Guides
How US short-term rental taxes work under IRS Schedule E and Form 1099-K
US short-term rental income runs through IRS Schedule E, Form 1099-K reporting thresholds and local occupancy tax rules that vary by state and city.
What to take away
- Rent from a home, condo or room you own goes on IRS Schedule E, and personal-use days decide whether your deductions are capped.
- The federal Form 1099-K threshold in force is $20,000 in gross payments and more than 200 transactions, and the income is taxable below it.
- Occupancy tax runs on its own forms and calendar, separate from the income tax return.
- Florida and Texas levy no personal income tax on rental profit. California and Colorado do.
- Depreciation on the building, not the land, is usually the largest single deduction.
Schedule E is where the rent is reported
Schedule E, Supplemental Income and Loss, is where most US hosts report rent from a home, condo or room. Gross rents sit in one column, expenses by category in the next.
A rental-only property stays off Schedule C, so no self-employment tax applies. That line turns on services, not nights. Handing a guest a door code keeps most whole-home hosts on Schedule E.
Personal-use days decide the cap
Use the unit more than 14 days, or more than 10 percent of rental days, and it counts as a residence. Expenses are then deductible only up to rental income, with ordering rules pushing the rest to later years.
Rent a place 200 days and stay 20, and the cap applies. Stay 12, and it does not. A day spent repairing or inspecting the unit is not personal use.
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Keep one calendar marking rental days, personal days and repair days. Publication 527 explains the day tests. Local permit duties apply either way, so read license requirements before you list a unit.
The 14-day exception pays off in dollars. Rent a cabin 12 nights at $300 a night, a total of $3,600, and if you also use it as a residence, none of that $3,600 goes on your return. Rental expenses cannot offset it.
Form 1099-K: the threshold in force
Payment platforms report host payouts on Form 1099-K, showing gross payment card and third-party network amounts.
The threshold in force for the current filing year is $20,000 in gross payments and more than 200 transactions. The $600 figure from the 2021 law was delayed and never applied. Some states set a lower bar for their own copies. The instructions for Form 1099-K set out each box.
Crossing the threshold does not create the tax. Payouts are taxable whether or not a form arrives, and gross payouts are not profit. The gap between the two is what unit economics measures.
Reconciling a form with your own books
- Add every 1099-K you received, including any from a channel manager or a processor such as Stripe or PayPal.
- Match each form to the platform earnings report for the same year.
- Strip duplicates so no booking is counted twice.
- Report gross receipts on Schedule E and deduct platform commissions as an expense.
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Gross receipts include cleaning fees, pet fees and guest service charges passed through to you. That is why a 1099-K can exceed your bank deposits.
Occupancy tax is a separate system
Occupancy tax is the lodging tax a guest pays on a short stay, levied by cities, counties and states. You collect it, hold it and remit it, and when you are only the collector it never becomes income.
Airbnb and Vrbo collect and remit occupancy tax for hosts in many US jurisdictions. When the platform remits, keep the remittance report. When it does not, you register with the state or county and file on the local schedule. Missed remittances trigger penalties, and some localities pull a permit over unpaid lodging tax.
State income tax in Florida, California, Texas and Colorado
Lodging tax and permits
- Florida
- Registered platforms remit the state transient rentals tax; counties add surtaxes and some require separate registration
- California
- No statewide lodging tax; cities and counties levy transient occupancy tax, often around 10 to 15 percent
- Texas
- State hotel occupancy tax plus city and county taxes; platforms remit the state portion in many cases
- Colorado
- Local governments set licensing and lodging tax; the state collects sales tax on many short stays
State income tax on rental profit
- Florida
- None, Florida has no personal income tax
- California
- Taxed as ordinary income on the state return
- Texas
- None, Texas has no personal income tax
- Colorado
- Federal taxable income flows to a flat state rate
Florida also requires a statewide vacation rental license from the Department of Business and Professional Regulation, plus local permits. California and Texas have no statewide permit, so each city or county runs its own registration and remittance.
Denver, Boulder and mountain resort towns each run their own licensing and lodging tax, so a Colorado host can face two rates and two filing calendars.
Deductions, depreciation and records
Ordinary and necessary costs reduce the rent you report. Commissions, cleaning, supplies, insurance, utilities, repairs and management fees are commonly deductible. Mortgage interest and property taxes go on their own Schedule E lines.
Depreciation recovers the cost of the building over 27.5 years on a straight-line basis. Land is not depreciable, so split the purchase price between building and land.
Repairs are deductible now. Improvements add value or extend life and are depreciated. A water heater is usually a repair; a kitchen remodel is an improvement.
Travel costs follow their own rules. Publication 463 covers the standard mileage rate and the actual expense method. A repair trip is business travel; a personal weekend is not.
Keep a file per property: settlement statement, depreciation schedule, every 1099-K, platform earnings reports and receipts. Hold the records at least three years after you file. A compliance checklist keeps registrations and deadlines in one place.
