VRBO Host Taxes in South Carolina - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in South Carolina

The Palmetto State’s welcoming hospitality extends to short-term rentals, but success as a VRBO host requires understanding the associated tax obligations. Income earned through VRBO and similar platforms is generally taxable at both the federal and South Carolina state levels. Proper record-keeping and understanding of applicable deductions are crucial for maximizing profitability and ensuring compliance.

South Carolina State Tax Rules for Rental Income

As a resident of South Carolina earning income from a VRBO property, filing a state income tax return is required. South Carolina operates under a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, income from your VRBO activity will be reported as part of your overall adjusted gross income. South Carolina does not have a specific form dedicated solely to rental income; instead, the income is integrated into the standard individual income tax return. The primary form for self-employed individuals and those with business income, including rental income reported on Schedule E at the federal level, is Form SC1040. This form is used to calculate your South Carolina income tax liability. It’s important to note that South Carolina generally conforms to federal tax laws, meaning deductions allowed at the federal level are typically also allowed at the state level, but always verify current regulations. Additionally, local accommodations taxes (hotel/motel taxes) may apply depending on the county and municipality where your rental property is located. These taxes are collected and remitted separately, often through the platform itself, but hosts are ultimately responsible for ensuring compliance. Keep detailed records of all income and expenses related to your VRBO activity to accurately report your tax liability. For the most up-to-date information and forms, please visit the South Carolina Department of Revenue website: https://www.sc.gov/revenue.

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. Think of it as simply renting out a space.
• 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 treated as running a small bed and breakfast.

Top Tax Write-offs for South Carolina Hosts

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible. These are considered expenses incurred to generate 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 must allocate these expenses accordingly.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items, professional cleaning, and supplies. Routine maintenance is deductible; major improvements that increase the property's value are generally 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.