Guide for rental owners
Short-term rental taxes: the 7-day rule and more
Airbnb and VRBO income can be taxed differently than a regular rental.
Renting by the night or week can change how your income is taxed. A few simple tests decide which rules apply, so it's worth knowing them before tax season.
The 14-day rule
Rent out your own home for 14 days or fewer in a year, and that rental income is generally tax-free (you also can't deduct the rental expenses). Popular for big local events.
The 7-day rule
If your guests' average stay is 7 days or less, the IRS doesn't treat it as a "rental activity" under the passive loss rules. That can be good news: if you materially participate (for example, you do most of the work yourself), losses from the property may offset your other income. It's one of the reasons short-term rentals get attention from tax planners.
Schedule E or Schedule C?
Most short-term rentals still go on Schedule E. If you provide hotel-like services (daily cleaning, meals, concierge), the income may belong on Schedule C instead, which can bring self-employment tax.
Using it yourself
If you use the property personally for more than 14 days or 10% of the days it's rented (whichever is more), it's treated partly as a vacation home, and your deductions are limited to the rental share.
Example
Guests stayed 4 nights on average, and you handle the cleaning and bookings yourself → the 7-day rule may let a paper loss lower the tax on your other income. Your CPA confirms whether you qualify.
Short-term rentals also have local rules: occupancy taxes, permits and limits vary by city. Check yours.
Tethered Properties does this for you
Tethered Properties keeps each property's income and expenses separate and flags the judgment calls for your CPA, so the 7-day question comes with the numbers already in hand.
This guide is general information for rental owners, not tax advice. Tax rules change and every situation is different; your CPA or tax advisor knows your full picture. Figures are estimates.