VRBO Host Taxes in New York - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in New York

From the bustling streets of Manhattan to the serene landscapes of the Catskills, New York’s short-term rental market offers unique opportunities for property owners. However, income earned through platforms like VRBO is subject to both federal and New York State taxes, requiring careful record-keeping and understanding of applicable regulations. This guide provides an overview of the tax implications for VRBO hosts in New York for the 2025 tax year.

New York State Tax Rules for Rental Income

As a resident of New York, filing a state income tax return is mandatory, regardless of income level. New York operates on a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, New York residents reporting income from VRBO rentals will primarily utilize Form IT-201, Resident Income Tax Return, to report their earnings. If your rental activity is considered a business (see section 2), you may also need to file Form IT-201-B, Unincorporated Business Income Tax Return. Rental income is generally considered taxable income, and you must report it on your state return. New York also allows deductions similar to those at the federal level, such as mortgage interest, property taxes (subject to the SALT cap – see federal section below), and depreciation. It’s crucial to accurately calculate the percentage of your property used for rental purposes to determine the deductible portion of these expenses. New York also has specific rules regarding sales tax collection on short-term rentals, particularly in certain localities. Hosts should verify local requirements for sales tax registration and remittance. Failure to comply with New York State tax laws can result in penalties and interest. For detailed information and the latest updates, please refer to the New York State Department of Taxation and Finance: https://www.tax.ny.gov/

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

This is the most important tax question for a 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. Providing amenities like toiletries, basic cable, or Wi-Fi generally doesn’t trigger Schedule C reporting.
• Schedule C (Active Business Income): However, if you provide "substantial services" (daily cleaning, meals, concierge services, actively marketing the property as more than just lodging), you report on Schedule C and must pay the 15.3% self-employment tax. The IRS looks at the degree of services provided. A high level of guest interaction and service provision points towards a business.

Top Tax Write-offs for New York Hosts

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible. These are reported as expenses on Schedule E or C, depending on your classification.
• Mortgage Interest & Property Taxes: Deduct the portion corresponding to the rental space and period. For example, if your property is rented 50% of the year, you can deduct 50% of your mortgage interest and property taxes. Remember the federal SALT (State and Local Tax) deduction limit of $10,000.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items (leaky faucets, broken appliances), professional cleaning, and supplies. Improvements that add value to the property are generally capitalized and depreciated, not deducted immediately.
• Depreciation: A powerful but complex deduction for wear and tear on your property. It allows you to deduct a portion of the property's cost over its useful life. Often requires a tax professional to calculate correctly.