VRBO Host Taxes in Maine - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Maine

Maine’s stunning coastline and picturesque inland areas make it a popular destination for vacationers, creating a thriving short-term rental market. Revenue generated from your VRBO property is considered taxable income by both the federal government and the State of Maine. Understanding these tax obligations is crucial for compliance and maximizing potential deductions.

Maine State Tax Rules for Rental Income

As a resident of Maine earning income from a VRBO property, filing a Maine state income tax return is required, regardless of the amount of rental income received. Maine operates under a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year (filed in 2026), Maine residents will utilize Form 1040ME, along with Schedule SE (Self-Employment) if reporting income on Schedule C, or Schedule E if reporting passive rental income. The Maine Revenue Services provides detailed information and forms on their website: Maine Revenue Services. Rental income is generally reported as either business income (Schedule C) or passive rental income (Schedule E), impacting how it’s taxed at the state level. Maine also allows for certain deductions mirroring federal rules, such as property taxes and mortgage interest, which can reduce your overall state tax liability. It’s important to accurately track all income and expenses throughout the year to ensure proper reporting. Furthermore, Maine’s rules regarding sales tax on short-term rentals are evolving; currently, rentals under 30 days are generally subject to Maine’s sales tax (currently 5.5%), and hosts are responsible for collecting and remitting this tax to the state. Staying updated on these regulations is vital, as penalties can apply for non-compliance. Consulting with a Maine-based tax professional is highly recommended to navigate the complexities of state and local tax laws.

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 providing a space for rent.
• Schedule C (Active Business Income): However, if you provide "substantial services" (daily cleaning, meals, providing toiletries beyond basic soap, concierge services), you report on Schedule C and must pay the 15.3% self-employment tax. This is because the IRS considers this an active business, not just a rental.

Top Tax Write-offs for Maine Hosts

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible. These are considered expenses directly related to generating rental income.
• Mortgage Interest & Property Taxes: Deduct the portion corresponding to the rental space and period. If the property is used both personally and as a rental, you’ll need to allocate these expenses accordingly.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items (leaky faucets, broken appliances), professional cleaning, and cleaning supplies. Routine maintenance is deductible; improvements that add value to the property are depreciated.
• Depreciation: A powerful but complex deduction for wear and tear on your property. Often requires a tax professional to calculate correctly. This allows you to deduct a portion of the property's cost over its useful life.