Legal Matters & Taxes Airbnb Fees Investment Property Owners Should Know About by Diala Taneeb September 24, 2016January 28, 2019 by Diala Taneeb September 24, 2016January 28, 2019 If you have an Airbnb investment property, there are Airbnb fees to be aware of and include when calculating costs and cash flow. In addition, there are guest fees you should know about, in order to have a better understanding of what your customer is paying, about the options available to protect yourself and your property, and how to avoid legal consequences. We did some research on Airbnb’s website and created a quick checklist. Make sure to get more details by visiting Airbnb’s Help Center and consulting financial advisors. Related: 5 Ways To Create A Positive Cash Flow Income Property 1. Host and Guest Service Fees Each time a reservation is booked, Airbnb deducts a 3% host service fee from the subtotal, which is before taxes and fees. Keep in mind the fees are rounded to the nearest dollar. Be sure to deduct this Airbnb fee from your income when calculating expenses. There’s also a guest service fee which guests pay, and this can range from 6-12%. The higher the subtotal amount, the less tax is charged. These fees cover the costs of running Airbnb. 2. Not Exactly Airbnb Fees . . . Taxes You might have to pay income tax on your Airbnb income. This may require filling out a W-9 form. Airbnb could collect taxpayer information to help with this process, for both US taxpayers and non-taxpayers. Fortunately, Airbnb will issue a Form 1099-K to hosts who make over $20,000 and have more than 200 reservations. Airbnb will also issue forms to non-US citizens, whether they have a US Taxpayer Identification Number or not. Check out Ernst & Young’s guide on the taxation of rental income from Airbnb. The good news is that the guide also includes information on tax-deductibles like mortgage payments, maintenance, insurance, etc. Be sure to take a look at the guide and consult an expert so that you can follow the laws while taking advantage of tax benefits. Depending on where you live, there is a local tax that has to be paid on rentals – this is known as occupancy tax, but can also be referred to as lodging tax, room tax, sales, tourist tax, or hotel tax. This tax is owed on providing accommodations and other chargeable services, like cleaning or hosting extra guests. The guest pays this tax but the host is responsible for transmitting the payment. In some cities, Airbnb collects and transmits this tax on behalf of the host. Otherwise, the host has to collect it on their own by including it in the nightly rate or in the Special Offer, which is a feature that allows hosts to create custom prices for guests which sent a booking inquiry. It can also be collected in person but should be done as soon as the guest arrives. Keep in mind, it’s usually better to do these kind of transactions using Airbnb’s website so that you can seek help when needed. Hopefully Airbnb will get to a point where it is able to collect and remit taxes for hosts in all cities. 3. Airbnb Fees That Help Hosts There are certain fees that shouldn’t make hosts frown! A security deposit is a way for hosts to protect themselves and their properties if something should go wrong during a guest’s stay. The amount is totally subjective to the host. Should the host need to make a claim on the security deposit, they only have 48 hours to do so after check-out. The cleaning fee is also for hosts to charge guests on a one-time basis to cover the cost of turnover. This can especially be convenient if you use a cleaning service. Related: How do I price my Airbnb property? These Airbnb fees are important to those who have Airbnb investment properties because they should be assessed when thinking about costs, pricing strategies, Airbnb occupancy rate, and more. More importantly, it’s better have everything legal when investing because disobeying the law could lead to losing the investment all together. Use Mashvisor’s investment property calculator and enter these Airbnb fees in the “Other” cell to get a better idea about returns and costs. Related: Investment Property Calculator For Analyzing Real Estate Investments Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL AirbnbAirbnb Host 0 FacebookTwitterGoogle +PinterestLinkedin Diala Taneeb Diala is among the most experienced content marketers at Mashvisor. She loves writing about everything real estate including investment strategies, how to buy a profitable rental property, and the best locations for investing in real estate. Previous Post 8 Real Estate Market Trends in 2016 Next Post How to Find a Real Estate Agent for Investment Properties Related Posts The War on Airbnb New York 2018 What is Encroachment in Real Estate? What You Need to Know About Airbnb Miami Regulations in 2019 The Investor’s Guide to NYC Airbnb Rules The Tax Benefits of Real Estate Investments Rent Control and How It Affects Your Real Estate Investment 10 Major Risks of Real Estate Investing and How to Reduce Them Ethics in Real Estate: What Real Estate Investors Need to Know in 2021 When to Hire a Real Estate Attorney New Tax Day 2020: What Real Estate Investors Need to Know All You Need to Know About San Antonio Airbnb Laws 4 Types of Real Estate Contracts: A Beginner’s Guide Leave a Comment Cancel Reply Save my name, email, and website in this browser for the next time I comment.