Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Michigan tax professional before filing.
Michigan · USA · Short-term rental taxes
Short-Term Rental Taxes in Michigan
Michigan STR income is subject to federal income tax, Michigan state income tax at 4.25%, and a statewide 6% Use Tax on rentals shorter than one month — plus any local lodging taxes your municipality may impose.
The 30-Second Answer
- Michigan Use Tax (6%) applies to all short-term rentals of less than 30 consecutive days — you must collect this from guests and remit it to the Michigan Department of Treasury.
- Federal income tax is reported on Schedule E (passive rental) or Schedule C (active/business rental) of your Form 1040, depending on your level of services and participation.
- Michigan state income tax is a flat 4.25% on net rental income, reported on Michigan Form MI-1040 — Michigan conforms broadly to federal rental income rules.
- Many Michigan cities and townships impose additional local lodging or excise taxes (e.g., Traverse City, Detroit); rates and collection rules vary by municipality — check with your local government.
Deductions
Expenses You Can Deduct Against Michigan STR Income
Ordinary and necessary rental expenses reduce your taxable income at both the federal and Michigan state level. Mixed personal/rental use requires pro-rating by rental days.
If the property is also used personally, expenses must be allocated between rental and personal days. Michigan follows federal allocation rules. Losses may be limited by passive-activity rules — consult a tax professional for your situation.
Filing Calendar
Key Dates & Filing Calendar
Michigan STR hosts face both federal and state filing deadlines, plus monthly or quarterly Use Tax remittance obligations.
Michigan Use Tax registrants must file returns on the schedule assigned by the Department of Treasury (monthly if annual liability exceeds $720, otherwise quarterly or annually). Register at Michigan Treasury Online (MTO).
Michigan Department of Treasury — Sales, Use & Withholding Tax (michigan.gov/taxes)
Tax Treatment
Passive Rental vs. Active Business: Which Applies to Your Michigan STR?
The IRS — and Michigan, which conforms — classifies your STR income differently depending on how many services you provide and how much you participate. This determines your form, deductions, and loss rules.
Passive Rental (Schedule E)
Standard rental income treatment for most STR hosts
- Report gross rents and deduct expenses on federal Schedule E; net flows to Michigan MI-1040.
- Losses are 'passive' and generally can only offset other passive income, with a $25,000 special allowance for active participants.
- Depreciation of the structure (27.5-year residential) is a key deduction.
- Michigan taxes net income at a flat 4.25% — no separate Michigan rental schedule needed beyond MI-1040.
No income ceiling — losses limited to $25,000 passive-activity allowance (phases out above $100,000 AGI)
Active Business (Schedule C)
Applies when you provide substantial services to guests
- Report on federal Schedule C; net profit is subject to self-employment tax (~15.3%) in addition to income tax.
- Losses can offset other ordinary income without passive-activity limits if you materially participate.
- Michigan taxes the same net income at 4.25% via MI-1040.
- The 14-day / 10% personal-use rule still applies: if personal use exceeds the threshold, expense deductions are limited.
No ceiling, but self-employment tax (15.3% on net) applies on top of income tax
Depreciation
Depreciation for Michigan STR Properties
Federal depreciation rules apply and flow through to Michigan taxable income. Michigan conforms to federal depreciation for individual filers.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental structure | 27.5 years (straight-line) | Land value excluded; only the building and improvements are depreciable. |
| Furniture, appliances & furnishings | 5 years (MACRS) | Bonus depreciation (federal) may allow accelerated write-off in year of purchase; Michigan conforms for individuals. |
| Carpeting & flooring | 5 years (MACRS) | Treated as personal property if removable; 15 years if structural component. |
| Land improvements (driveways, landscaping) | 15 years (MACRS) | Separate from the building; 150% declining balance method. |
A cost-segregation study can reclassify components to shorter depreciation lives, accelerating deductions. Consult a CPA familiar with Michigan STR properties.
When you sell the property, depreciation previously claimed is 'recaptured' and taxed federally at up to 25% (unrecaptured Section 1250 gain). Michigan taxes the gain at the standard 4.25% flat rate.
Michigan Lodging & Use Tax
Michigan Use Tax + Local Lodging Taxes
Every Michigan STR under 30 days owes the statewide 6% Use Tax. Many municipalities layer on additional local taxes — rates vary widely.
Michigan imposes a 6% Use Tax on the rental price of accommodations rented for fewer than 30 consecutive days. This is collected from the guest and remitted to the Michigan Department of Treasury. Some cities and counties add their own lodging or excise taxes on top.
6% minimum statewide; up to ~11%+ in some municipalities
Michigan Department of Treasury — Use Tax on Accommodations (michigan.gov/taxes); Michigan STRA (michiganstra.org/regulations)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb bookings (Michigan) | Airbnb collects and remits Michigan state Use Tax on behalf of hosts in Michigan | Airbnb handles the 6% state Use Tax remittance; verify your local tax obligations separately |
| VRBO / Vrbo bookings (Michigan) | VRBO collects and remits Michigan state Use Tax for marketplace facilitator transactions | State Use Tax handled by platform; host responsible for any local taxes not covered |
| Direct bookings (your own website) | Host must register with Michigan Treasury, collect 6% Use Tax from guest, and remit via Form 5080/5081 | Register at Michigan Treasury Online (MTO); failure to remit can result in penalties and interest |
Michigan's Marketplace Facilitator law (effective 2020) requires platforms like Airbnb and VRBO to collect and remit the state Use Tax. However, local taxes imposed by individual municipalities may still be the host's responsibility — always confirm with your local government.
Platforms
How Airbnb, VRBO & Other Platforms Handle Michigan Taxes
Michigan's marketplace facilitator rules mean major platforms collect state Use Tax automatically — but your income is still reported to the IRS and you remain responsible for local taxes.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — Form 1099-K if gross payments exceed $20,000 and 200+ transactions (2025 threshold); all income taxable regardless | Yes — Michigan state Use Tax (6%) collected and remitted by Airbnb as marketplace facilitator; local taxes may vary | Annual earnings summary available in Airbnb host dashboard by January 31 |
| VRBO / Vrbo | Yes — Form 1099-K under same federal thresholds | Yes — Michigan state Use Tax collected and remitted; check local tax coverage in your area | Annual tax summary available in VRBO host account |
| Direct / Other | No automatic reporting — host must self-report all income | No — host must register, collect, and remit Michigan Use Tax and any local taxes independently | Host must maintain own records; no platform-generated summary |
Using Multiple Platforms?
If you list on both Airbnb and VRBO (plus direct bookings), aggregate all gross income for federal and Michigan state tax purposes. Each platform issues its own 1099-K independently — add them together. Ensure Use Tax is not double-remitted for platform-collected bookings, and that direct bookings are separately registered and remitted.
DAC7 / OECD Reporting (EU Rule — Not Applicable in Michigan)
DAC7 is a European Union reporting directive and does not apply to Michigan or US-based STR hosts. US platforms report to the IRS under domestic 1099-K rules instead.
Airbnb Help Center — US tax documents (airbnb.com/help/article/414); Michigan Department of Treasury marketplace facilitator guidance (michigan.gov/taxes)
Illustrative P&L: Schedule E vs. Schedule C
Example Michigan STR with $30,000 gross rental revenue and $12,000 in expenses. Numbers are illustrative only.
Record-Keeping
Stay Audit-Ready: What Michigan STR Hosts Should Keep
The IRS recommends keeping rental records for at least 3 years from the filing date; Michigan Treasury recommends 4 years. Keep depreciation records for as long as you own the property plus 3 years.
| Keep | How long | Why |
|---|---|---|
| Rental income records (platform statements, bank deposits, 1099-Ks) | 4 years minimum | Substantiates gross income reported on Schedule E/C and MI-1040; Michigan Treasury audit window |
| Expense receipts (cleaning, repairs, supplies, insurance, utilities) | 4 years minimum | Required to support deductions claimed; IRS and Michigan may disallow unsupported expenses |
| Use Tax remittance records (Form 5080/5081 filings, payment confirmations) | 4 years | Proves Michigan Use Tax compliance; penalties for non-remittance can be significant |
| Depreciation schedules and property purchase records | Life of property + 4 years after sale | Needed to calculate depreciation recapture on sale and prove cost basis |
| Personal-use vs. rental-use day logs | 4 years | Required to correctly allocate mixed expenses and defend the rental vs. personal-use split |
Michigan's statute of limitations for tax assessments is generally 4 years from the return due date. Keep all STR records for at least 4 years — longer if you claimed large losses or depreciation.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
This page is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change — always verify current rates and rules with the Michigan Department of Treasury and a qualified tax professional.
- Michigan Department of Treasury — Use Tax — Official guidance on Michigan's 6% Use Tax applicable to short-term accommodations under 30 days. michigan.gov/taxes
- Michigan STRA — STR Regulations — Overview of Michigan statewide STR tax requirements and local legislation links. michiganstra.org/regulations
- Avalara MyLodgeTax — Michigan Vacation Rental Tax Guide — Third-party summary of Michigan state and local lodging tax obligations for STR hosts. avalara.com/mylodgetax
- IRS — Schedule E (Supplemental Income and Loss) — Federal form for reporting passive rental income and expenses. irs.gov
- Airbnb Help Center — US Tax Documents — Explains Form 1099-K thresholds and Airbnb's tax collection practices. airbnb.com/help/article/414
- DGN CPA — Tax Implications of Short-Term Rentals (Michigan) — Michigan-focused CPA article on STR income tax and Use Tax obligations. dgncpa.com
- BNBCalc — Complete Michigan Airbnb Host Lodging Tax Guide — Detailed breakdown of Michigan state and local lodging taxes for STR hosts. bnbcalc.com
Questions
Frequently Asked Questions: Michigan STR Taxes
Mr Props Team
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