Can Digital Nomads Write Off Airbnb Rent for Remote Work?

Most digital nomads won’t be able to take Airbnb rent as a tax deduction unless they have a fixed tax home and are traveling temporarily for business. However, according to IRS data, over 2 out of 3 American expats owe $0 in US taxes after properly using available exclusions like the Foreign Earned Income Exclusion, which allows qualifying digital nomads to exclude up to $130,000 of foreign-earned income for the 2025 tax year.

The key factor determining your Airbnb tax deductions isn’t where you stay; it’s where your tax home is located. This distinction affects whether your Airbnb expenses qualify as deductible travel expenses or if you need to explore other tax benefits available to Americans working abroad.

Can I Write Off My Airbnb Stay if I Work Remotely?

The IRS grants tax deductions for travel expenses when you are traveling away from your tax home for business purposes. For Airbnb rent to qualify as a business deduction, you must meet specific requirements:

You CAN deduct Airbnb rent when:

• You have an established tax home (your regular place of business)
• You’re traveling temporarily away from your tax home for work
• The Airbnb stay is for business purposes
• You maintain your primary residence and return to it

You CANNOT deduct Airbnb rent when:

• You’re constantly moving without a fixed business location
• You don’t have a regular place where you live or a principal place of business (making you an “itinerant” worker)
• Your travel assignment is expected to last over one year

Where Is My Tax Home as a Digital Nomad?

Your tax home is your regular place of business, regardless of the location of your family home. For digital nomads, determining your tax home is crucial for claiming travel deductions.

The Four Tax Home Scenarios

1. Fixed Business Location: If you operate from a specific city or have a primary office, that’s your tax home. Airbnb stays elsewhere for business, which could be deductible.
2. Multiple Business Locations: When you have several business locations, your tax home is the location of your main place of business.
3. No Main Business Location: If you don’t have a main place of business due to the nature of your work, your tax home is where you live.
4. Itinerant Worker (Most Digital Nomads): If you don’t have a regular place or a principal place of business, you are considered an itinerant, and your tax home is where you work. In this situation, you are deemed never to be away from your tax home, and travel expenses are not a business deduction.

Can Remote Workers Take the Home Office Deduction?

W-2 employees working from home cannot take the home office tax deduction in 2025. Before 2018, remote employees could write off some of their unreimbursed home office expenses as itemized deductions, but the Tax Cuts and Jobs Act of 2017 suspended this tax break until 2025.

For Self-Employed Digital Nomads

If you’re self-employed, you may qualify for home office deductions when using part of your Airbnb or rental exclusively for business:

Requirements:

• The space you’re using for business must be used exclusively for conducting business
• You use the business part of your home exclusively and regularly for trade or business purposes
• The space must be your principal place of business

Calculation Methods:

1. Simplified Method: $5 per square foot of home used for business (maximum 300 square feet)
2. Regular Method: Deduct the percentage of total housing costs equal to the percentage of space used for business

What Are the Two Main Tax Protections for Digital Nomads?

Instead of focusing solely on Airbnb deductions, digital nomads should know about the two powerful tax protections available to Americans working abroad:

Foreign Earned Income Exclusion (FEIE)

The FEIE allows qualifying individuals to exclude up to $130,000 of foreign-earned income for the 2025 tax year. This protection is far more valuable than any Airbnb deduction.

Who Qualifies:

• You must have a tax home in a foreign country
• You must pass either the Bona Fide Residence Test or the Physical Presence Test

Example Calculation:

• Income earned abroad: $120,000
• FEIE exclusion: $120,000
• US taxable income: $0
• Total tax savings: Often $15,000-$25,000 or more

Foreign Tax Credit (FTC)

For digital nomads in high-tax countries, the Foreign Tax Credit allows you to claim a dollar-for-dollar credit for foreign taxes paid against your US tax liability.

Example:

• Foreign taxes paid to Germany: $20,000
• US tax on the same income: $18,000
• Result: $0 owed to US, plus $2,000 carryforward credit

Can Digital Nomads Write Off Travel Expenses?

You first need to know that your tax home is where you work, and you can only deduct travel expenses outside your tax home. For most digital nomads, Airbnb would not constitute a travel expense as their tax home is always changing.

When Travel Expenses ARE Deductible

Business Equipment and Supplies:

• Laptops and all computer-related equipment, including laptop bags and accessories
• Office supplies, software, and business insurance
• Internet fees, phone data, and call costs

Co-working Spaces:

• Location-independent professionals have the freedom to deduct the cost of office space/co-working memberships that are used internationally

When Travel Expenses Are NOT Deductible

You can’t write off travel expenses if you’re constantly on the move and don’t have a home base. The word temporary draws the line between a digital nomad’s lifestyle and travel expenses for a business.

Is There a Silver Lining for International Digital Nomads?

For qualifying digital nomads living abroad, the Foreign Housing Exclusion provides a pathway to deduct Airbnb and housing expenses:

How It Works

The Foreign Housing Exclusion lets Americans living abroad deduct certain housing expenses from their US taxes. This exclusion can only be claimed in addition to the FEIE.

Qualifying Expenses:

• Rent, utilities (but not cable or phone), property insurance, and small out-of-pocket repairs
• Airbnb rent in foreign countries
• Temporary lodging while seeking permanent housing

Calculation:

The sweet spot is between 16% and 30% of the FEIE. Only housing expenses over 16% of the base amount can be excluded.

• 2025 Base Amount: 16% of $130,000 = $20,800
• Maximum Exclusion: 30% of $130,000 = $39,000
• Deductible Range: Housing costs between $20,800 – $39,000

Example:

• Annual Airbnb costs abroad: $35,000
• Base amount (non-deductible): $20,800
• Housing exclusion: $14,200

How Do I Avoid Double Taxation as a Digital Nomad?

U.S. tax law is based on citizenship, not residency. That means digital nomads must report their worldwide income, but several strategies prevent double taxation:

Strategy 1: FEIE for Low-Tax Countries

Best for nomads in countries with low or no income tax:

• Thailand, Malaysia, Portugal (NHR program)
• Use FEIE to exclude up to $130,000
• Result: Often $0 US taxes owed

Strategy 2: Foreign Tax Credit for High-Tax Countries

Best for nomads in high-tax countries:

• Germany, France, UK, Australia
• Claim dollar-for-dollar credit for foreign taxes paid
• Result: Often $0 US taxes owed after credits

Strategy 3: Strategic Combination

You can claim both the FEIE and the Foreign Tax Credit, but not on the same income:

• Use FEIE on earned income up to $130,000
• Use the FTC on investment income or excess earned income
• Add Foreign Housing Exclusion for maximum benefit

What About State Taxes for Digital Nomads?

Some digital nomads who originated from certain states will temporarily establish residence in another, less difficult state before traveling abroad.

States That May Still Tax You Abroad

• California: Difficult to break tax residency
• New Mexico: Aggressive enforcement
• South Carolina: Complex rules
• Virginia: Strict domicile requirements

Tax-Friendly States for Pre-Departure

Some states don’t tax income at all:

• Texas, Florida, Nevada, Tennessee
• Washington, Wyoming, South Dakota
• Alaska, New Hampshire (limited income tax)

What Records Should I Keep as a Digital Nomad?

You can only deduct expenses on your tax return that you have proof of. Therefore, it is important to keep good records of your business’s expenses as well as your income.

Essential Documents

For FEIE Qualification:

• Passport with entry/exit stamps
• Foreign residence lease agreements
• Foreign bank account statements
• Local utility bills and tax documents

For Business Deductions:

• Equipment purchase receipts
• Co-working space membership fees
• Internet and phone bills (business portion only)

For Foreign Housing Exclusion:

• Rental agreements or Airbnb receipts
• Utility bills (excluding TV/internet)
• Property insurance payments

When Might Airbnb Expenses Be Deductible?

While most digital nomads can’t deduct Airbnb rent as travel expenses, these specific situations may qualify:

Scenario 1: Established Business with Temporary Travel

• You operate from a fixed location (your tax home)
• You travel temporarily (under 1 year) for business
• You maintain your primary residence
• The Airbnb stay is primarily for business purposes

Scenario 2: Foreign Housing Exclusion

• You qualify for FEIE with a foreign tax home
• Your Airbnb costs are in a foreign country
• Expenses fall within the housing exclusion limits

Scenario 3: Business Conference or Client Meetings

• Travel has a specific business purpose
• Duration is clearly temporary
• You can document the business necessity

What Are My Next Steps for Tax Compliance?

Immediate Actions

1. Determine Your Tax Home Status: Are you an itinerant worker, or do you have a fixed business location?
2. Track Your Foreign Presence: Document days abroad to qualify for the FEIE Physical Presence Test
3. Organize Your Records: Be diligent because self-employed people are more frequent targets of audits
4. Choose Your Tax Strategy: Decide between FEIE, Foreign Tax Credit, or a combination approach

Long-Term Planning

For New Digital Nomads:

• Consider establishing tax residency in a favorable state before leaving
• Plan your travel to meet FEIE requirements
• Set up foreign bank accounts for easier qualification

For Experienced Nomads:

• Review your current tax strategy annually
• Consider the Foreign Housing Exclusion if in expensive cities

Why Professional Help Matters for Digital Nomad Taxes

Digital nomad taxes involve complex interactions between US and foreign tax laws. The good news is that most Americans living abroad face little to no US tax liability when they properly use available exclusions and credits.

If you realize you’re in over your head and worried that you’ll mess up your digital nomad taxes, let us help. You’ll have peace of mind, knowing that your taxes were done right.

Contact us, and one of our customer champions will gladly help. If you need specific advice on your tax situation, click below to get a consultation with one of our expat tax experts.

This article provides general information about US tax requirements for digital nomads and should not be considered specific tax advice. Tax laws change frequently, and individual situations vary. Always consult with a qualified tax professional for advice specific to your circumstances.