Who We Help · Real Estate · Short-Term Rentals
US short-term rentals: don’t let Airbnb send 30% of your payouts to the IRS.
Airbnb and Vrbo withhold 30% of every payout from Canadian hosts with US listings — unless you file Form W-8ECI and commit to a US return. Add occupancy taxes, the 7-day rule, and self-employment tax traps, and short-term rentals are the most misfiled property type we see. All of it is fixable.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
First: stop the platform withholding
Without a W-8ECI on file (which requires a US tax ID and a commitment to file a 1040-NR), Airbnb and Vrbo remit 30% of your gross payouts to the IRS. Hosts who never file a US return never see that money again. We obtain the ITIN, file the W-8ECI, and recover what's recoverable on the return.
Schedule E or Schedule C? The two tests people mix up
The 7-day rule: if your average stay is 7 days or less, the IRS doesn't treat it as a "rental activity" — which can let active hosts use losses against other income (the "STR loophole"). But Schedule C vs E turns on a different test: substantial services. Daily cleaning during stays, meals, concierge — that's Schedule C and 15.3% self-employment tax. Cleaning between guests only — Schedule E, no SE tax, even with short stays. Getting these two tests confused is how hosts overpay (or underfile).
Occupancy taxes are yours even when "Airbnb handles it"
| State | Lodging taxes on stays | What platforms actually collect |
|---|---|---|
| Florida | 6% state sales tax + county tourist tax 1–6% | State yes; many county taxes NOT collected — host registers and remits |
| Arizona | TPT: 5.5% state lodging + county + city (e.g., Scottsdale 1.75%) | Platforms remit on marketplace bookings; host still needs the TPT license |
| Texas | 6% state hotel tax + local hotel taxes | Varies by city — check each listing market |
Depreciation just got better
With 100% bonus depreciation now permanent for property acquired after January 19, 2025, a cost segregation study on a US short-term rental can front-load major deductions. For cross-border owners the timing needs care — big US losses have no immediate Canadian credit value, so we plan both sides together.
The Canadian side
Rented US property generally loses the T1135 personal-use exemption — if your foreign property cost tops CAD $100,000, T1135 is due. Net income is reported in CAD with a foreign tax credit; at sale, the FIRPTA process applies just as it does to long-term rentals.
Sources: Airbnb — US income tax withholding · Arizona DOR — short-term lodging.
Common questions.
Airbnb already took 30% last year. Is it gone?
Usually not — file a 1040-NR with the net election and the withholding becomes a credit against your actual tax; the excess comes back as a refund.
Do I owe Canadian CPP or US self-employment tax on my STR?
If your operation crosses into Schedule C territory, coordination under the Canada-US totalization agreement matters — this is exactly the kind of two-country question to ask before filing, not after.
My property is in Florida. Which taxes apply?
Florida has no state income tax, but transient stays carry 6% state sales tax plus a county tourist development tax — and Airbnb does not remit every county\u2019s tax. We check your specific county.
Related reading
Host on your terms, not the IRS’s.
Book a consultation and get a plain answer on exactly what applies to you.