Bookkeeping for Airbnb and Short-Term Rentals in Montana
Airbnb and VRBO income in Montana runs through both federal rental rules and Montana's lodging facility use tax. Get the setup right and it stays clean; get it wrong and it turns into a mess.
Schedule E vs Schedule C
Schedule E (rental): default for short-term rentals where you don't provide substantial services (cleaning, meals, laundry beyond changeovers).
Schedule C (business): applies when you provide 'substantial services' typical of a hotel — daily cleaning, meals, concierge.
Most Airbnbs are Schedule E. Schedule C triggers self-employment tax on the profit.
Income tracking
Track gross booking income (Airbnb payout to you) separately from service fees withheld.
Cleaning fees charged to guests are income to you, even though they're passed to a cleaner (which is expense).
1099-K from Airbnb/VRBO if you exceed thresholds — reconcile to your books.
Deductible expenses
Mortgage interest, property tax, insurance, HOA, utilities, cleaning, supplies (toiletries, linens), platform fees, professional photography, listing fees, snow removal, lawn care, repairs, depreciation.
For mixed-use properties (rented part of the year, personal use rest), allocate expenses by days rented vs total days used.
The 14-day rule: if you personally use the property MORE than 14 days OR 10% of days rented, it's a personal residence with limited rental deductions.
Montana lodging tax
Montana lodging facility use tax (7% currently) plus lodging facility sales tax (4%) apply to short-term rentals under 30 days.
Airbnb and VRBO collect and remit these on your behalf for many Montana listings — verify in your platform tax settings.
If you rent through a channel that doesn't collect (direct bookings, some smaller platforms), you're responsible for collecting and remitting through Montana DOR.
Local rules to check
Some Montana cities and counties have short-term rental permits, occupancy limits, and safety requirements. Check with your local jurisdiction.
HOA and covenant restrictions may prohibit STRs regardless of state/city rules.
Bookkeeping setup
Separate bank account for the STR — never comingle with personal.
One class per property in QuickBooks if you own multiple.
Monthly reconciliation of Airbnb/VRBO payout reports to your bank.
Depreciation schedule for the building and separately for any personal property (furniture, appliances) placed in service.
A quick disclaimer
This article is general information for Montana small business owners, not tax, legal, or accounting advice for your specific situation. Rules change, and how they apply depends on facts we don't know about you. Before acting on anything you read here, talk to a qualified professional. If you're a Montana business owner and want a real conversation about your books, payroll, or tax, that's what Marlow Accounting is here for — call 406-290-1214 or schedule a discovery call.