Oh No, Taxes! What Airbnb Owners Really Need (and What They Don’t) for Tax Season

If this is your first year renting out your property, tax season can feel overwhelming. Between rental income, cleaning fees, and cohost payments, it is easy to get confused. This guide explains what you can expect, how taxes generally work, and how to keep your books organized. We are not tax advisors or CPAs, so always consult a professional for guidance specific to your situation.

Who Does What? Cohosting vs. Property Managers

Understanding your management structure is the first step to organizing your finances for tax season.

Cohosts

• Typically handle guest communications, check-ins, and minor coordination.
• May collect income directly from Airbnb and remit your portion after expenses (although uncommon).
• Often charge a percentage of your rental income as a fee.
• Typically, use authorized payment methods for expenses or include charges as "bill backs" alongside cohosting income.

Property Managers

• Handle all aspects of the rental, including maintenance, marketing, bookings, and crucially, financial reporting.
• Often receive the full income, pay expenses on your behalf, and remit net revenue to you.
• May have more formal agreements and reporting than a typical cohost.
• Holds rent in trust, collects security deposits and handles much of the financial picture for property owners.

Knowing which setup you have is important because it affects how income and expenses are tracked and reported.

How Taxes Are Typically Treated

1. Owner-Paid Expenses

If you pay for cleaning, repairs, supplies, or utilities directly:

• The money is yours.
• These expenses can often be deducted by you on Schedule E if you itemize.
• You do not receive tax forms from the cohost for these expenses. Keep receipts for your records.

2. Income Collected and Expenses Paid by Your Cohost or Manager

If your cohost or property manager collects income and pays expenses for you:

• They should provide an annual summary that includes:
  • Total income collected
  • Itemized expenses paid on your behalf (important for your Schedule E)
  • Your management or cohosting fees
  • Net distribution sent to you
• This summary is intended to help your CPA prepare Schedule E.
• Only your management fees are reportable to you for 1099 purposes if the payment exceeds $600.

3. Mixed or Hybrid Scenario

Some owners have a combination of owner-paid and manager-paid expenses. In this case, a clear report will separate:

• Expenses you paid directly
• Expenses paid by the cohost or manager
• Management or cohost fees
• Net distributions

This ensures your records are accurate and easy for your CPA to use. Importantly, the IRS will expect that anything you paid for in your account that you have the accounting trail for this. If your cohost or manager makes payments on your behalf with your banking, make sure you have good expense management in terms of receipts!

Expense Management Tips for Owners

Keeping expenses organized is key to smooth tax filing. Here are some practical tips:

1. Keep receipts and invoices for every transaction. Whether you pay directly or your cohost pays for you, records matter. Having monthly statements and clear receipts can make or break you at tax time.
2. Categorize expenses: Common categories include cleaning, repairs, supplies, utilitiesuo, insurance, and software fees.
3. Track income separately from expenses: Your rental income and your cohost’s payments should be clearly distinguishable.
4. Use a reliable bookkeeping system: Tools like Baselane make it easier to track income, expenses, and receipts in one place.
5. Regularly reconcile accounts: Don’t wait until tax season to catch missing receipts or miscategorized expenses.

Top Bookkeeping Resources

Here are a few ways to simplify your accounting:

• Baselane – Designed for small business owners and real estate operators. Tracks income, expenses, and receipts in one place with banking built in.
• QuickBooks Online – Widely used for managing rental income and categorizing expenses.
• Google Sheets / Excel – Simple and free for owners who prefer manual tracking.

Tip: Use whichever system allows you to generate reports by property, category, and month. This will make tax season much easier.

Key Takeaways

• Know whether you have a cohost or property manager, because this affects how income and expenses are tracked.
• Keep clear records of all expenses, regardless of who paid for them.
• Use bookkeeping tools to keep reports organized, categorized, and easily accessible.
• Your cohost or property manager will provide summaries for tax reporting, but you are ultimately responsible for reporting income and expenses correctly.
• Always work with a CPA or tax professional for final guidance on deductions and reporting.

With the right organization and documentation, tax season can be much less stressful. Your cohost or manager is there to make things easier, but your professional tax advisor is your ultimate guide.

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