Tax Time in Tahoe: Smart Moves for Short-Term Rental Owners

When it comes to owning a short-term rental in South Lake Tahoe, maximizing your return isn’t just about occupancy rates, it’s about playing it smart at tax time. While the stunning views and seasonal demand make Tahoe properties lucrative, the nuances of local and federal taxes can catch even seasoned homeowners off guard.

1. Understand What’s Deductible

If you rent your property for more than 14 days per year, it’s considered a business. This means a wide range of expenses become deductible:

• Cleaning and maintenance

• Repairs and landscaping

• Advertising and photography

• Utilities and insurance

• Property management fees (like ours!)

  
  

2. Depreciation is Your Friend

Your home isn’t just a place, it’s a depreciable asset. Spreading the cost of your property over 27.5 years could significantly reduce your taxable income. Bonus: Furniture and appliances can often be depreciated faster.

3. Track Everything

Whether you’re using Lodgify, Airbnb, or just spreadsheets, clear records matter. Keep every receipt, log every booking, and store all vendor contracts.

4. Consider Tahoe-Specific Costs

Don’t overlook expenses unique to our region:

• Snow removal services

• Wildfire insurance premiums

• Local short-term rental permit fees

5. Local vs. Federal Tax Filing Requirements

Owning a short-term rental in South Lake Tahoe means navigating both federal tax rules and local obligations, and they don’t always speak the same language.

At the federal level, the IRS treats your rental property as a business once you exceed 14 days of rental per year. This opens the door to deductions and depreciation, but also requires accurate income reporting, especially if you're listing on platforms that issue 1099-Ks (like Airbnb and VRBO).

Locally, El Dorado County and the City of South Lake Tahoe require:

• A valid vacation home rental (VHR) permit

• Collection and remittance of Transient Occupancy Tax (TOT)

• Compliance with zoning and noise ordinances

• Periodic inspections or renewals

  
  

Failing to meet these requirements can result in fines or even revocation of your rental license. Always check whether your property falls under city jurisdiction or county oversight, as rules and tax rates can differ significantly, even within the Tahoe Basin.

Tip: Track and separate these obligations in your records. What the IRS allows and what the City requires are often two very different things.

6. Know When to Call a Pro

A tax professional who understands vacation rentals and El Dorado County regulations is worth the investment.