VRBO Host Taxes in Los Angeles, California - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Los Angeles, California

The vibrant Los Angeles rental market, fueled by tourism and entertainment industry professionals, presents a lucrative opportunity for VRBO hosts. However, alongside the income comes the responsibility of accurate tax reporting. Rental income generated through platforms like VRBO is taxable at both the federal and California state levels, requiring careful record-keeping and understanding of applicable tax laws.

California State Tax Rules for Rental Income

As a resident of California, even if your VRBO property is located elsewhere, you are required to file a California state income tax return. California operates on a graduated tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, the primary form for reporting self-employment income, including rental income treated as business income, is Form 540. Rental income reported on Schedule E will also flow to Form 540. California closely follows federal guidelines regarding deductible expenses, but it’s crucial to be aware of state-specific nuances. For example, California has specific rules regarding the deductibility of property taxes, particularly with Proposition 13 limitations. Furthermore, Los Angeles has unique considerations for short-term rentals, including potential city-level registration requirements and restrictions on the number of days a property can be rented. Staying compliant with these local regulations is essential to avoid penalties. The California Franchise Tax Board (FTB) provides detailed information and resources for taxpayers; access their website at https://www.ftb.ca.gov/. Remember to factor in potential state and local taxes, including sales tax if applicable (depending on the specific Los Angeles regulations for short-term rentals), when calculating your overall tax liability. Parking, a significant concern in Los Angeles, may also generate deductible expenses related to providing parking for guests. Accurate tracking of all income and expenses is paramount for a smooth tax filing process.

The Critical Tax Question: Are You a Business or a Rental?

This is the most important tax question for a VRBO host, as it determines if you owe self-employment tax.

• Schedule E (Passive Rental Income): Most casual hosts report on Schedule E (Passive Income) and are exempt from Self-Employment Tax. This applies if you only provide basic lodging and cleaning between guests. Think of it as simply renting out a space.
• Schedule C (Active Business Income): However, if you provide "substantial services" (daily cleaning, meals, concierge services, providing toiletries beyond basic soap), you report on Schedule C and must pay the 15.3% self-employment tax. This is treated as running a lodging business.

Top Tax Write-offs for Los Angeles, California Hosts

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible.
• Mortgage Interest & Property Taxes: Deduct the portion corresponding to the rental space and period. If the property is used for both personal and rental purposes, you must allocate these expenses accordingly.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items (leaky faucets, broken appliances), professional cleaning, and supplies. Routine maintenance is deductible; improvements that increase the property's value are depreciated.
• Depreciation: A powerful but complex deduction for wear and tear on your property. Often requires a tax professional to calculate correctly. This applies to the building itself and certain furnishings.