Preparing for tax season is a crucial part of maximizing your returns as an Orlando single-family rental investor. Florida’s landlord-friendly tax environment (no state income tax on rental income) offers advantages, but you still must navigate federal rules to minimize your tax bill[1]. In this guide, we break down essential 2025 tax deductions and updates for Orlando-area rental owners, explain the difference between immediate repair write-offs vs. capital improvements, summarize the latest IRS 1099-NEC reporting rules, and provide tips for both long-term and short-term rental owners (with example scenarios). The tone is professional yet reassuring – with smart planning (and help from a CPA when needed), you can keep more of your rental income while staying fully compliant.
Top Federal and Florida Landlord Tax Deductions in 2025
Operating a rental property is essentially running a small business, and many expenses are tax-deductible against your rental income[2]. By deducting these costs, Orlando landlords can significantly reduce taxable rental profits (thus lowering their federal tax bill) while remaining within the law. Below are key deductions to know, including special Florida considerations:
- Mortgage Interest: The interest portion of your mortgage payments on the rental home is fully deductible. This is often one of the largest expenses for landlords. Be sure to use Form 1098 from your lender to track interest paid[3]. (Note: principal payments are not deductible, only the interest.)
- Property Taxes: Annual property taxes paid to your county for the rental property are deductible as an operating expense. Importantly, unlike property tax on your personal residence (which is capped at $10,000 under SALT limits), property tax on a rental is fully deductible against rental income[4]. Given Central Florida’s property values, this can be a significant write-off. (Just remember that if a charge is a special assessment for improvements (not regular tax), it may need to be added to your property’s cost basis instead of deducted.)
- Insurance Premiums: Premiums for landlord insurance, hazard insurance, flood insurance, and even rent loss insurance are deductible. Essentially any insurance related to protecting your rental business can be written off[5]. In Florida, insurance costs (especially wind or hurricane coverage) can be high, so don’t overlook this deduction.
- Maintenance and Repairs: Ordinary repair and maintenance costs to keep the property in good condition are fully deductible in the year paid[6]. This covers expenses like fixing a leaky faucet, repairing an A/C unit, patching a minor roof leak, repainting walls between tenants, pest control, lawn care, pool servicing, etc. These routine upkeep tasks not only preserve your property’s value but also reduce your taxable income. (See the next section on the crucial repairs vs. improvements distinction – substantial upgrades must be depreciated rather than immediately expensed.)
- Depreciation: Apart from out-of-pocket expenses, rental owners get a depreciation deduction for the wear-and-tear of the property itself. The IRS allows you to recover the cost of the building (and certain improvements) over 27.5 years for residential rentals[7]. Each year you can deduct a portion (about 3.636%) of the property’s adjusted basis as depreciation, which can be a large non-cash deduction. Improvements (see below) are added to the depreciable basis. Also, personal property used in the rental (appliances, furniture in a short-term rental, etc.) can be depreciated over shorter periods (often 5 or 7 years) or even expensed faster using special methods like Section 179 or bonus depreciation if eligible[8]. Depreciation is a key tax benefit of owning property – it shelters part of your rental income from taxes each year, though remember it may be recaptured later if you sell.
- Property Management Fees and Professional Services: If you hire a property manager for your Orlando rental, their fees are tax-deductible. This includes ongoing management fees, tenant placement or leasing fees, and any one-time charges for services like inspections or eviction processing[9]. Similarly, fees paid to other professionals – attorneys (for leases or evictions), accountants or CPAs (for bookkeeping and tax prep), and real estate consultants – are deductible as long as they are ordinary and necessary for your rental activity[10]. Paying for professional help can actually save you money at tax time since it lowers taxable income. Tip: Keep invoices for any legal or accounting services related to the property.
- Utilities and HOA Dues: Any utilities that you, as the landlord, pay for the rental are deductible[11]. For example, if you include water, electricity, or trash service in the rent (or cover them during vacancies), those bills are business expenses. Many long-term leases have tenants paying their own utilities, but if you pay any portion, write it off. Likewise, if your rental home is in a homeowners’ association, the HOA fees you pay are deductible. Central Florida has many HOA communities, so this is a common expense – your HOA dues are a necessary cost of maintaining the rental investment and thus deductible.
- Advertising and Tenant Acquisition: Money spent to find tenants is deductible as a rental expense[12]. This can include the cost of online listings, rental website fees, “For Rent” signs, credit/background check services, and even referral fees or commissions paid to a realtor for bringing a tenant. All costs to advertise or market the vacancy are ordinary business expenses. Keep receipts for any advertising or leasing commissions.
- Travel and Mileage: If you travel for rental property purposes – such as driving to your property for inspections, meeting with a contractor, showing the home to prospective tenants, or even traveling to Orlando if you’re an out-of-area owner – those costs can be deductible. Mileage for driving your personal vehicle for rental activities can be written off at the IRS standard mileage rate (or actual expenses if you prefer)[13]. Just maintain a log of miles driven for rental business. Similarly, if you need to stay overnight or incur airfare to visit a distant rental, those travel costs may be deductible (ensure the trip is primarily for rental business). Good recordkeeping is key in case of audit.
Florida-Specific Considerations: Florida has no state income tax on rental income, which is a big benefit for landlords[1]. This means you won’t owe state tax on your rental profits, only federal. However, Florida does impose sales tax and local tourist taxes on short-term rentals (generally, rentals of 6 months or less)[14]. In the Orlando area, this means if you do vacation rentals or month-to-month rentals, you may have to collect Florida’s 6% state transient rental tax plus any county resort/hotel taxes (for example, Orange County’s 6% tourist development tax), and remit those to the state/county. Long-term rentals (leases longer than 6 months) are exempt from these sales/tourist taxes[14] – a nice perk for landlords with year-long leases. If you do have short-term rental tax obligations, the taxes you pay to Florida (or that you collect and remit) are deductible expenses for federal tax purposes (they count as an “expense necessary for managing your property” – essentially a tax expense). Always stay compliant with state/local tax rules for short-term rentals to avoid penalties, and keep records of any taxes paid as they can be written off on your Schedule E.
Repairs vs. Capital Improvements: Immediate Deductions vs. Depreciation
One of the most important tax distinctions for rental owners is knowing what counts as a repair (deductible now) versus an improvement (capital expense, deducted over time). The IRS does not allow you to deduct the full cost of improvements in the year incurred; instead, improvements must be added to the property’s basis and depreciated over years[15]. In contrast, repairs and maintenance that don’t add significant value or extend the property’s life can be expensed immediately[6]. Understanding this difference ensures you maximize write-offs without misclassifying something (which could trigger IRS issues if audited).
Deductible Repairs (Routine Maintenance): A repair is basically work that fixes or restores something to its original working condition without upgrading it. These expenses are considered ordinary and necessary to keep the property habitable and are fully deductible in the current year[6]. Common examples of immediately deductible repairs for Central Florida single-family homes include:
- Minor plumbing and HVAC fixes: e.g. repairing a leaky pipe, unclogging a drain, fixing a broken toilet, or servicing an air conditioner. Given Florida’s heat, A/C repairs are common and usually deductible if you’re just replacing a part or recharging coolant (not installing a whole new system).
- Patch and paint: e.g. repairing a small section of a leaky roof or replacing a few damaged shingles (versus replacing the entire roof), and repainting walls or exteriors that have peeled or faded. Touching up paint between tenants or pressure-washing the driveway are maintenance tasks, not improvements.
- Electrical and appliance repairs: fixing faulty wiring or a broken light fixture, repairing the dishwasher or refrigerator that came with the unit, or replacing a burned-out water heater heating element. If you repair an appliance to working order, it’s an expense. (Replacing an appliance entirely may be a different story – see improvements below – but many smaller appliance fixes are repairs.)
- General upkeep: e.g. pest control treatments, lawn and landscaping services, pool cleaning and minor pool repairs, replacing locks or smoke detector batteries, and other routine upkeep. These actions do not materially add value but simply keep the property in good condition, so they’re deductible operating expenses[6].
In short, repairs are about maintaining the original condition of the property. They “just” keep things running and habitable – you can deduct them now. Always keep receipts for repair costs (materials and labor) to substantiate these write-offs.
Capital Improvements (Must Be Depreciated): An improvement is an expense that adds to the value, prolongs the life, or adapts the property to a new use[16][17]. These are more substantial, long-lasting upgrades. The IRS says you may not deduct the cost of improvements in the year made; instead, improvements are capitalized and recovered through depreciation over time[15]. In practical terms, improvements get added to your property’s cost basis and typically depreciated over 27.5 years (for residential real estate), though some items like appliances or land improvements might use shorter lives. Examples of capital improvements common to Central Florida properties include:
- Major system replacements: Replacing an entire roof, HVAC system, or all the home’s windows. For instance, if a storm damages your roof and you replace the whole roof, that is a capital improvement (it extends the property’s life and value)[18]. Installing a brand new central A/C unit where one didn’t exist, or fully upgrading an old HVAC, likewise is an improvement, not a repair, because it’s a substantial value-adding project.
- Home additions and renovations: Adding a new room or screened porch, finishing an attic or garage into living space, or building an extension (e.g. adding a second bathroom to a 3-bedroom house). These clearly increase the home’s value and utility, so they must be capitalized[18]. Even remodeling an outdated kitchen or bathroom is generally considered an improvement if it significantly upgrades fixtures and value (though some minor cosmetic refreshes could be considered repairs; consult a CPA for borderline cases).
- Structural and landscaping upgrades: Replacing all the fencing with a higher-end material, adding a new deck or patio, installing a swimming pool or a permanent outdoor kitchen – these are improvements (they’re new structures or significantly enhanced features). Likewise, extensive landscaping that has a long-term impact (e.g. installing an irrigation system or large tree removal and land grading) could be improvements.
- Appliance and fixture upgrades: If you upgrade appliances or fixtures beyond restoring original function, it could be an improvement. For example, swapping out all old kitchen appliances for new stainless steel models improves the property’s value. Replacing laminate countertops with granite is an improvement. These costs should be capitalized (though note: many appliances or fixtures might be eligible for faster depreciation or the de minimis safe harbor if the cost is modest – e.g. if each appliance is under $2,500, IRS lets you expense it under the safe harbor election; again, check with a tax professional on these specific situations).
In summary, ask yourself: “Did this expense simply fix something, or did it make the property better than it was before?” If it bettered or extended the asset’s life, it’s likely a capital improvement. Per IRS rules, rental improvements are defined as expenses for a “betterment, restoration, or adaptation” of the property to a new use[15] – those must be depreciated, not deducted immediately. The cost of improvements gets added to your building’s basis and depreciated usually over 27.5 years (so you deduct a portion each year)[19]. Only a percentage of a capital improvement is written off in the year it’s done, but depreciation will continue to help you recoup the cost gradually. Keep a detailed list of any improvements and their costs; you’ll need this for Form 4562 (depreciation) and also when you eventually sell (higher basis due to improvements can reduce capital gains). When in doubt about an expense, consult a CPA to determine if it’s a repair or an improvement – misclassification can affect your taxes and potential audit risk.
(Note: The IRS has complex “Tangible Property Regulations” that govern repairs vs. improvements. For most small landlords, the above general rules apply. There are also safe harbors: for instance, the De Minimis Safe Harbor lets you elect to expense items that cost $2,500 or less per item or invoice, even if they’re technically improvements. And the Small Taxpayer Safe Harbor might allow deducting certain improvement costs on inexpensive properties. These nuances are beyond the scope of this overview, but they exist. It’s another reason to work with a knowledgeable tax advisor for significant repairs/improvements to ensure you’re optimizing deductions within IRS rules.)
IRS 1099-NEC Reporting Updates for 2025: What Landlords Need to Know
If you pay any vendors, contractors, or service providers for your rental business, you may have 1099 filing obligations. Landlords often hire handymen, plumbers, electricians, landscapers, cleaners, or pay property managers and other professionals. The IRS requires businesses to issue Form 1099-NEC to any non-corporate service provider you paid $600 or more during the year for work related to your business[20]. For rental activities, whether you are considered “in business” can be a gray area, but most active rental owners do file 1099s as a best practice (and property managers are considered in business and must issue 1099s for owners they pay on behalf of)[20][21]. Failing to issue required 1099s can lead to IRS penalties, so it’s important to understand the rules.
Key points about 1099-NEC for landlords in 2025:
- $600 Threshold (for 2024 payments): If in the 2024 calendar year you paid an independent contractor $600+ for services on your rental (e.g. a contractor for repairs, a gardening service, an accountant for your books), you generally should issue that payee a Form 1099-NEC in January 2025[20]. This form reports to the IRS and the contractor how much you paid them. The 1099-NEC for tax year 2024 is due to recipients by January 31, 2025, and typically must be filed with the IRS by that date as well (if paper filing, IRS copy by Feb 28; if e-filing, by March 31, but non-employee comp should be filed by Jan 31 to avoid confusion – check the IRS instructions for any deadline updates)[22]. Common scenario: You paid a local Orlando handyman $1,200 for various fixes – you need to send them a 1099-NEC showing $1,200.
- Who Needs to Receive a 1099: Generally, you issue 1099-NEC to unincorporated businesses (individuals, sole proprietors, partnerships, or LLCs taxed as such)[21]. Corporations are exempt from receiving 1099-NEC in most cases[23] (except attorneys, who get a 1099-MISC for legal fees). So if your vendor is “Joe’s Plumbing, Inc.” (a corporation), you typically do not send a 1099. If it’s “Joe Smith Plumbing LLC” and you’re not sure of tax status, have them fill out a W-9 form before you pay – the W-9 will tell you if they’re a corporation or not, and provide their Tax ID. Always collect W-9s from new vendors to have the info needed for 1099s[24]. For any property management company you hire: if they are an incorporated business, you don’t 1099 them for your payments; if they’re a small LLC not taxed as a corporation, you should issue a 1099-NEC for management fees paid. (However, note that property managers themselves have 1099 obligations: they must send 1099-MISC to property owners for rent paid over $600, and 1099-NEC to vendors they paid on the owner’s behalf[25][21]. So if you use a professional manager, often they handle a lot of the 1099 reporting for rents and contractors. Confirm with your property manager what forms they will issue and what you are responsible for.)
- 1099-MISC for Rental Income: As mentioned, Form 1099-MISC is used to report rent paid. If you use a property management firm, by January they should send you a 1099-MISC reporting the total gross rent they collected on your behalf in 2024 (if it was $600 or more)[25]. For example, if your tenants paid $20,000 in rent which went through the management company, you’ll get a 1099-MISC for $20,000 (and you’ll deduct the property management fees separately on your return). If you self-manage and your tenants pay you directly, you generally do not issue a 1099-MISC to yourself – that form is for payments to others. But do remember to report all rental income on your tax return whether or not you received any formal 1099; the IRS considers all rent taxable income and expects to see it on your Schedule E[26][2].
- Updated Rules – Threshold Rising in 2026: A recent tax law change in mid-2025 will increase the 1099-NEC reporting threshold from $600 to $2,000 for payments made in 2026 and beyond[27]. In other words, starting with payments you make in the 2026 tax year, you’ll only need to issue 1099s if you paid a vendor $2,000 or more during the year (the $2,000 threshold will then be indexed for inflation from 2027 onward)[27]. However, for the current 2024 tax year (filing in 2025), the threshold remains $600 – so don’t ignore 1099s just yet. The new law does not affect 2024 or 2025 payments, only 2026+. This increase will reduce paperwork for small landlords in the future, but for now you should still plan on the $600 rule through 2025[27]. (Also, a related change: the IRS had planned to dramatically lower the 1099-K threshold for third-party payment processors to $600, but that has been reversed. It’s staying at the traditional $20,000 and 200 transactions threshold[28][29]. So if you receive rental payments via apps like Airbnb, VRBO, PayPal, etc., you likely won’t get a 1099-K unless your volume is over $20k and 200+ bookings. Don’t let that lull you, though – all rental income is taxable even if you don’t get a 1099-K[30].)
- Action Items for 1099 Compliance: As an Orlando rental owner, each January ask yourself: “Did I pay any service provider $600+ last year for my rental, who isn’t incorporated?” If yes, plan to fill out a 1099-NEC for them. Ensure you have their name, address, and EIN/SSN (from the W-9) and the total paid. The IRS has online filing options or you can have your CPA or bookkeeping software handle e-filing (note: the IRS now requires electronic filing for most businesses once you file 10 or more info returns). Mark the deadline (Jan 31 for providing to contractors). Working with a CPA or using professional software can simplify this process, especially if you have multiple vendors. Penalties for late or missing 1099s can range from $50 to $310 per form, or more if intentionally ignored, so it’s worth the effort to comply.
- One Exception – “Mom-and-Pop” Landlords: There is an often-overlooked nuance: if your rental activity is very minimal and not considered a trade or business, some argue you’re not strictly required to file 1099-NECs (because the IRS generally ties 1099 requirements to business income). In fact, a prior law briefly required all landlords to file 1099s, but it was repealed in 2011[31]. That said, many tax professionals advise treating rental activities as a trade/business for tax purposes – not only to be safe on 1099 filings but also to potentially qualify for the 20% Qualified Business Income (QBI) deduction if eligible. The bottom line: if you own a couple of rental homes, it’s prudent to issue 1099s as if you are a business. It keeps your tax reporting clean and ensures you can maximize any business deductions. When in doubt, consult your CPA about your filing requirements.
Remember: Getting a 1099 from others or issuing 1099s doesn’t change whether the income is taxable – all your rental income must be reported, and you can deduct all eligible expenses, whether or not forms were filed[30]. The forms are simply IRS reporting mechanisms. Use them to your advantage (by deducting expenses and documenting payments) rather than seeing them as a nuisance.
Tax Tips for Long-Term vs. Short-Term Rentals (With Examples)
Not all rental investments are alike. Owning a long-term single-family rental (with tenants on annual leases) can have different tax implications than running a short-term vacation rental (like an Airbnb). Both types are subject to the general deductions we discussed (interest, taxes, maintenance, depreciation, etc.), but there are a few distinctions and special considerations for each. Below, we outline scenarios for a typical long-term rental versus a short-term rental in Central Florida, highlighting common deductions and how they play out. (These examples are for illustration; every investor’s numbers will vary. Use them as a guide to the kinds of deductions you should look for. And as always, consider a CPA for personalized advice.)
Long-Term Rental Scenario – Example
Scenario: John owns a single-family home in Orlando which he rents to a long-term tenant on a 12-month lease. The tenant pays $1,500 per month, so John’s gross rental income in 2024 is $18,000.
Typical Deductions John might claim:
- Mortgage Interest: $7,200 (roughly – if John has a mortgage, assume ~$600/month of the payment is interest). This is fully deductible[2].
- Property Taxes: $3,000 (annual property tax bill to Orange County). Deductible in full[4].
- Landlord Insurance: $1,200 for the year (hazard and liability insurance on the rental home). Deductible[32].
- Repairs & Maintenance: $800 (John paid for an A/C repair, some plumbing fixes, and re-painting a couple of rooms when the tenant turnover happened). All these were ordinary repairs, so they’re deductible now[6].
- HOA Fees: $600 (the home is in an HOA community costing $50/month). Deductible as an operating expense[11].
- Property Management Fees: $1,800 (John pays a management company 10% of rent to handle leasing and oversight). Fully deductible[33].
- Utilities (Landlord-paid): $0 – in this scenario, the tenant pays all their own utilities. If John had covered any (say water or lawn service), those costs would be deductible too[11].
- Advertising/Listing Fees: $100 (to list the property and run background checks when finding the tenant). Deductible[12].
- Depreciation: ~$5,000 (John’s cost basis in the house structure maybe around $182,000, which gives about $5k/year in depreciation – your CPA would calculate this precisely). This is a non-cash but significant deduction each year.
Outcome: John’s total deductions in this example sum to about $19,500, which actually exceeds his $18,000 rental income, yielding a net taxable loss of roughly -$1,500 on paper. This means John wouldn’t owe federal income tax on his rental income at all for 2024 – in fact, he has a $1,500 loss to potentially use. However, here’s an important caveat: Because John’s rental is a long-term rental with a tenant, it is considered a passive activity for tax purposes (assuming John isn’t a real estate professional). Passive losses can only offset passive income, or up to $25,000 of losses can offset other income if John’s overall income is under $150,000 (this $25k allowance phases out at higher incomes)[34]. If John’s income is high and he has no other passive income, that $1,500 loss might be suspended (carried forward to future years) rather than used in 2024[35][36]. Essentially, long-term rental losses are often limited – you don’t get to deduct a loss against your salary or other income unless you meet certain criteria (low/moderate income or qualify as a real estate professional). The good news is, even if a loss is suspended, it’s not wasted – it will carry over to offset future rental income or reduce gain when you sell.
Takeaway for Long-Term Landlords: Aim to at least break even or have a modest profit on paper, but use all those deductions to minimize that profit. If you do end up with a small loss, it may be usable (if under the $25k limit and your income isn’t too high) or carried forward. Always report all rental income, deduct all legitimate expenses, and let the tax chips fall where they may. Long-term rentals typically won’t give huge immediate tax write-offs beyond wiping out their own income (unless you have high depreciation from a cost segregation or are a real estate pro). The real benefit is building equity and taking the steady annual deductions like depreciation and interest to keep taxes low on the rental earnings.
(Side note: Florida long-term rentals avoid the sales/tourist tax hassle. If John’s rental was short-term, he’d also have to pay, say, 6%+ in taxes on that $18k rent, which is over $1,000 in lodging taxes – but with a 12-month lease, he has $0 of those taxes. This is a prime reason many Central Florida investors prefer 7+ month leases[14].)
Short-Term Rental Scenario – Example
Scenario: Jane owns a furnished vacation rental home in Kissimmee (near Orlando’s theme parks) which she rents out on a short-term basis via Airbnb/VRBO. In 2024, her property was occupied frequently by tourists, and she earned $30,000 in gross rental income. However, short-term rentals come with a lot of expenses and services. Here’s how Jane’s deductible expenses might look:
- Cleaning & Turnover Costs: $4,000 for the year. (After each guest, the property must be cleaned; linens and supplies restocked. Jane pays a cleaning service and also purchases supplies like toiletries and guest amenities. All these costs are deductible operating expenses, common for STRs.)
- Utilities and Cable/Internet: $3,000. (Unlike a long-term tenant, short-term guests expect utilities included. Jane pays for electricity, water, internet, and streaming TV service for the home. These bills are business expenses that directly offset rental income.)
- Repairs & Maintenance: $1,200. (Short-term guests can cause more wear and tear. Jane had to repaint scuffed walls and repair an appliance during the year. These are ordinary repairs, deductible now.)
- Furnishings and Supplies Depreciation: $2,500. (Jane invested in furniture, a new smart TV, and kitchenware for the rental. These are assets she must depreciate or expense via safe harbor. Let’s say she can deduct $2.5k this year for the depreciation of these items. Note: Many STR owners do a cost segregation to classify furniture, appliances, etc. separately from the building, allowing faster depreciation. For simplicity, we assume a chunk of her furnishings cost was deducted in 2024 through allowable methods.)
- Property Management/Platform Fees: $4,500. (Jane hires a local vacation rental manager who charges 15% of booking revenue to handle guest communications, check-ins, etc., or this could represent the cut that Airbnb/VRBO takes in platform fees. These fees are absolutely deductible as the cost of doing business.)
- Mortgage Interest: $8,000. (Similar to long-term, interest on the mortgage for the property is deductible. STR owners often have slightly higher mortgage rates or costs, but the tax treatment is the same[2].)
- Property Taxes and Licenses: $3,500 in property tax + $1,000 in Florida state/county resort taxes = $4,500 total. (Jane must collect and remit 13.5% taxes on her STR revenue in her county, totaling $1,000 for the year – which is deductible. Plus $3.5k property tax. All deductible as taxes/expenses[32].)
- Insurance: $1,500. (Vacation rental insurance costs a bit more due to higher risk, but fully deductible like any landlord insurance[32].)
- Depreciation (Building): $6,000. (Jane’s home cost basis for the structure might be around $220k, yielding about $6k annual depreciation. This large non-cash deduction significantly shelters her rental income.)
Outcome: Jane’s total deductions in this scenario come to roughly $35,200, which exceeds her $30,000 income – resulting in about -$5,200 net loss for tax purposes. Here’s the interesting part: Because Jane’s rental is a short-term rental (STR) with an average guest stay of less than 7 days, it is not automatically treated as a passive rental activity. In fact, if Jane materially participates in managing this STR (e.g. spends 100+ hours on it and more than anyone else, which is likely since it’s her property)[37][38], her STR can be considered an active trade or business for tax purposes. This means the loss of $5,200 could potentially offset her other non-rental income (like W-2 salary or other business income) immediately, avoiding the passive loss limitations[35]. This is a major tax advantage of short-term rentals for those who actively manage them – often touted as the “STR loophole.” In Jane’s case, assuming she does qualify, that $5k loss might reduce her overall taxable income for 2024, giving her a nice tax savings. If she didn’t meet the material participation tests, then her STR would be treated like a passive activity and the $5,200 loss might be suspended (similar to John’s case above) – but given the level of involvement STRs usually require, many owners do meet the test.
Takeaway for Short-Term Rental Owners: Short-term rentals tend to have higher income but also higher expenses – make sure you are tracking and deducting everything: from cleanings and supplies to platform service fees and occupancy taxes. The goal is often to show little to no taxable income after deductions (or even a planned taxable loss, which, if you qualify as active, can offset other income). Be aware of the IRS rules: average rental period of 7 days or less (or up to 30 days in some cases with extra services) is needed for the STR to not be considered a rental activity under passive loss rules[39][35]. And you must materially participate (there are several tests, but a common one is 100+ hours and more than any other individual’s involvement[37]). If you meet these, the tax code essentially treats your STR like a normal business – you can use losses freely and you might also qualify for the 20% QBI deduction on your net rental income if profitable, since it’s a trade or business. This can be a significant perk, especially for high-income investors looking to shelter income. As always, document your involvement (keep a log of hours and tasks you perform) and work with a knowledgeable CPA to ensure you meet the criteria and properly claim any losses or the QBI deduction.
Also, remember that short-term rental income is subject to Florida taxes as noted. You’ll need to file those tax returns (state/county) for your rental receipts, but those taxes paid become deductions on your federal return (softening the blow). And if you use platforms like Airbnb, you may or may not get a Form 1099-K depending on your volume (many STR hosts won’t, due to the $20k/200 txn threshold[28]). Regardless, report all your income and don’t rely on receiving a form – the IRS expects full reporting[30]. The good news is with all the allowed deductions, you can often report substantial income but owe minimal tax.
Final Thoughts: Plan Ahead and Leverage Professional Advice
Tax time doesn’t have to be stressful for Orlando rental property owners. By understanding your deductions and the latest tax rules, you can confidently prepare for the 2025 tax season and maximize your investment returns. To recap, focus on capturing all your federal deductions (from mortgage interest to maintenance to depreciation) and be mindful of Florida-specific factors (no state income tax, but short-term rental taxes and compliance if applicable). Distinguish clearly between what expenses you can expense now versus what must be depreciated over time – this will keep you out of hot water with the IRS and ensure you get the full benefit of long-term investments in your property. Stay on top of reporting requirements like 1099-NEC for any contractors; the rules are tightening in some areas even as thresholds adjust[27]. Good recordkeeping is your friend: save receipts, mileage logs, property tax bills, Form 1098, insurance statements, etc. Not only will this make tax filing easier, it will support your deductions if ever questioned[40][41].
Most importantly, don’t hesitate to consult a qualified local CPA or tax advisor – especially one experienced with real estate in Central Florida. Every landlord’s situation is a bit different. A CPA can help identify less obvious deductions (like depreciation optimizations or safe harbor elections), ensure you’re handling repairs vs. improvements correctly, and navigate complex areas like passive loss limits or the short-term rental material participation rules. They can also keep you apprised of any new tax law changes that might affect rental owners as we approach 2025 and beyond. Investing a little in professional advice can pay for itself many times over in tax savings and peace of mind.
By being proactive and informed, you’ll enter the 2025 tax season well-prepared. Ackley Realty is here to support our Orlando investors – from maximizing your property’s income potential to connecting you with the resources you need to succeed come tax time. Here’s to keeping more of your hard-earned rental income in your pocket, and to a profitable year ahead!
Sources & References:
- IRS Topic No. 414 – Rental Income and Expenses (Outlines what rental income must be reported and typical deductible expenses like mortgage interest, property taxes, repairs, etc.)[2][32]
- IRS Rental Tips – Tips on Rental Real Estate Income, Deductions, and Recordkeeping (Emphasizes that you cannot deduct the cost of improvements – those must be depreciated – and defines improvements vs. repairs)[15][6]
- Ackley Realty Blog – Tax Tips for Central Florida Rental Property Owners (Highlights Florida-specific tax benefits and obligations, such as no state income tax, and the fact that long-term rentals avoid short-term rental taxes)[1][14]
- Ackley Realty Blog – Tax Deductions in Florida Rentals (Discusses common deductible expenses for Florida landlords and explains the difference between immediate repair write-offs and capital improvements that must be depreciated)[4][18]
- David French, CPA – Short Term vs Long Term Rental Tax Treatment (Explains that short-term rentals can be treated as non-passive if you meet material participation, allowing active loss deductions, whereas long-term rentals are passive for most investors with losses limited to $25k against other income if under $150k AGI)[35][34]
- IRS Form 1099-NEC Instructions & Updates 2025 (New law raises the 1099-NEC reporting threshold from $600 to $2,000 starting with 2026 payments – but the $600 threshold still applies for 2024/2025)[27]. See also: OnPay Inc. summary of 2025 tax law changes[28].
- Buildium – 1099 Filing in Property Management (Good overview of 1099-MISC vs 1099-NEC in the rental context, who needs to file, and noting the upcoming threshold increase)[20].
- IRS Reminder – All Income Is Taxable (Not receiving a 1099 form doesn’t excuse you from reporting the income; rental earnings must be reported even if under reporting thresholds)[30].
- Publication 527 – Residential Rental Property (For further reading on depreciation, repairs vs. improvements, and special rental situations. The IRS Pub 527 is a comprehensive guide for rental owners[42].)
- Consult a Tax Professional: Always consider working with a local CPA familiar with Florida real estate to personalize these general tips to your situation. They can ensure you’re taking advantage of every deduction while staying fully compliant with IRS and state rules.
[1] [3] [4] [5] [9] [10] [11] [12] [13] [14] [18] [33] Tax Tips for Central Florida Rental Property Owners
https://www.ackleyflorida.com/blog/tax-tips-for-central-florida-rental-property-owners
[2] [6] [15] [19] [26] [32] [40] [41] Tips on rental real estate income, deductions and recordkeeping | Internal Revenue Service
[7] [8] Tax Strategies for Short-Term and Long-Term Rentals in 2025 - Rentastic Blogs
https://www.rentastic.io/blog/rental-property-taxes
[16] [17] Capital Improvements vs. Repairs and Maintenance: Rental Accounting 101 – Landlord Studio
https://www.landlordstudio.com/blog/capital-improvements-vs-repairs
