What CPAs Should Know About the Growing Vacation Rental Landscape
CPAs who understand the complex tax and financial requirements of vacation rentals are best positioned to help a growing client base optimize their financial outcomes.
By Jennifer Liddell, CPA | Digital Exclusive – 2025
The growth of online platforms like Airbnb and VRBO has transformed the vacation rental landscape in Illinois. By enabling property owners to monetize their homes, these platforms have also led to the proliferation of property management companies who offer comprehensive services to manage these rentals. Of course, as the market expands, certified public accountants (CPAs) are increasingly being called upon to help owners and property managers navigate the industry’s complex tax and financial requirements.
For CPAs looking to expand their practices and tap into this growing client base, here are a few things to consider.
Navigating Complex Tax Requirements, Changing Local Ordinances
CPAs provide invaluable services to short-term rental clients by helping them stay compliant with evolving tax codes. Notably, Illinois vacation rental hosts face a variety of state and local tax obligations, with lodging and occupancy taxes being the most challenging, as these taxes can vary significantly by jurisdiction. In many cases, property management companies are responsible for collecting and remitting these taxes on behalf of the owners they serve to maintain compliance with local regulations.
Importantly, CPAs should understand the differences between taxable and non-taxable revenues for their short-term rental clients. For example, in most cases, lodging and occupancy taxes only apply to charges that are required for the reservation, such as rent, cleaning, resort fees, and damage waiver fees. Non-mandatory fees, like pool heating, service animal fees, or charges for other add-ons, are usually exempt. It’s important to be aware that incorrect categorization of these revenues can add up, creating serious financial impacts for short-term rental operators.
Local ordinances can also significantly impact short-term rental operations. For example, Chicago has implemented stricter laws governing short-term rentals, including licensing requirements and zoning regulations.
CPAs who understand the nuances of accounting and revenue reporting requirements for short-term rentals are best positioned to help their clients optimize their financial strategies. This includes being familiar with the terminology used, reporting frequency, and requirements at the state and county level, as well as any other municipalities that require short-term rental reporting or licensure. CPAs should also help clients stay informed about any regulatory or ordinance changes and proactively adjust their strategies to remain compliant. This proactive approach is essential for avoiding penalties and ensuring the sustainability of rental businesses.
As you can see, CPAs play a vital role in helping vacation rental owners and managers navigate complex financial regulations. From ensuring compliance with tax obligations to helping them navigate local ordinances, CPAs provide the expertise needed to optimize financial outcomes. As the short-term rental market continues to grow, CPAs have a unique opportunity to expand their practice and support the success of this growing client base.
Jennifer Liddell, CPA, is the leader of Ximplifi’s onboarding and delivery team.
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