United States: Tax Implications of the Sharing Economy - Special Rules for Home Rentals

If you use online platforms to rent a spare bedroom, lawnmower, car or bicycle; or to provide car rides or dog walks; or to connect and deliver other goods or services, you are involved in what is sometimes called the sharing economy.

With an explosion of technological advances and a trend toward a sharing economy, the way the average consumer transacts business on a day-to-day basis is forever evolving. Airbnb, as well as companies like Uber and Lyft, have changed the way we travel, while services such as Letgo and Poshmark, following in the footsteps of pioneers like eBay, have transformed the manner in which we buy, sell and share products. You can even rent out the family minivan for a day with apps like Turo. 

Perhaps the biggest winners of the sharing economy revolution are short-term vacation rental services such as Airbnb, HomeAway and VRBO (Vacation Rentals by Owner). With these services, individuals rent out their homes, or individual rooms within their homes, to travelers and vacationers. These services provide what is essentially a win-win for each party involved: Renters get an opportunity to vacation "like a local" and homeowners get a chance to make some extra money.

While the simplicity and value of these services may be appealing, homeowners renting their properties, in particular, should plan for an additional, and frequently unexpected, houseguest: Uncle Sam. Homeowners utilizing short-term vacation rental administrative services are often unaware that there are tax implications involved in the renting of their personal or vacation home. The IRS has recently launched a sharing economy resource center specifically dedicated to providing assistance to taxpayers in identifying resources needed to help them in meeting their tax reporting responsibilities. Now, more than ever, it is imperative to follow tax reporting rules, as we believe the IRS will start target examinations of tax returns reporting this type of activity.

Below are some guidelines for individuals who may be looking to rent out their property through Airbnb or other similar online platforms.

General Rental Rules

In general, income received from the rental of real property (i.e., real estate) is taxable. Taxpayers are also generally entitled to report appropriate expenses, which are used to offset the income received in a given tax year. Common expenses include mortgage interest, real estate taxes, repairs and maintenance, depreciation and utilities.

Rental of Residences and Vacation Homes

Most taxpayers, especially those utilizing services such as Airbnb and VRBO, are not renting out a property that is strictly used for rental purposes, but rather are renting out their personal residence or a vacation home. Rental properties, for tax reporting purposes, generally fall into three categories:

  • Personal Residence with Very Limited Rental Use: This is a residence that is rented for fewer than 15 days during the year. In order to qualify as a residence, the property must be used for personal purposes for more than the greater of 14 days or 10 percent of the rental days during the year. If the property qualifies as a residence and is rented for fewer than 15 days during the year, you are not required to report the rental income. Similarly, the expenses, other than qualified mortgage interest, property taxes and any qualified casualty loss, are not reportable. Otherwise known as the "15-day exception," this rule is extremely beneficial for those looking to rent out their home, or a portion thereof, through Airbnb and similar platforms for a week or two during the year.
  • Vacation Home with Both Rental and Personal Use: This is a property with (a) personal use that exceeds the greater of 14 days or 10 percent of the rental days and (b) rental use that exceeds 14 days. In accordance with IRS rules, income from these properties must be reported on the taxpayer's income tax return and allowable expenses are prorated based on the ratio of the rental use of the property to the total days used during the year. Courts, however, may use the "number of days in the year" rather than "days used during the year." For those participating in the sharing economy, IRS rules may yield greater tax deductions.
  • Rental Property with Very Limited Personal Use: This is a property that is rented during the year in which personal use does not exceed the greater of 14 days or 10 percent of the rental days. Income from these properties are also required to be reported on the taxpayer's income tax return, with allowable expenses prorated to remove the portion attributable to personal use.


While the sharing economy continues to gain prevalence in the United States, it has also caught the ever-watchful eye of the IRS. With increasing IRS focus, taxpayers should be very diligent in their compliance with such rules and regulations.

There are two primary tips that taxpayers should consider when renting out properties through a short-term vacation rental service. First, and most importantly, is recordkeeping. It is imperative that landlords maintain clear and supportive records, including the maintenance of receipts, for all income and expense items incurred and/or paid during the year. Second, individuals should maintain a log in order to track rental and personal use days associated with any property. This is particularly critical for those who utilize Airbnb or similar platforms for a few weekends or a week during the year and wish to qualify for the "15-day exception."

In addition to federal and state income tax considerations, some jurisdictions impose occupancy taxes based on gross revenue. To complicate matters further, tax rates and methodologies differ by locality. Vacation homes are often located in a jurisdiction other than the taxpayer's home state or locality, and rental income generated in those jurisdictions may trigger additional tax filing responsibilities.

For Further Information

If you would like more information about this topic or your own unique situation, please contact Kevin F. Ward, CPA, CSEP, or any of the practitioners in the Tax Accounting Group.

For Further Information

If you would like more information about this topic or your own unique situation, please contact Kevin F. Ward, CPA, CSEP, or any of the practitioners in the Tax Accounting Group.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions