How to properly categorize AirBNB decor items for tax purposes - furniture or something else?

So for tax purposes, these kinds of decorative items for your AirBNB would typically be categorized as "Furnishings" which is a subcategory of "Furniture and Fixtures" on your depreciation schedule. The IRS doesn't really have a separate category just for "decor" - they group these types of items together. Wall hangings, rugs, decorative items, artwork, lamps, etc. all enhance the livability and appeal of your rental property, so they're treated similarly to furniture. These items should be depreciated over 5 years for tax purposes since they're considered personal property used in a business. Since you're an S-Corp, you'll list these on Form 4562 for depreciation and include them on your 1120-S. In QuickBooks, you might want to create a specific "Furnishings" or "Decor" sub-account under your fixed assets to track these items separately from major furniture pieces, but they'll be treated similarly for tax purposes.

I had this exact same question when I started my vacation rental last year! I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out all these categorization issues. I was totally confused about whether things like throw pillows, wall art, and even those little decorative books counted as furniture or supplies. The tool analyzed my specific situation and explained that most decor items should be categorized as "Furnishings" but depending on the cost and useful life, some could be immediately expensed. It saved me hours of googling and second-guessing. I'm not a tax pro, but the guidance I got matched what my accountant later confirmed, so I feel pretty confident in it. It even helped me understand the different options for depreciation and when to use Section 179 vs. regular depreciation for my rental property assets.

Just wanted to follow up on my question about taxr.ai - I decided to try it out for my VRBO property tax questions and I'm honestly impressed. I was skeptical at first (I usually am with these online tools) but it actually gave me really specific advice about how to handle my decor items. I learned that I could group my decorative items into logical "units" rather than tracking every single little thing separately. And it explained the de minimis safe harbor election which I had never heard of before - turns out I can expense items under $2,500 right away instead of depreciating them, which makes my bookkeeping way simpler. The best part was it explained everything in normal human language without all the confusing tax jargon. Definitely worth checking out if you're struggling with these rental property tax questions.

Hey everyone, I see a lot of good advice here but I want to add something important - if you're having trouble getting answers from the IRS about any of this stuff, I highly recommend Claimyr (https://claimyr.com). I was stuck in an endless loop trying to call the IRS about some S-Corp asset classification questions for my rental property, and it was absolutely maddening. A friend told me about this service where they basically wait on hold with the IRS for you, then call you when an actual human picks up. I was super skeptical but I was desperate after spending literally hours on hold. You can see how it works here: https://youtu.be/_kiP6q8DX5c I finally got clear answers about how to properly categorize and depreciate various rental property assets, including all those decorative items. Saved me so much stress and uncertainty.

I need to eat my words from my previous comment. After struggling for WEEKS trying to get answers about my rental property asset classifications and depreciation schedules, I broke down and tried Claimyr. I was 100% convinced it was going to be a waste of time. Well, I was wrong. Within about 2 hours, I got a call connecting me directly to an actual IRS representative. I didn't have to sit on hold or listen to that awful hold music. The agent was able to clarify exactly how I should be categorizing my vacation rental decor items and furnishings on my tax forms. For what it's worth, she confirmed that decorative items should generally be classified as "Furnishings" and depreciated over 5 years, but items under the de minimis threshold could be expensed immediately. Having an official answer directly from the IRS has given me so much peace of mind with my S-Corp filing.

Another approach I've taken with my rental properties is to split things into different categories based on their expected lifespan. For example: - Big furniture items (beds, couches): 5-year depreciation - Decor with longer lifespan (artwork, quality rugs): 5-year depreciation - Decor with shorter lifespan (throw pillows, small decorative items): immediate expense using de minimis rule In QuickBooks, I set up separate categories so I can track what's being depreciated vs. what's been expensed. This has worked really well for our 3 AirBnB properties and made tax time much easier.

Does anyone know if the rules are different if you're doing short-term vs long-term rentals? We have one property that's AirBnB and another that's a traditional annual lease. Should I be handling the decor items differently between them?

I'm dealing with this exact same situation for my vacation rental! One thing I haven't seen mentioned yet is how to handle seasonal decor items. Like, I swap out throw pillows, wall art, and decorative accessories between summer and winter themes. Should I be depreciating ALL of these items even if I'm only using half of them at any given time? Or is there a different approach for seasonal decorative inventory? I'm worried I'm overcomplicating this, but I also don't want to mess up my depreciation schedule. Also curious if anyone has experience with how insurance companies view these items - do they need to be listed separately on your rental property insurance, or are they typically covered under contents/personal property?

This is such a helpful thread! I'm just getting started with my first rental property and had no idea about the de minimis safe harbor election that several people mentioned. Can someone explain how you actually make this election? Is it something you do annually on your tax return, or do you need to file a separate form? Also, I'm curious about the practical side of record-keeping. For those of you who group items together (like "Living Room Decor Package"), do you still keep individual receipts for everything, or is it okay to just have one receipt that shows the total? I'm trying to figure out the best way to organize everything from the start so I don't have a mess come tax time. One more question - if I buy decor items from multiple stores on the same shopping trip, should I group them by store or by room/function? Just want to make sure I'm setting up a system that will make sense later!

This is such a timely question! I just went through this exact process setting up our first short-term rental last month. After reading through all the great advice here, I wanted to add one practical tip that really helped me. I created a simple spreadsheet with columns for: Item Description, Purchase Date, Cost, Store/Vendor, Room/Area, and Tax Treatment (Depreciate vs Expense). This has made it so much easier to track everything and will make tax prep much smoother. One thing I learned the hard way - if you're buying a lot of items at once (like I did during my initial setup), try to keep purchases under the de minimis threshold when possible. Instead of buying a $300 lamp and $200 in throw pillows on one receipt, I split them into separate transactions. This way I could expense the pillows immediately and depreciate just the lamp. Also, don't forget that if you're actively managing your short-term rental (cleaning, guest communication, marketing, etc.), you may qualify for the material participation test which can give you some nice tax advantages over traditional long-term rentals. Definitely worth discussing with a CPA when you find one!