Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified United States tax professional before filing.
United States · Federal & State · Short-term rental taxes
Short-Term Rental Taxes in the United States
STR income is taxed as ordinary income on your federal return—reported on Schedule E or Schedule C depending on services provided—and is also subject to state and local lodging taxes that vary by jurisdiction.
The 30-Second Answer
- All rental income must be reported on your federal Form 1040; most hosts use Schedule E (Supplemental Income and Loss) unless they provide hotel-like services, in which case Schedule C applies and self-employment tax is owed.
- The 14-day / 10% rule determines whether your property is treated as a rental or a personal residence—rent it out 14 days or fewer per year and the income is tax-free, but deductions are also off the table.
- Platforms like Airbnb issue a Form 1099-K when gross transactions exceed $20,000 and 200 transactions (2025 threshold); income is taxable regardless of whether you receive a 1099.
- On top of federal income tax, most states and cities impose lodging taxes (also called hotel taxes, occupancy taxes, or transient accommodation taxes) ranging from roughly 1% to 15%+; many platforms now collect and remit these automatically in participating jurisdictions.
Deductions
What You Can Deduct Against Rental Income
Ordinary and necessary expenses directly related to your rental activity reduce your taxable income dollar-for-dollar.
If the property is also used personally, expenses must be allocated between rental and personal days. Only the rental-use portion is deductible. Capital improvements are not immediately deductible—they are depreciated over time.
Filing Calendar
Key Dates & Filing Calendar
Federal deadlines apply nationwide; state and local lodging-tax deadlines vary—check your state revenue department.
Quarterly estimated payments are also due June 15, September 15, and January 15 of the following year. Missing them can trigger an underpayment penalty.
IRS Publication 527 (Residential Rental Property) and IRS Topic No. 415 — irs.gov
Tax Treatment
How Is Your STR Income Classified?
The IRS does not have a single 'STR regime'—your classification depends on personal use, services provided, and average rental period.
Schedule E — Passive Rental
The standard route for most vacation-rental hosts
- Report gross rents and deduct ordinary expenses on Schedule E (Form 1040)
- Income is not subject to self-employment (SE) tax—a significant saving
- Losses are generally passive and can only offset other passive income (subject to at-risk and passive activity loss rules)
- Exception: if your adjusted gross income is $100,000 or below and you actively participate, up to $25,000 of passive losses may offset ordinary income
No income ceiling
Schedule C — Active / Business Income
Applies when you provide hotel-like services to guests
- Report income and expenses on Schedule C (Form 1040) as a self-employed business
- Net profit is subject to self-employment tax (15.3% up to the Social Security wage base, 2.9% above)
- Losses can offset other active income without passive-activity restrictions
- The 'STR loophole': if average guest stay is 7 days or fewer and you materially participate, losses may be non-passive even on Schedule E
No income ceiling
14-Day / Non-Taxable Rule
Rent 14 days or fewer — income is completely tax-free
- If you rent your home for 14 days or fewer AND use it personally for more than 14 days (or 10% of rental days), rental income is not taxable
- No rental deductions are allowed under this rule—only mortgage interest and property taxes on Schedule A
- You must still handle any 1099-K reporting carefully to avoid IRS matching issues
- Exceeding 14 rental days moves you into the standard taxable rental regime
14 rental days per year
Depreciation
Depreciation: Your Largest Non-Cash Deduction
The IRS allows you to deduct the cost of your rental property (excluding land) over its useful life using the Modified Accelerated Cost Recovery System (MACRS).
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building | 27.5 years | Straight-line MACRS; land value excluded from depreciable basis |
| Appliances, furniture & fixtures | 5 years | 5-year MACRS property; bonus depreciation or Section 179 may accelerate deduction |
| Carpeting & flooring | 5 years | Treated as personal property if separately identified via cost segregation |
| Land improvements (driveways, fencing) | 15 years | 150% declining balance MACRS |
Depreciation begins when the property is placed in service (available for rent), not when you first receive a guest. A cost segregation study can reclassify components to shorter lives, accelerating deductions.
When you sell the property, accumulated depreciation is subject to 'depreciation recapture' taxed at up to 25% (Section 1250 unrecaptured gain), in addition to any capital gains tax on appreciation.
Lodging & Occupancy Taxes
State & Local Lodging Taxes on STR Income
Separate from income tax, most U.S. states and many cities impose occupancy or lodging taxes on short-term rental guests—collected on top of the nightly rate.
Lodging tax rates and names vary widely across the U.S. The bars below show illustrative combined state + local rates for selected high-STR markets. Actual rates depend on the specific state, county, and city.
Varies by jurisdiction — typically 5% to 18% combined
Avalara MyLodgeTax state-by-state guide (avalara.com/mylodgetax) and individual state revenue departments
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking in a marketplace-facilitator state | Airbnb collects from guest and remits to state/locality automatically | You generally do not remit this tax yourself, but verify your jurisdiction is covered; keep records of amounts collected |
| VRBO booking in a marketplace-facilitator state | VRBO/Expedia collects and remits in participating jurisdictions | Check VRBO's list of covered locations; in non-covered areas you must register and remit yourself |
| Direct booking (your own website) | Host collects from guest and remits directly to state/local authority | You must register with the relevant tax authority, collect the correct rate, file returns, and remit on schedule |
Most U.S. states have enacted 'marketplace facilitator' laws requiring platforms to collect and remit lodging taxes on behalf of hosts. However, coverage varies—always confirm with your state and local tax authority whether your jurisdiction is included.
Platforms
How Major Platforms Handle Tax Reporting
Airbnb and VRBO report income to the IRS and collect lodging taxes in many—but not all—U.S. jurisdictions.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — Form 1099-K (>$20,000 gross & >200 transactions in 2025) or 1099-MISC ($600+) | Yes, in marketplace-facilitator jurisdictions (most U.S. states) | Earnings Summary available in host dashboard by January 31 |
| VRBO / Vrbo | Yes — Form 1099-K where thresholds are met | Yes, in participating U.S. jurisdictions (see VRBO help center for full list) | Annual income statement available in owner dashboard |
| Direct / other platforms | Platform may issue 1099-K if thresholds met; income still taxable regardless | Generally no — host responsible for collecting and remitting lodging taxes | Host must maintain own records; no standardized IRS form guaranteed |
Hosting on Multiple Platforms?
Each platform reports only its own payments. You must aggregate income from all sources on your Schedule E or C. The IRS 1099-K threshold applies per platform, but all income is taxable regardless of whether a 1099 is issued. Keep a master income log across all booking channels.
U.S. Equivalent: Form 1099-K Reporting
The U.S. does not use the EU DAC7 framework. Instead, the IRS requires platforms (as Third Party Settlement Organizations) to issue Form 1099-K to hosts meeting the reporting threshold. The threshold for 2025 remains at $20,000 gross and 200 transactions for federal purposes, though some states have lower thresholds.
Airbnb Help Center — US tax documents (airbnb.com/help/article/414); IRS Topic No. 415 (irs.gov/taxtopics/tc415)
Illustrative P&L — Schedule E Rental
Hypothetical example for a host earning $30,000 in gross rental income. Not tax advice.
Record-Keeping
Stay Audit-Ready: What to Keep and How Long
The IRS can audit returns up to 3 years after filing (6 years if income is understated by more than 25%). Good records protect every deduction you claim.
| Keep | How long | Why |
|---|---|---|
| Rental income records (booking confirmations, bank statements, 1099-Ks) | At least 3 years after filing (6 years if large understatement risk) | Proves gross income reported matches actual receipts; reconciles platform 1099-Ks |
| Expense receipts (repairs, cleaning, supplies, utilities, insurance) | At least 3 years after the return is filed | Substantiates every deduction claimed on Schedule E or C |
| Depreciation schedules and property purchase documents | As long as you own the property, plus 3 years after sale | Needed to calculate adjusted basis, depreciation recapture, and capital gain on sale |
| Personal-use vs. rental-use day logs | At least 3 years after filing | Supports the allocation of expenses between personal and rental use under the 14-day rule |
| Lodging tax filings and remittance confirmations | At least 4 years (varies by state) | Proves compliance with state and local lodging tax obligations |
Digital copies are acceptable. Use cloud storage or accounting software to organize receipts by year and category. A mileage log is also recommended if you drive to the property for management purposes.
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 advice. Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation.
- IRS Topic No. 415 — Renting Residential and Vacation Property — irs.gov/taxtopics/tc415 — Core federal rules on rental income, personal use, and the 14-day rule
- IRS — Tips on Rental Real Estate Income, Deductions and Recordkeeping — irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-deductions-and-recordkeeping — IRS guidance on what counts as rental income and allowable deductions
- Airbnb Help Center — US Tax Documents — airbnb.com/help/article/414 — 1099-K, 1099-MISC, and 1099-NEC thresholds and issuance dates for Airbnb hosts
- Avalara MyLodgeTax — State-by-State Lodging Tax Guide — avalara.com/mylodgetax/en/resources/state-lodging-tax-requirements.html — Overview of lodging tax requirements in all 50 states
- VRBO Help — Where Vrbo Collects and Remits Taxes — help.vrbo.com/articles/vrbo-stay-taxes-lodging-taxes-united-states-n-z — VRBO's marketplace facilitator tax collection coverage
- IRS Publication 527 — Residential Rental Property — irs.gov/publications/p527 — Comprehensive IRS guide covering depreciation, personal use rules, and reporting requirements
Questions
Frequently Asked Questions
Mr Props Team
Property & Short-Term Rental Tax specialists
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