VRBO Host Taxes in Virginia - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Virginia

Virginia’s rich history and beautiful landscapes, from the beaches of Virginia Beach to the mountains of Shenandoah, make it a popular destination for travelers, creating opportunities for successful VRBO hosts. However, alongside the rewards of sharing your property comes the responsibility of understanding and fulfilling tax obligations. Rental income is subject to taxation at both the federal and Virginia state levels, and proper record-keeping is crucial for maximizing deductions and ensuring compliance.

Virginia State Tax Rules for Rental Income

As a resident of Virginia, filing a state income tax return is required regardless of income level. Virginia operates under a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Virginia’s income tax rates are expected to remain consistent with prior years, ranging from 2% to 5.75% based on income brackets. Rental income reported on Schedule E of your federal tax return will also be reported on Virginia Form 540, the state’s individual income tax return. Specifically, the rental income will be included as part of your overall adjusted gross income (AGI) calculation. It’s important to note that Virginia does not allow a deduction for federal taxes paid, which differs from some other states. Furthermore, Virginia has specific rules regarding the allocation of expenses between personal and rental use if the property is also used for personal enjoyment. Accurate record-keeping of rental days versus personal days is essential for correctly calculating deductible expenses. The Virginia Department of Taxation provides detailed guidance on rental income and deductions; resources can be found at the Virginia Department of Taxation website. Failure to accurately report rental income and claim eligible deductions could result in penalties and interest. Consider consulting with a qualified tax professional to ensure full compliance with Virginia 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. The IRS classifies rental activities differently, impacting your tax liability.

• 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 Virginia 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 for both rental and personal purposes, you must allocate these expenses based on the percentage of time the property is rented.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items, professional cleaning, and supplies. Routine maintenance is deductible, while significant 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. Depreciation is calculated over 27.5 years for residential rental property.