Basically in the topic. I bought a duplex last October and the upstairs unit is going to become available soon. I live in the downstairs, which already makes the taxes a little more fun. Basically I'm trying to decide if I should just rent normally, rent short term or go through AirBnB since it seems like I could potentially get more rent that way.

Are there any different taxes if I do that though? Or does it still just count as a normal rental property, and I just count the occupied/unoccupied days?

  • 2
    When asking a tax question, please specify the country using one of our convenient tags available for that purpose. Thanks. – Chris W. Rea Apr 25 '14 at 17:14
  • Are you asking whether the act of using AirBnB in itself will change your tax situation, or whether renting the place as a vacation rental (as AirBnB does) will change your tax situation vs. renting it as a normal long-term rental? – BrenBarn Apr 25 '14 at 19:58
  • @BrenBarn I mean renting it as a vacation/daily rental (which I pretty much assume is all AirBnB is really for.) – CodeRedick Apr 28 '14 at 18:48

There's no tax difference between using AirBnB or Craigslist or any other method to find tenants.

The rules relating to occupancy and frequency may be different for some purposes if you go from yearly or monthly tenants to daily-rate tenants. Your state and local authorities may in the future try to consider you a motel or Bed n Breakfast equivalent, and subject you to various regulations and business taxes. But the method of finding customers itself is probably not meaningful for tax purposes.

  • 2
    You should perhaps clarify that you mean income tax purposes, if that's what you mean. As you mention, there are likely to be substantial differences for tax purposes in general due to local governments distinguishing residential rentals from short-term rentals that are taxed as hotels. – BrenBarn Apr 25 '14 at 19:53
  • AirBnB is essentially for daily rate... so how would I go about finding out if I need to worry about motel/BnB regulations and business taxes? – CodeRedick Apr 28 '14 at 18:12
  • If your question is about switching to more or less an actual BnB or hotel in your home, then you need to consult Pub 527 and determine whether you will provide substantial services, making you a Schedule C business instead of just a Schedule E rental. That'd make your losses more usable (though I imagine that doesn't apply to you most years, if ever). Without knowing your locality, my move would be to start googling to find the local authorities, then to specifically check the secretary of state and maybe city rules. – NL7 Apr 28 '14 at 19:55

It actually depends on the services provided. If you're renting through AirBnB, you're likely to provide much more services to the tenants than a traditional rental. It may raise it to a level when it is no longer a passive activity. See here, for starters:

Providing substantial services. If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Use Form 1065, U.S. Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture).

Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. For information, see Publication 334, Tax Guide for Small Business. Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5


Given your clarifying comment that you're asking about the length of stay rather than AirBnB in particular, I'd say there is a decent chance there will be tax differences. The difference is unlikely to be in income tax, but many cities have local ordinances that impose transaction taxes on short stays. For instance, the town where I live has a "transient occupancy tax" for any paid stay of less than 31 days.

Unfortunately, because these taxes are often levied by individual cities, it's hard to know whether one applies in your case. One town may impose no tax while the town right next to it does impose a tax. You'll have to look at what your local laws are. This could be easy if your town has a nice comprehensive website about local laws; if not you may have to do some deeper research.

In any case, you should definitely look into it, since there could be penalities if there is a tax and the city finds out you're not paying it. As AirBnB has grown in popularity, many municipalities have begun to crack down on AirBnB renters who try to make money without paying taxes like a regular motel (as well as conforming to other laws, e.g., running a business in a neighborhood zoned residential).

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.