Do I Have to Pay Taxes on Airbnb Income?

Income generated from Airbnb rentals is subject to taxation. The specific tax treatment varies depending on factors such as the number of days a property is rented and the extent of services provided to guests. Understanding these nuances is important for hosts to accurately assess their tax obligations.

Understanding Your Income Classification

The Internal Revenue Service (IRS) distinguishes between rental income and business income, which dictates how income is reported and which deductions are available. If a property is rented for 14 days or fewer during the tax year and is also used for personal purposes, the rental income is not taxable. In this scenario, expenses related to the rental are not deductible, with the exception of mortgage interest and property taxes. This provision is often referred to as the “14-day rule.”

When a property is rented for more than 14 days, the level of services provided determines the income classification. If a host offers only basic services, such as cleaning between guests and providing utilities, the income is considered passive rental income. This type of income is reported on Schedule E (Form 1040).

If substantial services are provided, the activity may be considered an active business. Substantial services include offerings similar to those found in a hotel, such as daily cleaning during a guest’s stay, concierge services, or providing meals. If these services are a material portion of the rent, the income may be classified as active business income and reported on Schedule C (Form 1040), Profit or Loss from Business. This classification can trigger self-employment taxes.

Determining whether services are substantial depends on their nature and extent. Services customary for maintaining the property’s condition for occupancy, like cleaning between guests, are not considered substantial. The distinction is important because it affects not only the reporting form but also the applicability of self-employment taxes.

Allowable Business Deductions

Airbnb hosts can deduct ordinary and necessary expenses related to their rental activity. Accurate record-keeping of all income and expenses is important for substantiating claims during tax preparation.

A range of common expenses are generally deductible. These include costs for cleaning and maintenance, and utilities such as electricity, gas, water, and internet. Supplies provided for guests, like toiletries, linens, and kitchenware, are also deductible.

Insurance premiums, including homeowners, landlord, or short-term rental specific policies, are deductible if they cover the rental property. A proportionate share of mortgage interest and property taxes attributable to the rental use of the property can also be deducted. Repairs that maintain the property’s condition are fully deductible, while improvements that add value or extend the property’s life are depreciated over time.

Professional fees paid to accountants, property managers, or legal advisors for the rental business are deductible expenses. Advertising and listing fees, including those charged by platforms like Airbnb, are also deductible. Hosts can claim depreciation on the property and its furnishings, which allows for the recovery of the cost of the asset over its useful life. Expenses for properties used for both personal and rental purposes must be proportionally allocated based on rental use.

Federal Income Tax Reporting

The process for reporting federal income tax for Airbnb activity depends on how the income is classified. Third-party payment networks, including Airbnb, are required to report payments to the IRS. For 2025, the reporting threshold for Form 1099-K is $2,500 or more. Even if a host does not receive a Form 1099-K, all rental income must still be reported.

If the Airbnb activity is classified as a passive rental activity, income and expenses are reported on Schedule E (Form 1040), Supplemental Income and Loss. The net income or loss from these activities is then transferred to Form 1040.

When the Airbnb activity is considered an active business due to substantial services, income and expenses are reported on Schedule C (Form 1040), Profit or Loss from Business. Reporting on Schedule C means the net earnings from the business are also subject to self-employment taxes.

State and Local Tax Obligations

Beyond federal income tax, Airbnb hosts may be subject to various state and local taxes, which vary significantly by jurisdiction. These obligations are distinct from federal income tax and require separate consideration. Hosts are responsible for complying with the specific regulations in their property’s location.

A common type of state and local tax is the Occupancy Tax, also known as Transient Occupancy Tax (TOT), lodging tax, or tourist tax. These taxes are levied by cities or counties on short-term rentals, similar to taxes on hotel stays. The rates for these taxes can vary widely.

Some states and localities may also consider short-term rentals subject to sales taxes. Many jurisdictions require hosts to obtain special permits or licenses for short-term rentals, often with associated fees. Hosts should be aware of these requirements.

Airbnb often collects and remits some state and local taxes on behalf of hosts in certain jurisdictions where agreements are in place with tax authorities. However, hosts are ultimately responsible for verifying compliance and remitting any taxes not collected by Airbnb. It is important for hosts to check their specific state, county, and city regulations, as these tax requirements can be complex and are subject to frequent changes.