Can I Deduct Furniture and Supplies for My Airbnb Property?

Furnishing and stocking an Airbnb property is a significant expense -- often $15,000 to $50,000 or more depending on the size and market positioning of the property. The good news is that virtually all of these costs are tax deductible. The question is not whether you can deduct them, but how quickly and through which method. Understanding your options allows you to maximize the tax benefit in the year it matters most.

The De Minimis Safe Harbor -- Instant Expensing for Small Items

Under Treasury Regulation 1.263(a)-1(f), taxpayers can elect the de minimis safe harbor to immediately expense tangible property items costing $2,500 or less per item or per invoice. This election is made annually on your tax return by attaching a statement. For Airbnb owners, this covers a wide range of purchases including linens and bedding sets, kitchenware and small appliances (coffee makers, toasters, blenders), bathroom accessories and towels, cleaning supplies and equipment, decorative items and artwork, lamps and lighting fixtures, outdoor furniture and grill accessories, and guest amenities like toiletries and welcome baskets.

The $2,500 threshold applies per item, not per purchase. If you buy ten sets of towels at $80 each in a single transaction totaling $800, each set is a separate item well under the threshold. You expense the full $800 in the year of purchase.

Section 179 Expensing for Larger Items

For furniture and equipment costing more than $2,500 per item, IRC Section 179 allows you to deduct the full cost in the year of purchase rather than depreciating it over several years. The Section 179 deduction limit for 2026 is substantial -- well in excess of what most individual STR owners would spend on furnishings. Qualifying items include bedroom furniture sets (beds, dressers, nightstands), living room furniture (sofas, chairs, entertainment centers), dining sets, major appliances (refrigerators, washers, dryers, dishwashers), hot tubs and outdoor recreational equipment, and smart home systems (security cameras, smart locks, thermostats).

Section 179 property must be tangible personal property used in a trade or business. Note that Section 179 deductions are limited to taxable income from all active trades or businesses -- you cannot use Section 179 to create or increase a net loss. If your STR already shows a loss before applying Section 179, the excess deduction is carried forward.

Bonus Depreciation Under IRC Section 168(k)

Bonus depreciation provides another path to immediate expensing. Under current law, qualifying assets can be depreciated at an accelerated rate in the first year of service. Unlike Section 179, bonus depreciation can create or increase a net loss, making it particularly powerful for STR investors implementing a cost segregation strategy.

Furniture and appliances are generally classified as 5-year or 7-year MACRS property under IRC Section 168(e), and both categories qualify for bonus depreciation. A cost segregation study will identify and categorize all eligible personal property within the rental, including built-in shelving, specialty lighting, and window treatments.

Supplies vs. Assets -- The Distinction Matters

Consumable supplies that are used up within the year are immediately deductible as ordinary business expenses under IRC Section 162, regardless of the de minimis safe harbor election. These include cleaning products and chemicals, paper goods (toilet paper, paper towels, tissues), coffee, tea, and breakfast items provided to guests, toiletries (shampoo, soap, lotion), and printer ink and office supplies for your rental management.

These items are fully deductible in the year purchased. If you stock up at the end of the year on supplies you will use in the following year, the deduction is still available in the year of purchase under the IRS's general rule for materials and supplies under Treas. Reg. 1.162-3, provided the amounts are not material enough to require capitalization.

Replacement vs. Initial Furnishing

When you initially furnish a property, all furniture and equipment costs are capitalized (and then expensed through Section 179 or bonus depreciation if eligible). When you replace items during the property's operation, the replacement cost follows the same rules -- but you must also account for the disposition of the old item. Under Treas. Reg. 1.168(i)-8, when you dispose of a depreciable asset, you recognize a loss equal to the remaining adjusted basis. If you fully expensed the item in Year 1 using Section 179 or bonus depreciation, the adjusted basis is zero and there is no additional loss on disposition.

The bottom line is that furniture and supplies for your Airbnb are fully deductible -- often in the year of purchase. Maintain receipts for every purchase, photograph furnished rooms to document items in service, and retain invoices showing per-item costs. The combination of the de minimis safe harbor, Section 179 expensing, and bonus depreciation means you can write off virtually everything you spend to furnish and stock your property immediately. Work with your tax advisor to choose the optimal deduction method based on your income level and overall tax situation.

This article is for informational purposes only and does not constitute legal or tax advice. Consult a qualified tax professional regarding your specific circumstances. AE Tax Advisors, 935 Lake Elmo Dr, Suite B, Billings, MT 59105. Phone: (631) 614-5762.