Real Estate Taxes for Airbnb Hosts: What You Should Know

25 November 2025

So, you're thinking about listing your property on Airbnb—maybe it’s a cozy cabin in the woods, a slick apartment downtown, or even just a spare bedroom in your house. The idea of making passive income, meeting new people, and leveraging your real estate investment sounds like a dream, right?

Well, it kind of is—until tax season rolls around.

Let’s be honest. Taxes aren’t sexy. They aren’t fun. But they’re necessary. And if you’re an Airbnb host or planning to become one, understanding how taxes work with short-term rentals is absolutely vital.

Stay with me. By the end of this article, you'll feel a heck of a lot more confident about how real estate taxes apply to your Airbnb side hustle. Ready? Let’s dive in.

Why Airbnb Hosting Isn’t Just Extra Cash—It’s a Business

Yes, you’re making money from a property you already own. But once you start renting it out—even occasionally—you’ve stepped into the realm of business income. And that means Uncle Sam wants his share.

Short-term rental income is considered taxable income.

It doesn’t matter if you made $100 or $10,000. If you’re earning money from guests, you’ll need to report it. The good news? There are plenty of deductions you can take advantage of to reduce your tax bill. But we’ll get to that in a sec.

When Do You Have to Report Airbnb Income?

Here’s a simple rule of thumb: If you rent your property for 14 days or less in a year, you don't have to report the income. That’s right—zero tax.

This is known as the “14-Day Rule” or the “Masters Rule” (yep, named after the Masters Golf Tournament when homeowners in Augusta rent out their homes tax-free).

But here’s the catch: Your property must be your personal residence, and you can’t exceed those 14 days. If you rent it for 15 days or more, even once, you’re in taxable territory.

So if you're hosting regularly, even just once a month, you’ll likely need to report your earnings.

Understanding the 1099-K & Airbnb’s Role

Starting in recent years, Airbnb has been required to send hosts IRS Form 1099-K if:

- You earn over $600 during the year
- You receive payment through third-party networks like PayPal or Airbnb Payments
- You meet state-specific reporting requirements

Even if Airbnb doesn’t send you a form, you’re still legally obligated to report all your rental income. Remember, the IRS receives copies too, and they don’t mess around. Don’t assume that if you don’t get a 1099, you’re off the hook.

Federal Taxes: What You’ll Owe

So, let’s break down the types of federal taxes Airbnb hosts may be responsible for:

1. Income Tax

First and foremost, all rental proceeds must be reported as income. This goes on Schedule E of your federal tax return if you’re treating your short-term rental like a passive investment.

But (and this is important) if you offer "hotel-like" services—think breakfast, daily cleaning, fresh linens—you might need to report your earnings on Schedule C instead and pay self-employment taxes too.

Not sure where you fall? If your Airbnb looks more like a hotel than a rental property, you're likely operating a business. That’s not necessarily a bad thing, but it does change your tax obligations.

2. Self-Employment Tax

If you're treated as a business (Schedule C), you'll owe self-employment tax. This covers Social Security and Medicare contributions—just like any freelancer or small business owner would pay.

It currently totals 15.3% of your net earnings, which can be a shocker if you're not expecting it.

3. Depreciation Recapture

If your property’s value has appreciated and you’ve claimed depreciation on your taxes (which we'll talk about in a minute), you may face depreciation recapture tax when you sell it. Think of it as the IRS saying, "Hey, remember all those nice deductions you took? We want a piece of that pie back."

The Beauty of Deductions: Reduce What You Owe

Now we get to the fun part—deductions.

One of the best perks of being an Airbnb host is that you can write off a ton of your expenses. Think cleaning fees, utilities, internet, repairs, supplies, and even part of your mortgage interest or property taxes.

Here’s a breakdown of common tax deductions for Airbnb hosts:

- Cleaning Services: Did you hire a cleaner after each guest? Write it off.
- Utilities: Water, gas, electricity, internet—if your guests are using it, it's deductible.
- Supplies: Toilet paper, kitchen basics, soap. All those little things add up.
- Maintenance & Repairs: Fixing a leaky sink or repainting the guest room? Count it.
- Insurance: Rental-specific insurance or riders? Yes, please.
- Professional Fees: That CPA or tax software that keeps you sane? Also deductible.
- Depreciation: You can deduct a portion of your home’s value each year over a period (usually 27.5 years for residential rental property).

Here’s a pro tip: Keep excellent records. Save receipts. Use an app or a spreadsheet to track everything. You’ll thank yourself later.

What About State & Local Taxes?

Here’s where it gets tricky. Every state (and sometimes every county or city) has its own rules.

Some areas require Airbnb hosts to collect lodging taxes—also called hotel taxes, occupancy taxes, or transient taxes—from guests. These taxes can range from 1% to 15% depending on where you’re located.

Airbnb helps automate this process in many places. They'll collect and remit the taxes on your behalf. But not everywhere. In some localities, you’re totally on your own. That means researching your local laws (yes, sorry) and possibly registering your rental as a business.

Should You Form an LLC?

Let’s talk structure.

Some Airbnb hosts form LLCs (Limited Liability Companies) to protect their personal assets. If someone slips on your icy steps and decides to sue, an LLC can help shield your home and savings.

But from a tax perspective, forming an LLC doesn’t necessarily save you money. It may just add an extra layer of paperwork. That said, if you're really serious about building a short-term rental empire, it's worth looking into.

Chat with a tax pro or lawyer before making the jump.

Real Estate Taxes Versus Income Taxes: Know the Difference

A lot of new Airbnb hosts get these confused, so let’s clear it up:

- Real estate taxes (or property taxes) are what you pay yearly to your local government for owning property. These can be deductible on your federal return (especially if you itemize).
- Income taxes are what you pay based on the income your property generates.

You’ll likely deal with both. The key is understanding how they intersect and ensuring you’re not overpaying or missing out on valuable deductions.

Hiring a Tax Pro: Worth Every Penny?

Unless you live for spreadsheets and IRS instructions, hiring a CPA or tax advisor who understands short-term rentals is a game-changer.

They can help you:

- Maximize legal deductions
- Avoid costly mistakes
- Stay ahead of deadlines
- Navigate local tax laws

Think of it this way: Spending a few hundred bucks might save you thousands in taxes. That’s a win-win if you ask me.

Final Thoughts: Hosting Smart Starts with Knowing the Rules

If you’re hosting on Airbnb or plan to, taxes aren’t something you can just brush under the rug. Sure, they can be a little overwhelming at first, but when you break it down step by step, it starts to make sense.

Knowing how taxes work—from income taxes to deductions to local lodging taxes—can make the difference between a profitable hosting experience and a financial headache.

Airbnb hosting can be an amazing way to build wealth, meet people from all over the world, and even hedge against inflation. But like any business, it pays to go in prepared and educated.

So the next time you welcome a guest with fresh towels and a smile, just remember—you’re not only a host. You’re a savvy real estate entrepreneur now. And that, my friend, comes with a little paperwork.

But trust me, it’s worth it.

Frequently Asked Questions (FAQs)

Q: Will Airbnb automatically withhold taxes for me?
A: Not usually. Airbnb may withhold taxes in countries with specific rules, but in the U.S., you're typically responsible for reporting and paying your own taxes.

Q: Do I need to charge sales tax to my guests?
A: In many states and cities, yes. Airbnb may handle this on your behalf, but double-check local regulations.

Q: What if I rent out only part of my house?
A: You can still deduct expenses, but you’ll need to allocate them based on the percentage of the home used for rental.

Q: Are Airbnb “experiences” taxable too?
A: Yes, income from hosting experiences (like guided hikes or cooking classes) is also considered taxable income.

Q: Can I offset losses against other income?
A: Possibly. If you're treated as an active participant in your rental business, you may be able to offset losses against other income. Talk to a tax pro for specifics.