Vacation rental taxes in Virginia come in two layers you have to handle at the same time: a state retail sales tax on any stay shorter than 90 continuous days, and a local transient occupancy tax that most counties and cities impose on stays shorter than 30 days. Both apply to the full amount the guest pays, and both require you to register and file on a set schedule before your first booking goes live. On top of that, the IRS treats the rental income as reportable on your federal return unless a narrow 14-day exception applies.
The Two Taxes You Collect From Guests
Virginia treats a short-term rental as a taxable accommodation sale. The state retail sales and use tax applies to any rental of a room or lodging that lasts fewer than 90 continuous days. Once a single guest stays 90 days or longer without interruption, that stay becomes exempt, and you can refund any sales tax already collected and deduct those charges on your next return to the Department of Taxation.1Virginia Code Commission. 23VAC10-210-730 Hotels, Motels, Tourist Camps, Etc.
The local transient occupancy tax works on a tighter clock. For counties, it applies only to stays shorter than 30 consecutive days.2Virginia Code Commission. Virginia Code 58.1-3819 – Transient Occupancy Tax That gap trips up hosts who take medium-term bookings. A guest staying six weeks still owes you state sales tax but typically owes no local occupancy tax. Track the two thresholds separately on every reservation.
What Rate to Charge
Virginia’s combined state and local sales tax starts at 5.3 percent across most of the Commonwealth. That figure is a 4.3 percent state levy under the retail sales and use tax plus a 1 percent local tax collected with it.3Virginia Code Commission. Virginia Code 58.1-603 – Imposition of Sales Tax4Virginia Code Commission. Virginia Code 58.1-606 – Local Use Tax Several regions sit higher:
- 6 percent in Northern Virginia, Hampton Roads, and Central Virginia (including Richmond City, Henrico, and Chesterfield).
- 6.3 percent in parts of Southside Virginia, including Charlotte County, Danville, Halifax County, Henry County, and Pittsylvania County.
- 7 percent in the Historic Triangle: James City County, Williamsburg, and York County.
The rate applies to the whole amount the guest pays, not the nightly rate alone. Cleaning fees, pet fees, and any other mandatory charges are part of the taxable total.5Virginia Tax. Retail Sales and Use Tax A host in Virginia Beach charging $200 per night with a $150 cleaning fee collects 6 percent on the full amount. Leaving fees out of the base is one of the fastest ways to come up short at filing time.
Local Transient Occupancy Tax
Counties and cities set their own transient occupancy tax independently. Counties draw their authority from Virginia Code § 58.1-3819, while cities and towns with general taxing charters draw theirs from § 58.1-3840.6Virginia Code Commission. Virginia Code 58.1-3840 – Certain Excise Taxes Permitted Rates range from around 2 percent in quieter jurisdictions to 8 or 10 percent in heavy tourism areas. When a county sets the rate above 2 percent, some of the excess must be earmarked for tourism promotion.2Virginia Code Commission. Virginia Code 58.1-3819 – Transient Occupancy Tax
Because this layer is administered locally, there is no central rate table that will serve you. Call or email your county or city commissioner of the revenue to confirm the current rate, the filing schedule, and whether a separate local business license is required before you take guests. Many localities require one, and the local registration is wholly separate from anything you file with the state.
Registering Before You Accept a Booking
Register with the Virginia Department of Taxation by filing Form R-1, the Business Registration Application, before you collect any tax. The form asks for a Federal Employer Identification Number (or your Social Security Number if you operate as a sole proprietor) and the legal name of the business.7Virginia Department of Taxation. Business Registration Form The physical address of the rental decides which district and regional rate apply to you, so get it right. Most hosts file R-1 online through the Virginia Tax website.
Local registration is its own step. Many counties and cities require a business license, a zoning permit, or both, and some require annual renewal. Checking with the local commissioner of the revenue early keeps a confirmed booking from becoming an illegal one.
When the Platform Collects for You
Virginia law treats Airbnb, Vrbo, and similar services as “accommodations intermediaries.” The platform is treated as the dealer making the sale and is required to collect and remit the state sales tax on the room charge.8Virginia Code Commission. Virginia Code 58.1-612.2 – Tax Collectible From Accommodations Providers and Intermediaries Platforms are also required to collect and remit the local transient occupancy tax and file by the 20th of the following month.9Virginia Code Commission. Virginia Code Article 6 – Transient Occupancy Tax
You are still personally liable for tax on anything you charge the guest outside the platform. A damage deposit, an early check-in fee, or a side-payment upgrade all carry the tax, and you owe it.8Virginia Code Commission. Virginia Code 58.1-612.2 – Tax Collectible From Accommodations Providers and Intermediaries Review your payout statements now and then to confirm the platform is applying the correct rate to your property; miscategorized locations do happen, and you are the one who knows the address.
Filing and Remitting
File state sales tax returns through the Virginia Tax Online Services portal. Beginning with the April 2025 filing period, Virginia replaced Form ST-9 with a consolidated Form ST-1 for all sales tax filers.5Virginia Tax. Retail Sales and Use Tax You report gross rental receipts, apply the combined rate for your location, and pay electronically. The Department of Taxation assigns you a monthly or quarterly schedule based on your liability.
Local transient occupancy returns go to the local treasurer or commissioner of the revenue on the locality’s own schedule. They are not part of your state return, and filing one while forgetting the other is a frequent first-year mistake.
Keep tax records for at least three years from the later of the return’s due date or the date you actually filed.10Virginia Tax. Recordkeeping Requirements for Businesses Four or five years is safer in practice. Keep booking confirmations, payout statements, cleaning receipts, and guest correspondence organized by tax period so an audit later is a sorting exercise rather than a reconstruction.
Penalties for Late Filing or Nonpayment
Sales tax you collect from a guest is held in trust for the Commonwealth. It was never your money. A penalty of 6 percent per month applies to any unpaid balance, capping at 30 percent of the tax owed, and even a late return with no tax due triggers a minimum penalty. Interest accrues daily on top of that.
Hosts who never register at all face deeper exposure. The Department of Taxation can assess back taxes for the entire period the rental operated unreported, plus the stacked penalties and interest, and the final bill can easily exceed the income the rental earned over that stretch. Filing on time with small numbers is the cheapest protection available.
Federal Income Tax on the Same Income
The IRS requires you to report rental income on Schedule E of Form 1040 whether or not a platform sends you a Form 1099-K.11Internal Revenue Service. Topic No. 415, Renting Residential and Vacation Property The duty to report does not depend on receiving a form.
One exception matters for occasional hosts. If you use the property as a personal residence and rent it out for fewer than 15 days in the year, the rental income is not reportable, and you cannot deduct rental expenses either.11Internal Revenue Service. Topic No. 415, Renting Residential and Vacation Property For owners who rent only during a local event or a holiday week, that exclusion can be worth real money.
If you rent 15 days or more, you can deduct expenses tied to the rental activity: mortgage interest, property taxes, insurance, utilities, maintenance, and depreciation.11Internal Revenue Service. Topic No. 415, Renting Residential and Vacation Property When the property is used partly as a personal home and partly as a rental, you have to allocate expenses between the two based on days of each use. The arithmetic is straightforward, but a sloppy allocation is one of the more common audit triggers for vacation rental owners.