VRBO Host Taxes in Boston, Massachusetts - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Boston, Massachusetts

Boston’s vibrant tourism, fueled by historical landmarks and world-class events, creates a strong demand for short-term rentals. However, successfully hosting on VRBO also means understanding the tax implications of your rental income. Rental income is taxable at both the federal and Massachusetts state levels, and proper reporting is crucial to avoid penalties.

Massachusetts State Tax Rules for Rental Income

As a resident of Massachusetts earning income from a VRBO property in Boston, you are required to file a Massachusetts state income tax return. Massachusetts operates under a flat income tax rate, currently 5.0% for the 2025 tax year. This applies to all income, including rental income. The primary form for reporting self-employment income, including rental income reported on Schedule E or Schedule C at the federal level, is Form MA-1040, Massachusetts Income Tax Return. You will need to report your net rental income (gross rental income less allowable expenses) on this form.

Massachusetts also requires the filing of Schedule SE (Self-Employment Tax) if your rental activity is considered a business (reported on Schedule C at the federal level). Even if you don't owe any state tax, you generally must file if your gross income exceeds certain thresholds. Keep meticulous records of all income and expenses related to your Boston VRBO property. Consider the unique challenges of operating a short-term rental in a city environment, such as potential parking restrictions impacting guest access and the need for frequent cleaning due to high occupancy rates. Boston also has specific local regulations regarding short-term rentals; ensure compliance with these rules as non-compliance can lead to fines and impact your tax obligations. The Massachusetts Department of Revenue provides comprehensive information and resources for taxpayers. You can find more information at Massachusetts Department of Revenue.

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. Essentially, if you're simply making a space available for rent, Schedule E is likely appropriate.
• 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 passive rental.

Top Tax Write-offs for Boston, Massachusetts 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, professional cleaning, and supplies. In Boston, where properties can be older, maintenance costs may be higher.
• Depreciation: A powerful but complex deduction for wear and tear on your property. Often requires a tax professional. This allows you to deduct a portion of the property's cost over its useful life.