Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Virginia tax professional before filing.
Virginia · USA · Short-term rental taxes
Short-Term Rental Taxes in Virginia
Virginia STR hosts owe federal and state income tax on net rental income, plus a locally-set Transient Occupancy Tax (TOT) collected by each county or city where the property sits.
The 30-Second Answer
- Federal income tax: report STR net income on Schedule E (passive rental) or Schedule C (if you provide substantial services); the 14-day / 10% personal-use rule determines deductibility of expenses.
- Virginia state income tax: Virginia conforms closely to federal adjusted gross income; file Form 760 (residents) and pay Virginia's graduated income-tax rates (2%–5.75%) on net rental profit.
- Transient Occupancy Tax (TOT): every Virginia locality may levy a TOT on gross rental proceeds — rates vary by jurisdiction (e.g., Virginia Beach charges 8%, Warren County charges 5.5%); register with your local Commissioner of the Revenue.
- Short-term rental property tax: under § 58.1-3510.6, localities may add up to 1%–1.5% on gross STR proceeds on top of the state sales tax; platforms like Airbnb collect and remit TOT in many Virginia localities under marketplace facilitator agreements.
Deductions
What Virginia STR Hosts Can Deduct
Ordinary and necessary expenses allocable to the rental portion of your property reduce taxable income at both the federal and Virginia state level.
If the property is also used personally, expenses must be allocated between rental and personal days using the IRS ratio method. Virginia follows federal treatment for rental expense deductions. This is educational information, not tax advice — consult a qualified CPA for your situation.
Filing Calendar
Key Dates & Filing Calendar
Virginia state income-tax deadlines mirror federal deadlines; local TOT returns are filed monthly or quarterly depending on the locality.
Virginia's individual income-tax return (Form 760) is generally due May 1. An automatic 6-month extension to file is available, but any tax owed must be paid by May 1 to avoid penalties.
Virginia Tax — Form 760 instructions (tax.virginia.gov)
Income Tax Treatment
Passive Rental vs. Active Business: Which Applies to Your STR?
The IRS — and Virginia, which conforms to federal AGI — distinguishes between passive rental income and active business income based on services provided and material participation.
Passive Rental (Schedule E)
Standard treatment for most STR hosts
- Net income reported on federal Schedule E and flows to Virginia Form 760.
- Losses are passive and generally deductible only against other passive income (unless you qualify as a real-estate professional).
- Depreciation, mortgage interest, repairs, and other ordinary expenses are deductible in proportion to rental use days.
- Not subject to self-employment (SE) tax on net rental income.
No income ceiling
Active Business (Schedule C)
Applies when substantial services are provided to guests
- Net income reported on federal Schedule C; Virginia taxes it as ordinary income on Form 760.
- Subject to 15.3% self-employment tax on net profit (above the SE threshold).
- All ordinary and necessary business expenses are deductible without passive-loss limitations.
- IRS Chief Counsel Advice 202151005 clarifies when services are 'substantial' enough to trigger Schedule C treatment.
No income ceiling
Depreciation
Depreciation for Virginia STR Properties
The IRS allows residential rental property to be depreciated over 27.5 years using the straight-line method; Virginia conforms to this federal treatment.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building (structure only) | 27.5 years | Straight-line; land is not depreciable. Allocate purchase price between land and building. |
| Appliances, furniture & fixtures | 5 years | Personal property used in rental; bonus depreciation or Section 179 may accelerate deduction. |
| Carpeting & flooring | 5 years | Treated as personal property under cost-segregation rules in many cases. |
| Land improvements (driveways, fencing) | 15 years | Straight-line or 150% declining balance. |
Virginia conforms to federal depreciation rules under IRC §§ 167 and 168. A cost-segregation study can accelerate deductions by reclassifying components to shorter lives. Consult a CPA before filing.
When you sell the property, depreciation previously deducted is subject to federal 'unrecaptured Section 1250 gain' taxed at up to 25%. Virginia taxes the gain as ordinary income at state rates (up to 5.75%).
Transient Occupancy Tax (TOT)
Virginia's Local Transient Occupancy Tax
Virginia localities — not the state — levy a Transient Occupancy Tax on gross STR proceeds. Rates and filing rules differ by county or city.
Under Virginia Code § 58.1-3819 et seq., every county, city, and town may impose a TOT on the gross rental proceeds of transient lodging. STR hosts must register with the local Commissioner of the Revenue and file returns on the locality's schedule. The examples below illustrate the range of rates across Virginia.
Varies by locality — confirm your exact rate with your local Commissioner of the Revenue.
Virginia Code § 58.1-3819; City of Virginia Beach Commissioner of the Revenue (cor.virginiabeach.gov); Warren County VA (warrencountyva.gov); York County VA (yorkcounty.gov)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking in a locality with a marketplace facilitator agreement | Airbnb collects TOT from guest and remits to the locality | You do not remit TOT for Airbnb bookings where an agreement exists, but verify with your locality — you may still need to file a $0 return. |
| VRBO / direct booking in most Virginia localities | Host collects TOT from guest and remits directly to the locality | Add TOT to your invoice, hold it in a separate account, and remit on the locality's schedule (monthly or quarterly). |
| Short-term rental property tax (§ 58.1-3510.6 add-on) | Host remits to locality (up to 1%–1.5% of gross proceeds) | Separate from TOT; check whether your locality has enacted this additional levy. |
Airbnb has marketplace facilitator agreements with many Virginia localities, but coverage is not universal. Always confirm with your local Commissioner of the Revenue whether you must file returns even when the platform remits on your behalf.
Platforms
How Airbnb & VRBO Handle Virginia Tax Reporting
Platforms report host income to the IRS and, in many Virginia localities, collect and remit Transient Occupancy Tax under marketplace facilitator agreements.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Issues 1099-K (>$20,000 & >200 transactions in 2025) or 1099-MISC ($600+) to IRS and host | Yes — in localities with a marketplace facilitator agreement | Annual earnings summary available in host dashboard by January 31 |
| VRBO / Vrbo | Issues 1099-K to qualifying hosts; reports to IRS | Varies by locality — check VRBO's tax collection page for Virginia | Annual earnings summary available in host account |
| Direct / other OTAs | No platform reporting; host responsible for all income reporting | No — host must collect and remit TOT directly | Host must maintain own records |
Using Multiple Platforms?
If you list on both Airbnb and VRBO, each platform reports only its own payments. You must aggregate all income across platforms on your federal Schedule E or C and your Virginia Form 760. Keep separate records for each platform to reconcile 1099s with your own books.
DAC7 / OECD Reporting (EU Rule — Not Applicable in Virginia)
DAC7 is a European Union directive requiring platforms to report seller income to EU tax authorities. It does not apply to Virginia or US-based hosts renting US properties. US hosts are subject to IRS Form 1099 reporting rules instead.
Airbnb Help Center — US tax documents (airbnb.com/help/article/414); IRS Form 1099-K guidance
Illustrative P&L: Schedule E vs. Schedule C
Hypothetical Virginia STR earning $30,000/year. For illustration only — not tax advice.
Record-Keeping
Stay Audit-Ready as a Virginia STR Host
The IRS and Virginia Tax can audit STR income; good records protect your deductions and prove your rental-vs-personal-use split.
| Keep | How long | Why |
|---|---|---|
| Booking records (guest name, dates, amounts) from all platforms | At least 3 years after filing (7 years if substantial underreporting risk) | Proves rental days vs. personal-use days for expense allocation and TOT compliance |
| Receipts for all deductible expenses (repairs, cleaning, supplies, utilities) | At least 3 years after filing | Substantiates deductions on Schedule E/C and Virginia Form 760 |
| TOT registration certificate and filed local returns with payment confirmations | At least 4 years (some localities require longer) | Demonstrates compliance with local Transient Occupancy Tax obligations |
| Property purchase documents, closing statements, and improvement receipts | As long as you own the property, plus 3–7 years after sale | Establishes cost basis for depreciation calculations and capital-gains reporting on sale |
| 1099-K / 1099-MISC forms received from platforms | At least 3 years after filing | Reconcile platform-reported income with your own records to avoid IRS notices |
Virginia Tax may audit state returns independently of the IRS. If the IRS adjusts your federal return, you must notify Virginia Tax within one year of the final federal determination (Virginia Code § 58.1-1823).
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; verify all figures with official sources or a qualified tax professional before filing.
- Virginia Code § 58.1-3510.6 — Short-term rental property tax — Authorizes localities to levy up to 1%–1.5% on gross STR proceeds in addition to state sales tax. law.lis.virginia.gov
- Virginia Tax — Form 760 & Deductions — Official Virginia resident income-tax return and deduction guidance. tax.virginia.gov
- City of Virginia Beach — Transient Occupancy Taxes — Virginia Beach TOT rate and registration information. cor.virginiabeach.gov
- Warren County, VA — Transient Occupancy Tax — Warren County TOT rate and filing requirements. warrencountyva.gov
- York County, VA — Transient Occupancy and Additional Taxes — York County TOT information. yorkcounty.gov
- Airbnb Help Center — US tax documents — 1099-K and 1099-MISC thresholds and issuance dates for US hosts. airbnb.com/help/article/414
- IRS Chief Counsel Advice 202151005 — IRS guidance on when STR services are 'substantial' enough to trigger Schedule C / SE tax treatment. irs.gov
- Keiter CPA — Tax Considerations for Short-Term Rentals (2022) — Virginia-based CPA firm analysis of IRS CCA 202151005 and STR tax treatment. keitercpa.com
Questions
Frequently Asked Questions — Virginia STR Taxes
Mr Props Team
Property & Short-Term Rental Tax specialists
Make Tax Season a Non-Event
Mr. Props tracks your STR income, expenses and remittances all year, so your Virginia filing is ready to file instead of reconstructed in a panic.
Join Hosts Running Smarter Portfolios
Monthly tactics on STR tax, pricing and operations — written for operators, not accountants.
No spam. Unsubscribe anytime.