Short-term rental income needs to be tracked at the gross level, not the net payout you receive from Airbnb or VRBO. This distinction matters because platform fees are a deductible expense, and recording only the net amount means you’re understating both your income and your expenses.

When a guest pays $500 for a two-night stay and Airbnb takes $75 in host fees, you have $500 in gross rental income and $75 in platform fees expense. Your books should reflect both. The same applies to cleaning fees collected from guests. If you charge $150 for cleaning and pay a cleaner $120, you’re recording $150 as additional income and $120 as a cleaning expense.

Separate your income and expenses by property if you own more than one rental. Your accountant needs to see profitability by property, not just in aggregate. Most accounting software lets you track this using classes, locations, or projects. Set this up from the start because going back to separate years of mixed transactions is tedious and expensive.

San Diego has specific requirements for short-term rentals including the Transient Occupancy Tax, which is currently 10.5%. You collect this from guests and remit it to the city. Some platforms collect and remit TOT automatically for California listings, but not all do, and direct bookings definitely require you to handle it yourself. Track what’s been collected and what you owe separately from your rental income. This is a liability on your books until you pay it.

Common expenses to track include cleaning between guests, supplies like toiletries and linens, repairs and maintenance, property management fees if you use a manager, insurance, utilities, HOA fees, mortgage interest, and property taxes. If you’re furnishing or renovating the property, those costs may need to be capitalized and depreciated rather than expensed immediately. A working with a San Diego bookkeeping service familiar with rental properties helps you categorize these correctly from the start.

How the IRS treats your rental income depends on average guest stay length and your level of involvement. If the average stay is seven days or less, you’re typically running a rental business reported on Schedule C, which means self-employment taxes apply. Longer average stays usually mean passive rental income on Schedule E. The tax treatment affects both how you file and which deductions are available to you.

Connecting your booking platforms to your accounting software can automate some of this, but you’ll still need to review the imports and make sure gross income and fees are being recorded correctly. Many platforms export data in ways that require cleanup before it’s useful for bookkeeping.

The goal is clean records that show your true revenue, every deductible expense, and accurate profit by property. This makes tax prep straightforward and gives you real numbers to evaluate whether each rental property is actually worth keeping. Getting the structure right when you start a property saves hours of cleanup work down the road.