How the Government Pays You to Buy a Short-Term Rental

I spent eight years touring as a producer, with platinum records on the wall and almost nothing in the bank, which sounds like the setup to a country song but was mostly bad math on my part. People stole from me, sure, but the bigger problem was that I measured everything by what came in and never thought about what I got to keep. I own 18 short-term rental units now across two Texas markets, and the largest jump in what I actually took home had nothing to do with occupancy or nightly rate. It came off during the once-dreaded tax season that I now quite enjoy. Here’s the kind of thing I mean. You’re single, making $400,000 at a job you have no intention of quitting, and in September you buy a $500,000 cabin and put it on Airbnb. Between the down payment, furnishings, and closing costs, you’re about $164,000 into the deal. Do it correctly, and if your facts meet the requirements, your federal tax bill that year could come down by roughly $50,000. That isn’t a credit, dream, or some kind of aggressive shelter that makes an accountant shift around in their chair. It’s a question of how the property gets classified, and the rule it hangs on was written in 1988 with hotels in mind. One ...