VRBO Host Taxes in Dallas, Texas - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Dallas, Texas

Dallas’ vibrant tourism scene, fueled by events at the Kay Bailey Hutchison Convention Center and a thriving arts district, makes it a prime location for short-term rentals. However, generating income through platforms like VRBO means navigating federal and Texas state tax obligations. Rental income is generally taxable, and understanding the rules is crucial for compliance and maximizing deductions.

Texas State Tax Rules for Rental Income

The big perk in the Lone Star State is no personal income tax. However, be aware of the Texas Franchise Tax. While it has a high threshold (over $1.2 million in revenue) that rarely applies to solo gig workers operating a VRBO, it's a key part of the state's business tax structure. As a VRBO host, your rental income is still subject to scrutiny regarding sales tax, particularly if you're operating in a city like Dallas that has implemented hotel occupancy taxes on short-term rentals. Dallas specifically requires registration and remittance of these taxes, and the rules can be complex depending on the location and length of stay. Failure to comply with Dallas’ local occupancy tax regulations can result in penalties. It’s essential to check the City of Dallas’ website for the most up-to-date information on registration, collection, and remittance requirements. Furthermore, while Texas doesn’t have a state income tax, the IRS still requires reporting of all income, and the lack of state income tax doesn’t affect federal obligations. Keep meticulous records of all income and expenses, as the IRS may request documentation to verify your reported figures. Consider the impact of local regulations regarding parking availability for guests in popular Dallas neighborhoods; any costs associated with providing parking solutions could potentially be deductible. For comprehensive information on Texas taxes, visit the Texas Comptroller of Public Accounts website.

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, this is likely passive income.
• 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 considered an active business, not just a rental.

Top Tax Write-offs for Dallas, Texas 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 supplies. Routine maintenance to keep the property in good condition is deductible.
• 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.