Written by Whetzel Homes Collective | Published October 20, 2026
The short-term rental tax St. George investors ask about is a federal test, not a way to skip tax. If the average guest stay is 7 days or less, the IRS may stop treating the activity as a rental activity. Losses still do not offset wages unless you also materially participate. On top of that, St. George lodging under 30 days carries a 6.57% transient room tax.
How short-term rental tax St. George owners have to separate from federal tests
Rental real estate is generally a passive activity under Internal Revenue Code section 469. Passive losses usually offset passive income. They do not automatically offset W-2 wages. That is the rule people are trying to step around when they talk about a short-term rental tax strategy. The step is narrow, and a CPA has to apply it to your hours and your bookings.
Treasury Regulation 1.469-1T(e)(3)(ii)(A) says an activity is not a rental activity if the average period of customer use is 7 days or less. Other exceptions exist, including a 30-day average when you provide significant personal services. If the activity is not a rental activity, it can be nonpassive only when you materially participate under the tests in Treasury Regulation 1.469-5T. Those tests are about your hours and your role. A property manager who does the work can keep you from meeting them. A log you write at tax time is a weak record. A log you keep as the work happens is what the tests contemplate.
Two different “day” rules get mixed together. The 7-day average is about whether the activity is a rental activity for the passive-loss rules. The rule in section 280A(g) is about a home you rent for fewer than 15 days in the year. In that short-use case, the rental income is generally not included in gross income, and you do not deduct rental expenses for those days. Renting all year on week-long stays is not the 14-day rule. Do not stack them.
There is also a long-standing special allowance in section 469(i) for some active participants in rental real estate, up to $25,000, phased out as modified adjusted gross income moves from $100,000 to $150,000. It has its own tests. It is not the 7-day rule, and it is not a promise that your wages are sheltered. Your CPA runs the income number.
Source: IRC section 469, IRC section 280A(g), Treas. Reg. 1.469-1T(e)(3)(ii), and Treas. Reg. 1.469-5T. This is a description of public rules, not a tax opinion for your return.
The St. George lodging tax on a real booking
Federal status does not remove Utah lodging tax. Utah Publication 56 says amounts paid for temporary lodging are subject to both sales tax and transient room tax. Temporary lodging is a stay of less than 30 consecutive days. A stay of 30 consecutive days or longer is exempt from both.
The Tax Commission rate chart in effect October 1, 2026, lists St. George, location code 27-020, at a county transient room tax of 4.50%, a state transient room tax of 1.07%, and a municipal transient room tax of 1.00%. The combined transient room rate on that chart is 6.57%. The same agency’s sales-tax chart lists St. George combined sales and use tax at 6.75%. Unincorporated Washington County on that October chart shows 4.50% plus 1.07%, or 5.57% transient room tax, without the city 1%.
Here is the arithmetic on a $200 room charge, using only those rates. It is an illustration, not a quote for a platform booking.
- Transient room tax at 6.57% is $13.14.
- Sales tax at 6.75% is $13.50.
- Together that is $26.64 on the $200 charge, if both taxes apply to the full room amount and no extra city layer applies.
Hosts generally report sales tax on a sales-tax return and transient room tax on form TC-62T. Some booking platforms collect part of the tax. Publication 56 and the Tax Commission tell you not to assume the platform covered every layer. Confirm the current quarter’s rates, because the chart changes.
Source: Utah State Tax Commission, Publication 56, and the other-rates chart in effect October 1, 2026, for St. George location 27-020. Sales and use tax rate for St. George as published by the Tax Commission at 6.75%.
A city license and the CC&Rs sit on top of the tax return
St. George writes its own short-term rental rules. Washington City, Hurricane, Ivins, Santa Clara, and the unincorporated county do not copy them. A strategy that works on a federal form still fails if the city does not allow the use on that parcel, or if you never took out the business license the city requires. Read Title 3 and Title 10 of the St. George City Code for the address you are buying, and ask the city before you put nightly income in an offer.
The association can be stricter than the city. A license does not override recorded CC&Rs. Read the rental section before you model average stays of 7 days. Our HOA fee and CC&R guide is the companion to this one. Nightly use can also affect the primary residential exemption on property tax, because vacation use is treated differently from a home you occupy. See primary versus secondary residence property tax.
Depreciation is a separate decision
Short-term status does not, by itself, tell you how fast to depreciate the building. Residential rental property is generally recovered over 27.5 years. A cost segregation study may move some parts to a shorter life. Bonus depreciation, if any, depends on the year the property is placed in service and the federal law for that year. We are not stating a bonus percentage. The passive-loss rules can also defer a deduction you otherwise earned. That pairing is covered in cost segregation on a Southern Utah rental.
Self-employment tax is another trap. Providing substantial hotel-like services can change the character of the income. Cleaning between guests is not a slogan you should use to force a result. Ask the CPA which services you actually provide.
What it means for buyers, sellers, and investors
Buyers should underwrite the house twice: once as a legal nightly rental with tax, vacancy, furnishing, and management, and once as a long-term lease. If the city or the HOA blocks nightly use, the 7-day discussion is irrelevant. Sellers who advertise “great Airbnb numbers” should be ready to show that the use is allowed and that the license can be addressed with the city. We do not promise a license transfers.
Investors who want losses to reach W-2 income need a CPA to test average stay, material participation, and basis before the purchase, not after a surprise letter. This is not a plan to hide income. Income from guests is still income unless a specific exclusion, such as the short 280A(g) use, actually applies.
The broader purchase questions sit on our investing in St. George page. Start your St. George home search when you want houses that fit the use you can legally make. Book a no-pressure chat with our St. George team if you want help separating a legal rental from a tax theory. Before touring, the next step is a written buyer-broker agreement. Buyer-agent pay is negotiable and is not guaranteed by the seller.
Frequently asked questions
Does an average stay of 7 days make the income tax-free?
No. The 7-day test can change whether the activity is a rental activity under the passive-loss rules. Guests’ payments are still generally taxable. The fewer-than-15-days rule is a different statute and applies only when you rent the home for fewer than 15 days in the year.
What is the transient room tax in St. George?
On the Tax Commission chart in effect October 1, 2026, St. George location 27-020 shows a combined transient room tax of 6.57%. Sales tax is separate. Stays of 30 consecutive days or more are exempt from both under Publication 56. Confirm the quarter you will actually collect.
Can I run this strategy if the HOA bans nightly rentals?
No. A federal test does not override recorded covenants or a city prohibition. If you cannot legally host short stays, you do not have a 7-day average to report.
Will a manager’s hours count as my material participation?
Usually the opposite risk is the one that matters. If someone else does the work, you may fail the material-participation tests. Your CPA has to apply Treasury Regulation 1.469-5T to your facts. We do not track hours for clients.
Use the tests, and keep the receipts
Average stay, your own hours, city permission, HOA permission, and the 6.57% lodging tax are five separate gates. Missing one of them breaks the story, even if the other four look fine. Call Whetzel Homes Collective at (435) 334-1544 or email hello@whetzelhomes.com. We are open Monday through Friday, 9:00 a.m. to 8:00 p.m., and Saturday, 10:00 a.m. to 4:00 p.m., Mountain Time. Bring the address. Take the tax return to a CPA.
This article is general information from Whetzel Homes Collective. It is not tax, legal, or investment advice, and it is not a plan to avoid tax. Confirm federal rules with a CPA, lodging tax with the Utah State Tax Commission, and the license and zone with the city. We do not guarantee a loss, a deduction, or a rental result.
