People everywhere are finding new and creative ways to pick up extra income on the side. Renting your home or spare room on a site like Airbnb or VRBO is a quick way to earn extra cash and offset life’s expenses. But do you know what your tax liability is as a host? Are you getting all your tax deductions? We’ve got the 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?
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. Rent 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.
When you rent your space for less than 14 days in one year, you qualify for the “Master’s exception,” which says that your rental income is non-taxable. But then, your rent-related expenses are not deductible either.
What do I need to declare as income?
The amount you report on your taxes is your “gross income.” 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 Airbnb actually paid out to you. The difference will be made up for in deductions on your tax return.
Can I deduct my Airbnb rental expenses?
If you are required to report your rental income (i.e. you rented your space for more than 14 days), there are certain items you can deduct that will 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
Does Airbnb withhold taxes for me?
Airbnb requests taxpayer information from you as a host because they have to report any US-earned income to the IRS. If you don’t give them your correct information, they will withhold income taxes from your payouts. The amount they withhold is somewhere around 24% – 28%, which is possibly more than you actually owe. If you do fill out the taxpayer information, Airbnb will not withhold income from your payout.
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 to fill out your taxpayer information correctly and report your own rental income on your tax return.
Will I get a tax form from Airbnb?
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, even if it is for fewer than 14 days. If you get audited, you’ll need to have records of your rental expenses and income. If you were 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 would 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 report occupancy tax?
Depending on where you live, you may need to collect occupancy tax from your guests and send the payment to the tax authority. 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 e-file with TaxSlayer, we’ll ask you guided questions to make sure your rental income gets reported and you get all your deductions for the maximum refund at tax time. Try out the TaxSlayer Refund Calculator today for an estimate of what you’ll be getting back when you go to file.
This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.