As the short-term rental market matures, many Airbnb hosts are looking to cash in on the equity they’ve built. But before you hit “sell” on that profitable listing, it’s crucial to understand the tax on selling Airbnb properties in 2025. Between capital gains, depreciation recapture, and state taxes, your profit margin can quickly shrink without the right strategy.
The good news? Real estate investors have a powerful ally: the 1031 exchange. Combine that with a smart Airbnb calculator to estimate your returns, and you’ve got a solid game plan to defer taxes and reinvest wisely.
In this article, we’ll break down the tax implications of selling your Airbnb, how to calculate your profits, and how to legally defer capital gains through a 1031 exchange in 2025.
1. Tax on Selling Airbnb: What You Need to Know
Selling an Airbnb is not the same as selling your primary residence. Here are the main taxes that may apply:
a. Capital Gains Tax
- Applies to the profit made between your purchase price (adjusted basis) and selling price.
- Federal capital gains tax ranges from 15% to 20%, depending on your income.
- Some states like California and New York add another 9-13%.
b. Depreciation Recapture
- You’ve likely deducted depreciation on your Airbnb for tax benefits.
- When you sell, the IRS wants some of that back.
- Recapture is taxed at a flat 25% on the depreciation claimed.
c. Net Investment Income Tax (NIIT)
- If your income exceeds $200,000 (single) or $250,000 (married), an additional 3.8% may apply to your gains.
d. State Taxes
- State capital gains taxes can significantly impact your net proceeds.
Example:
| Item | Amount |
| Purchase Price | $300,000 |
| Sale Price | $500,000 |
| Capital Gain | $200,000 |
| Federal Capital Gains Tax (15%) | $30,000 |
| Depreciation Recapture (25% on $75k) | $18,750 |
| Total Tax Owed | ~$48,750 |
Without a tax deferral strategy, nearly 25% of your profit could go to taxes.
2. Use an Airbnb Calculator to Estimate Profits
Before selling, it’s important to calculate:
- Cumulative rental income
- Operating expenses
- Appreciation value
- Projected capital gains tax
Use this free Airbnb ROI & profit estimation tool: GetChalet Airbnb Calculator
This Airbnb calculator provides:
- Average nightly rate in your zip code
- Occupancy rates
- Seasonality factors
- Estimated annual income and costs
- Equity and potential return if sold
By combining this with your tax estimate, you can decide whether to sell or hold.
3. How 1031 Exchange Can Save You Thousands in Taxes
The 1031 exchange is one of the most powerful tools available to real estate investors.
What Is a 1031 Exchange?
A 1031 exchange named after Section 1031 of the Internal Revenue Code, lets you sell an investment property and reinvest the proceeds into another like-kind property without paying immediate capital gains tax.
2025 Rules to Keep in Mind:
- Identify replacement property within 45 days
- Close on purchase within 180 days
- Use a Qualified Intermediary (QI) to handle funds
- Property must be held for investment purposes (not personal use)
Does My Airbnb Qualify?
Yes – if it was:
- Rented for more than 14 days per year
- Not used for personal stays more than 14 days or 10% of total rental days
- Reported as income on Schedule E
