Renting your home or spare room on a home–sharing site like Airbnb and Vrbo is a quick way to earn extra cash. But do you know what your tax liability is as a host? Are you getting all your tax deductions? We’ve got answers to some of the most frequently asked tax questions from short-term rental hosts like you.
Do I have to pay taxes on my rental income?
If you rent your home, apartment, or spare room for more than 14 days in a year, you are required to pay taxes on the income. That includes all the money you receive for the use of your property and any services or “extras” you tack on, like cleaning fees or meals.
Does Airbnb/Vrbo withhold taxes for me?
Sites like Airbnb and VRBO request taxpayer information from you as a host because they have to report any US-earned income to the IRS. But, each site has its own policies regarding income tax withholdings. For instance, if you use Airbnb and you don’t give them your correct tax information, they will withhold income taxes from your payouts. The amount they withhold is somewhere around 24% – 28%, possibly more than you actually owe.
If Airbnb withheld income from your payout, you can claim it as a credit on your tax return. But the best thing you can do is fill out your Form W-9 taxpayer information correctly and report your own rental income on your tax return.
Vrbo does not appear to have this same policy, but they do automatically withhold 30% for non-US residents listing properties in the US (unless the host has submitted Form W-8ECI showing they are tax-exempt). Airbnb will also withhold 30% for non-US resident hosts unless they have submitted Form W-8ECI.
What do I need to report as income from my rental?
The amount you should report on your taxes is your “gross income” from your rentals. This means all the payments you received from your guests before any refunds were given or service fees are taken out. It will be a larger amount than what the hosting site actually paid out to you. The difference will be made up for by deductions on your tax return.
If you rent your space for less than 14 days total in one year, you will not need to report the rental income you received. This exception is known as the “Master’s exception.” Be aware: When you qualify for the Master’s exception, your rental-related expenses are not deductible.
Can I deduct expenses for my Airbnb/Vrbo rental?
If you are required to report your rental income (i.e., you rented your space for more than 14 days), there are certain expenses – or portions of your expenses – that you can deduct to reduce your tax liability. These include:
- Cleaning and maintenance fees, including laundry and cleaning supplies you purchase
- Property insurance and private mortgage insurance (PMI)
- Service fees charged by Airbnb or another host site
- Utilities (water, gas, electricity, TV, internet, etc.)
- Repairs made to the rental property, including furniture and appliances
- Mortgage loan interest
Will I get a tax form from Airbnb/Vrbo?
Vacation rental host sites like Airbnb, HomeAway, and Vrbo will send a Form 1099-K to hosts who have more than 200 reservations and who earn over $20,000. They will also send you a form if you had taxes withheld from your payouts so you can claim your withholdings on your return.
If I don’t get a tax form, do I still owe taxes?
If you don’t receive a form, it doesn’t mean you don’t owe taxes. Your host site is reporting your income to their IRS on their end, so it’s important to report the same income when you file your tax return. Even if you only rent your space for less than 14 days, the IRS will know about it.
If you are audited, you’ll need to have records of your expenses and income to match. If you are eligible for the Master’s exception, you’ll need to be able to show that your rental time was, in fact, less than two weeks.
Am I self-employed as a rental host?
If the room or home you list is used only for renting, and if you provide over-the-top services for your guests (like meals and cleaning services), you could be considered self-employed by the IRS. In other words, if your Airbnb or Vrbo rental looks more like a traditional bed & breakfast, you would need to start paying self-employment tax in addition to your rental tax. Self-employment tax is a 15.3% tax that covers Medicare and Social Security.
Do I have to collect occupancy tax?
Depending on where you live, you may need to collect occupancy tax from your guests. Occupancy tax – also known as tourist tax, hotel tax, room tax, and lodging tax – is a tax that a visitor is required to pay when they rent a property.
The rate and rules for occupancy tax vary by country, state, county, and city. Airbnb and Vrbo only collect occupancy tax for you if you live in select areas. If this is the case, the amount of tax will appear on your listing’s public page. For all others, you are responsible for collecting occupancy tax and sending it in yourself.
How do I report rental income on my tax return?
When you file with TaxSlayer, we’ll guide you to make sure your rental income is reported, and you get all possible deductions. Simply follow the step-by-step instructions in the program, and enter your income information carefully, exactly as it appears on your tax form (if you receive one). TaxSlayer will do all necessary calculations for you based on the info you provide.
Get started filing for free today.
The information in this article is current through tax year 2021 (taxes filed in 2022).