Vacation rental expenses: how to calculate what your property really costs

Why gross revenue misleads you

The first mistake, for both new owners and people managing other people's properties, is to think in gross terms. The number that matters is different:

Net margin = Gross revenue − Fixed costs − Variable costs − Commissions − Taxes

These four items don't weigh the same and don't behave the same way. Some you pay even with the house empty, others grow with your bookings. Separating them is the first step to knowing where to act.

Fixed costs: what you pay even with an empty house

These go out no matter what, whether you have zero or a hundred bookings. Calculate them on an annual basis:

• Mortgage (if any): often the heaviest item, and best kept separate, because on its own it can turn a good deal into a loss.
• Property tax (IMU): due on second homes (a non-luxury primary residence is exempt in Italy).
• Waste tax (TARI).
• Condominium fees: ordinary and, occasionally, extraordinary.
• Insurance: home policy plus any rental-damage coverage.
• Internet and fixed subscriptions: Wi-Fi, streaming, the fixed part of your subscriptions.
• Management software / channel manager: calendar sync, smart lock, management tools. If you use one, it's a fixed cost of its own.
• Marketing and advertising: social or Google Ads campaigns to get found. Discretionary, but if you run them, budget for them.
• Accountant / tax advice: the annual fee, almost always forgotten.
• Ordinary maintenance: boiler, small repairs, periodic repainting. Budget an annual figure even if you don't spend it every year.
• Contingency fund: a reserve for breakages, appliances to replace and uncovered damage. Better to plan for it than to discover it.

Variable costs: what grows with your bookings

These rise with occupancy. The most useful way to handle them is to think per stay or per night:

• Cleaning and linen change: the cost per turnover. You often pass it to the guest as a "cleaning fee", but keep it in your numbers because it affects how competitive your price is.
• Laundry: sheets and towels, if not washed on site.
• Metered utilities (electricity, gas, water): the share that varies with occupancy, separate from the fixed part of the bill.
• Consumables and welcome kit: coffee, soap, paper, courtesy products.
• Tourist tax: you collect it from the guest and pass it to the municipality. It's not your cost, but collecting and paying it is work someone has to do.

Commissions: platforms and management

This is the slice that's often underestimated:

• Airbnb: from 13 October 2026 it moves to a flat 15.5% fee charged entirely to the host (previously the model split a smaller share to the host and one to the guest).
• Booking.com: the commission is generally between 15% and 18%, depending on the agreement and options.
• Professional management (property manager or co-host): in Italy, full-service management usually costs between 15% and 30% of revenue, based on the services included. A co-host handling only some tasks costs less than turnkey management.

If you rely on both a platform and a manager, the two commissions add up: do that math before, not after.

Taxes: the part almost everyone forgets

This is the most expensive mistake. Italy's flat-rate rental tax (cedolare secca) on short-term rentals applies to the gross rent collected, not to your profit: you cannot deduct cleaning, utilities or mortgage interest. The rates, under Italy's 2024 Budget Law:

• 21% on the first property used for short-term rental.
• 26% from the second property onward.

You can use this regime for up to 4 units: beyond that, the activity counts as a business and requires a VAT number. Also remember the CIN (National Identification Code), now mandatory for short-term rental listings. Tax rules change often: before you decide, check the current figures with an accountant.

The 5-step method, with an example

1. Add up your annual fixed costs.
2. Estimate variable costs per stay and multiply by your expected bookings.
3. Apply platform and management commissions to gross revenue.
4. Calculate taxes on the gross rent (note: not on the net).
5. Subtract everything from gross revenue: you get your real net margin.

Example (a coastal one-bedroom, second home, all figures illustrative):

• Gross revenue: 100 nights × €95 = €9,500
• Platform fee (15.5%): −€1,472
• Variable costs (metered utilities, consumables, laundry): −€1,200
• Fixed costs (IMU 500 + TARI 250 + condo 600 + insurance 200 + internet 300 + maintenance 400): −€2,250
• Cedolare secca 21% on gross (€9,500): −€1,995
• Net margin ≈ €2,583, before any mortgage.

If that property carries a €4,800-a-year mortgage, the result turns negative. That's why your nightly price should be built from the net you want, not from the apparent income.

And if you don't want to (or can't) manage everything yourself? Handing the property to a property manager adds a line, usually around 20%, but calculated on revenue after the platform commission (Airbnb or Booking take their cut first). In our example that's 20% of €9,500 − €1,472, about €1,606, and the net margin drops to about €977, still before the mortgage. It doesn't mean delegating isn't worth it, but that this cost belongs in the math alongside the time it saves you, so you decide with numbers rather than gut feeling.

To avoid redoing these calculations by hand every time, we've built a free Excel calculator: every line is already set up, with columns for up to 3 properties and a net margin that updates on its own. Enter your name and email and get it straight away in your inbox.

Frequently asked questions

Do I pay for cleaning or does the guest?

Usually it's charged to the guest as a separate fee, but it affects the total price they perceive: keep it in your competitiveness math.

Is cedolare secca calculated on my profit?

No. It's calculated on the gross rent collected, with no deduction of expenses. That's the most common mistake.

How many properties before I need a VAT number?

Beyond 4 units used for short-term rental, the activity is considered a business and requires a VAT number.

What's a "normal" net margin for a vacation rental?

It depends on location, mortgage and management, but a realistic net is between 25% and 50% of gross. If you think you'll keep 80%, you're forgetting something.

Find the right local support

Doing these calculations well is half the job; the other half is handling cleaning, maintenance and guests without letting costs slip. If you manage a single home and time is tight, or you're a professional who needs local support, Hostbudd helps you find reliable cleaners, co-hosts and maintenance pros in your area to give your guests the best possible experience.