Should You Put Your House on Airbnb?

Posted by Pekin Insurance on May 17, 2019 in Home

5 min read

Know the pros and cons of hosting on Airbnb.


Maybe you’ve read a few Airbnb success stories. You know, the ones where someone rakes in six figures after putting space up for rent online?

All of us have bills to pay, so we understand why you’d want to bring in extra income. Have you done the research and asked yourself if you really should put your house on Airbnb, though?

Continue reading to discover benefits, legalities, tax implications, and insurance complications that come with hosting a property on Airbnb.



  1. How Airbnb Works

  2. The Benefits of Renting Out Your Space

  3. Following Hosting Standards

  4. About Those Legalities

  5. Your Airbnb Income Is Generally Taxed

  6. The Insurance Gets Tricky

  7. Property Management Isn't a Cakewalk




How Airbnb Works

Airbnb is like the Uber of the hospitality industry. Both companies profit from a growing share economy where personal property is used to drive business profits.

Airbnb’s online platform allows hosts to rent rooms and sometimes entire houses to guests. If you’re wondering how Airbnb makes money from this setup, they collect a commission from the host and a service fee from the guest.

Airbnb doesn’t own the real estate being rented, so they’re not responsible for taxes, maintenance, or any other costs related to those properties. That’s a smart way for them to save and make money!

The Benefits of Renting Out Your Space

Do you have a rental home or vacation property that’s going unused? Through Airbnb, you can offer lodging to anyone visiting your area.

If you’re comfortable with renting out space in your own home or apartment, you can offer a spare room. No matter how you go about it, Airbnb gives you a chance to bring in extra money.

Airbnb invites its users to leave feedback about each experience, which is public information. This open forum is designed to keep guests and hosts accountable.

Following Hosting Standards

As a host, you would have to follow Airbnb’s policies.

Here are Airbnb’s basic requirements for hosts:

  • Provide essential amenities (toilet paper, soap, linens).
  • Reply to reservation requests and booking inquiries within 24 hours.
  • Accept reservation requests whenever you’re available.
  • Avoid cancellations.
  • Maintain a high rating. 


About Those Legalities

Before you rush to put your property on Airbnb, make sure you know the short-term rental laws in your city and state (or the city and state of your vacation home).

As an example, Las Vegas has strict short-term rental regulations, which means Airbnb hosts in this city must follow these rules:

  • Only primary residents who occupy properties are allowed to receive permits for short-term rentals.
  • Airbnb rentals must be at least 660 feet away from each other.
  • Hosts are obligated to collect taxes from guests and deliver them to the city.
  • Short-term rentals have a maximum limit of 3 bedrooms.

Much to Airbnb’s dismay, short-term rental owners in Las Vegas must:

  • Carry $500,000 of liability insurance.
  • Renew their rental permit every six months.
  • Be on the premises when someone is renting a property.

Los Angeles, New York City, San Francisco, and Santa Monica are other cities with strict short-term rental laws.


Your Airbnb Income Is Generally Taxed

After you work out Airbnb’s legalities, you have to figure taxes into the equation. In most cases, you have to report the majority of the income earned on short-term rentals.

You’ll probably pay taxes and have very little (if any) of the Airbnb income qualify for write-offs, but you should consult your accountant or financial advisor for more details.


The Insurance Gets Tricky

Depending on how long your guests stay, you might need to register your rental as a business and get separate insurance. This is something you should discuss with your insurance agent.

Damage caused by guests and injuries sustained by guests might not be covered by a homeowners policy. If your Airbnb property isn't registered as a business, you won't be able to cover it through a business policy.

You’ll run into similar issues if you’re an Airbnb host who lives in an apartment. You might convince your landlord to let you earn some extra money by renting out a spare room. If your Airbnb guest causes property damage or steals from you, most renters policies won’t pay for the damage or replace the stolen items.

Property Management Isn’t a Cakewalk 

Managing a property isn't easy. If you're going to offer a rental year-round, you’ll have to stay on top of communication, amenities, and much more.

As you decide whether or not to list a property on Airbnb, make a list of pros and cons. Consider your buying-selling position, taxes, and even possible real estate agent costs if you might sell.



If you need more help navigating the insurance aspects of hosting a property through Airbnb, contact your local Pekin Insurance agent.

Contact your local Pekin Insurance agent today!




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