Short-term rentals, including properties rented through Airbnb, VRBO, or directly, are taxed differently than traditional long-term rentals. The average rental period determines which IRS schedule applies, Florida imposes sales tax on every booking, and county tourist taxes stack on top. Most hosts discover the full picture only after their first notice.
The 7-Day Rule
The average rental period is the key threshold. If the average stay across all rentals is 7 days or fewer, your rental activity is treated as a business and reported on Schedule C, not Schedule E.
Schedule C treatment means:
- Rental income is subject to self-employment tax (15.3% on net profit up to $168,600 in 2024)
- You must materially participate in the activity or losses are still passive
- You can deduct business expenses, mileage, home office (if applicable), and platform fees
This catches most short-term rental hosts off guard. Airbnb rentals in a vacation market where guests stay 3–5 nights will almost always average 7 days or fewer.
The 14-Day Rule
Even if your property qualifies as a rental, the 14-day personal use rule limits your deductions. If you use the property personally for more than 14 days or 10% of rental days (whichever is greater), the IRS treats it as a mixed-use property.
Mixed-use rules require you to allocate expenses between personal and rental use. You cannot deduct rental expenses in excess of rental income. Losses are disallowed until income in future years absorbs them.
Active vs. Passive Income
If the average rental period exceeds 7 days (Schedule E territory), the passive activity rules apply. Losses are deductible only against passive income unless you qualify as a Real Estate Professional or meet one of the material participation tests.
Hosts who actively manage their own property by handling bookings, guest communication, cleaning coordination, and maintenance often qualify under the 500-hour material participation test, converting passive losses to active ones.
Florida Sales Tax on Rentals
Florida imposes 6% state sales tax on all short-term rentals, defined as rentals of living accommodations for 6 months or less. This applies to transient rentals regardless of platform.
In addition to state sales tax, Florida counties levy a Tourist Development Tax (TDT) ranging from 2% to 6% depending on the county. Miami-Dade, Broward, and Palm Beach counties each have their own rates and registration requirements.
Total effective tax rate on Florida STR bookings: 8%–12%, depending on location.
What Airbnb and VRBO Actually Collect
Airbnb collects and remits Florida state sales tax and most county tourist development taxes on behalf of hosts. VRBO collects state tax but has variable coverage at the county level.
What platforms do not cover:
- Your obligation to register with the Florida Department of Revenue as a sales tax dealer
- County-level TDT registration in counties where the platform does not remit directly
- Reporting requirements even in months with zero rental activity once registered
Hosts who assume the platform handles everything often discover unregistered tax obligations during a DOR audit.
Deductions Available
STR hosts can deduct ordinary and necessary business expenses, including:
- Platform commissions and service fees (Airbnb/VRBO host fees)
- Cleaning and laundry costs
- Supplies, linens, toiletries, and furnishings (subject to depreciation rules)
- Repairs and maintenance (not capital improvements)
- Utilities, internet, and cable (allocated to rental days)
- Property management fees
- Mortgage interest and property taxes (allocated to rental use)
- Depreciation on the rental portion of the property
- Mileage for property visits, supply runs, and maintenance trips
Common Mistakes
- Assuming the platform remits all taxes: it usually doesn’t cover county TDT
- Not registering with the DOR: Florida requires a separate dealer registration even if Airbnb remits on your behalf
- Missing the 7-day average: hosts who assume Schedule E when average stays are below 7 days underreport SE tax
- Personal use days: every night you, your family, or friends stay free counts as personal use
- No separate bookkeeping: mixing rental income with personal accounts makes expense allocation unreliable and invites scrutiny
When to Seek Help
If you’re generating meaningful income from a short-term rental, the combination of federal income tax, self-employment tax, Florida sales tax, and county TDT requires a coordinated approach. Getting the registration and reporting structure right in year one is far cheaper than catching up after a DOR notice.
Last updated: 2026