. It is not lost — it is suspended and carries forward until they have rental profit, sell the property, or their income drops.
Under IRC §280A(g), if you rent your home for fewer than 15 days in the year, the rental income is completely excluded from your tax return and you do not deduct any rental expenses against it. That is why the calculator zeroes everything out at 14 nights or fewer. Once you hit day 15, the entire rental activity becomes taxable on Schedule E and the normal rules below apply — there is no gradual phase-in.
You cannot depreciate land, so the first step is stripping out the land value from your purchase price. The remaining building basis is depreciated over 27.5 years as residential rental property. On a $400,000 property with 20% land, that is $320,000 ÷ 27.5 = $11,636 per year of paper deduction — money you never actually spend, but which reduces taxable income every single year. If you furnished the unit, the furniture is 5-year or 7-year property and can often be expensed immediately instead.
Rental activity is normally passive, which means losses can only offset passive income. There is one big exception: if you actively participate (you make management decisions, even with an agent handling day-to-day work), you can deduct up to $25,000 of rental losses against ordinary income — but that allowance phases out by 50 cents per dollar of MAGI above $100,000 and is completely gone at $150,000. This is the single most consequential input in the calculator.
If the average customer stay is 7 days or less (typical for Airbnb) and you provide substantial services, the activity may be treated as a non-passive business rather than passive rental. Combined with the material-participation tests, some hosts qualify to deduct losses without the $25,000 cap and without the MAGI phase-out. Whether you clear that bar depends on hours worked and services provided — which is exactly the kind of determination a CPA should make before you rely on it.
Schedule E, 27.5-year depreciation, passive by default, $25k allowance with MAGI phase-out. No self-employment tax.
Often a business (Schedule C) if services are substantial. Can escape passive limits. May trigger 15.3% self-employment tax on net profit.
There is a fifth cost nobody mentions on the listing page: depreciation recapture. When you eventually sell, all that depreciation you deducted comes back as unrecaptured §1250 gain taxed at up to 25% — it was a deferral, not a permanent gift. Our depreciation recapture calculator sizes that bill before you list the property.
⚠️ Important: This calculator models federal income tax treatment for a single rental property using the §280A(g) 14-day rule, straight-line 27.5-year residential depreciation, and the §469(i) $25,000 active-participation allowance with its MAGI phase-out. It does not account for state income tax, self-employment tax if your STR is classified as a business, the §199A qualified business income deduction, mid-year depreciation conventions, or the 7-day-average-stay exception to the passive rules. Short-term rental tax treatment is fact-specific — confirm your situation with a CPA before filing.