Are Cleaning Fees Taxable for Landlords and Hosts?
Understand how cleaning fees are classified for tax purposes, when they may be subject to sales tax, and best practices for reporting and recordkeeping.
Cleaning fees are a common charge for rental properties, whether through short-term platforms like Airbnb or traditional leases. While they help cover property maintenance costs, landlords and hosts must understand their tax implications.
Tax rules vary by location and rental type. Knowing whether cleaning fees are subject to sales tax or included in taxable rental income helps avoid unexpected liabilities.
Income Classification for Cleaning Fees
Cleaning fees are taxable rental income, but classification depends on the rental arrangement. The IRS considers all payments from tenants or guests as taxable, including separate cleaning charges. Whether the rental is short-term or long-term determines how they are reported and whether additional taxes apply.
For short-term rentals, such as Airbnb or Vrbo listings, cleaning fees are part of gross rental income. The IRS defines short-term rentals as stays averaging fewer than 30 days. These rentals are often treated as business income, which may be subject to self-employment tax. If a host provides services beyond basic maintenance—such as daily cleaning, concierge services, or meals—the IRS may classify the rental as a business, altering tax obligations.
For long-term leases, cleaning fees must also be reported as rental income. Often, these fees come from security deposits rather than separate charges. If a landlord withholds part of a security deposit for cleaning beyond normal wear and tear, that portion becomes taxable income. If the deposit is refunded or used strictly for repairs, it does not count as income.
Sales Tax on Cleaning Fees
Sales tax on cleaning fees depends on state and local laws, which often distinguish between services and tangible goods. In many states, short-term rental hosts must collect and remit sales tax on the total charge, including cleaning fees. Since these rentals resemble hotel stays, they are often taxed similarly.
States such as Florida and Texas explicitly require sales tax on cleaning fees when part of a short-term rental transaction. Florida imposes a 6% sales tax on transient rentals, covering all mandatory charges, including cleaning fees. Local jurisdictions may add surtaxes, increasing the total tax rate. Texas applies its 6% state hotel occupancy tax to the entire rental price, including cleaning fees.
Some states exempt cleaning fees from sales tax if they are separately stated and not required under the rental agreement. In California, while short-term rental income is subject to transient occupancy tax, cleaning fees may be exempt if they are optional rather than mandatory. Proper structuring and disclosure of fees to guests can affect tax treatment.
For long-term leases, sales tax generally does not apply to cleaning fees, as residential rentals are typically exempt in most states. However, if a landlord provides additional services, such as regular cleaning included in the lease, some states may impose tax obligations.
Reporting Methods for Landlords or Hosts
How cleaning fees are reported depends on rental activity and tax status. Individuals renting properties short-term typically report income on Schedule C (Profit or Loss from Business) if the rental is classified as an active business. This applies when a host offers significant services beyond lodging, such as frequent cleanings or guest assistance. Reporting on Schedule C allows business deductions but subjects income to self-employment tax.
If the rental does not qualify as a business, income, including cleaning fees, is reported on Schedule E (Supplemental Income and Loss). Unlike Schedule C, Schedule E rental income is not subject to self-employment tax, though deductions are limited to rental-related expenses. Misreporting income under the wrong schedule can lead to penalties, especially if it results in avoiding self-employment taxes.
State tax reporting varies, with some jurisdictions requiring additional filings for short-term rental hosts. States like Hawaii and New York mandate registration for General Excise Tax (GET) or similar levies, which must be reported separately from federal taxes. Noncompliance can result in fines or interest charges.
Recordkeeping Essentials
Accurate records help landlords and hosts comply with tax regulations and substantiate deductions in audits. The IRS requires rental property owners to maintain documentation supporting income and expenses, including invoices, receipts, and bank statements. Categorizing transactions in accounting software like QuickBooks or Stessa streamlines tax reporting and prevents misclassification of deductions.
A separate business bank account for rental activities simplifies financial tracking and reduces the risk of mixing personal and rental-related transactions. This is especially important for short-term rental hosts who process frequent payments through platforms like Airbnb or Vrbo. Payment processors issue Form 1099-K when gross earnings exceed $20,000 and 200 transactions, though IRS proposals may lower this threshold to $5,000, increasing reporting obligations.
Depreciation schedules for cleaning equipment, such as vacuums or steam cleaners, should be documented per IRS guidelines. Assets with a useful life exceeding one year may qualify for Section 179 expensing or bonus depreciation, allowing landlords to recover costs more quickly. Additionally, tracking mileage for property maintenance trips, including cleaning supply purchases, can provide deductible business expenses under IRS standard mileage rates.