Short-Term Rental Income from Foreign Property: Airbnb and Tax Rules

Rental income from a foreign property listed on Airbnb or a similar platform is fully taxable on your US return, reported on Schedule E or Schedule C depending on the level of services you provide to guests. The same deduction rules that apply to US rental property apply to foreign rentals: you can deduct mortgage interest, property taxes, insurance, repairs, utilities, management fees, and depreciation. Foreign residential rental property is depreciated over 30 years for US tax purposes, compared to 27.5 years for US residential property, which slightly reduces the annual depreciation deduction. If you also use the property personally for more than 14 days per year, or more than 10% of the days it was rented at fair market value, the property is treated as a personal residence and some deductions are limited under the vacation home rules. If you pay income tax to the foreign country on your rental income, you can offset the US tax with the Foreign Tax Credit on Form 1116, though the passive income basket limitation applies to how much credit you can use.