STR Nightly Rate (ADR) Breakeven Calculator

How this calculator works

The breakeven Average Daily Rate (ADR) for a short-term rental is the nightly rate at which annual revenue exactly covers annual cost at a stated occupancy. The base identity is:

annual fixed cost ÷ (occupancy × 365) = breakeven nightly rate (net of fees and tax)

That figure is the per-night fixed cost the property must clear after the platform takes its host-side service fee and (if the host remits) the state and local lodging tax. To produce the gross ADR the guest actually pays, the per-night fixed cost is divided by the host's net retention — typically 1 minus the platform fee, with the lodging-tax rate also subtracted when the operator (not the platform) remits.

The calculator runs that math at a single supplied occupancy, then re-runs it at occupancy offsets of −10pp, −5pp, +5pp, and +10pp to produce a sensitivity table. The shape of the curve is hyperbolic — per-night fixed cost scales as 1 ÷ occupancy — which is why a 10-percentage-point drop in occupancy from 65% to 55% raises the required ADR by roughly 18%, not 10%. Operators who underwrite at the headline market-average occupancy without stress-testing the downside scenario routinely buy properties that are fragile to the first off-season or new-competition event.

The supplied target ADR is then evaluated against the cost stack to produce a net annual profit (positive) or shortfall (negative). The calculator does not optimize the rate — it surfaces the underlying breakeven so the operator can sanity-check pricing-tool output (PriceLabs, Wheelhouse, Beyond Pricing) against the actual cost structure.

The cleaning fee is treated as cost-neutral in the breakeven math because the host typically charges the guest a cleaning line item equal to what the cleaner is paid. The calculator surfaces the cleaning labor cost separately so the operator can verify the assumption — if the host marks up the cleaning fee, that markup is profit and shifts the breakeven downward.

Fixed cost components

The annual fixed cost stack assembled by the calculator covers the carrying cost of the property whether or not it is occupied on any given night. Six lines drive the stack:

Mortgage principal and interest. Monthly P&I × 12. Use $0 if the property is owned free and clear. Exclude escrowed property tax and insurance from this line — those are modeled separately to keep the stack itemized. Mortgage interest is deductible against rental income on Schedule E (or Schedule C for active trade-or-business STRs); the breakeven calculation does not model the tax deduction, only the cash outflow.

Property tax. Property value × annual tax rate. National average is roughly 1.1%; rates range from 0.3% in Hawaii and Alabama to 2.2%+ in New Jersey and Illinois. Most STR properties do not qualify for homestead caps because they are not the operator's primary residence — use the effective rate after any applicable exemptions, but assume the property is on the open-market assessment roll.

Hazard and liability insurance — specifically an STR-endorsed policy. A standard homeowner policy generally excludes commercial short-term rental use, and a claim filed against a standard policy on an Airbnb-rented unit is commonly denied. STR-specific policies (Proper, Slice, CBIZ, USAA STR endorsement, Lloyd's of London markets) run 1.5x to 3x a standard homeowner premium and cover liability, loss of rent, and guest property. Verify with the carrier before listing — a denied claim on a guest injury or property damage event is catastrophic.

HOA or condo dues. Monthly dues × 12. Use $0 for non-HOA single-family properties. Confirm the HOA permits short-term rentals before underwriting — many HOAs prohibit rentals under 30 days and the prohibition is enforceable through fines, special assessments, and ultimately injunction.

Utilities and internet. Combined monthly electric, water, sewer, gas, internet, and any subscription services (streaming, smart-home device fees). STR utilities run 1.5x to 2x a primary-residence equivalent because climate control runs aggressively for guest comfort and water use is higher per occupant-night.

Lawn or pool service and software subscriptions. Recurring landscape, pool, and pest service contracts; plus the operator software stack (PMS like Hostfully, Lodgify, OwnerRez; pricing tools like PriceLabs; messaging tools like Hospitable). These line items often run $200 to $600 per month for a managed property and are easy to omit in a back-of-envelope underwrite.

The calculator also includes a maintenance reserve as a capital-expense accrual — the depreciation-style line that captures HVAC replacement every 15 to 20 years, roof every 25 to 30, water heater every 10, appliance turnover every 8 to 12. The industry rule of thumb is 1% of property value per year for an updated property, 1.5% to 2% for an older one. A breakeven computed without the reserve is artificially low.

Variable cost per booking

Variable costs scale with bookings, not with calendar time. The two material lines:

Cleaning fee. Per-turn labor cost paid to the cleaner. In nearly all platform UIs the cleaning fee is charged to the guest as a separate line item on the booking and assumed to wash to the cleaner. The calculator treats cleaning as cost-neutral in the breakeven math but surfaces the cleaning line so the operator can verify. If the host marks up the cleaning fee (charges the guest $150 for a $100 clean), that $50 markup is profit and shifts the breakeven downward. If the host absorbs cleaning (no separate guest line), the cleaning labor becomes an additional fixed cost roughly equal to cleaningsPerMonth × cleaningFee × 12.

Channel commission (platform fee). The host-paid platform service fee comes out of the gross nightly rate:

• Airbnb host-only ("simplified") fee: typically around 15% of payout. Single all-in price shown to the guest; recommended for hosts who want to compete on the search-result price and don't want the guest to see a separate service-fee line.
• Airbnb split fee (legacy): approximately 3% host and 14% guest as a separate line at checkout. Host keeps more of the gross but the displayed price to the guest is higher, hurting conversion.
• Vrbo standard: approximately 5% host and 8% guest split — generally the most host-friendly of the major platforms.
• Booking.com: approximately 15% commission, sometimes higher for premium placement. Commission is taken from the host's payout; the guest does not see a separate service fee.
• Direct booking (own site or PMS): 0% to the platform layer but adds merchant processing of approximately 2.9% plus $0.30 per transaction. The economic tradeoff is that direct booking captures the platform-fee delta but requires the operator to drive their own demand — SEO, repeat-guest marketing, and a brand investment that takes years to compound.

Guest-paid fees do not flow through the host's revenue equation directly but they affect demand elasticity — a $200 nightly rate with a 14% guest fee shows up as $228 on the search results page, which is the price the booker actually evaluates. That elasticity dynamic sits outside the cost-stack math but operators should weigh it when comparing platforms.

Occupancy and seasonality

The breakeven ADR is hyperbolic in occupancy: a property booked at 80% occupancy needs roughly half the per-night fixed cost a property at 40% occupancy needs to cover the same annual stack. Underwriting at the wrong occupancy is the dominant risk in STR.

The standard market-data sources operators benchmark against are AirDNA (Market Reports, MarketMinder) and Key Data (formerly Key Data Dashboard, the professional-manager data co-op). Both report occupancy, ADR, and RevPAR by market and property type. The typical bands:

• Strong urban markets (Nashville, Austin, Charleston, downtown core of most major cities): 65% to 80% blended annual occupancy with moderate seasonal variance.
• Beach and ski markets (Destin, Outer Banks, Park City, Breckenridge): 50% to 70% blended annual occupancy with high seasonal variance — peak weeks at 90%+, shoulder weeks at 20% to 30%.
• Secondary markets and rural cabins (Smokies, Hocking Hills, regional lake destinations): 35% to 55% blended annual occupancy.
• Florida vacation markets (Orlando area, Gulf Coast, Keys): 55% to 70% blended annual, with peak in winter snowbird season and a softer summer.

New listings typically achieve 60% to 70% of the market-average occupancy in year one and ramp toward market average over 18 to 24 months as reviews accumulate. Underwriting at the headline market-average is a common new-operator mistake — model year-one at 60% to 70% of the benchmark and verify the property still hits breakeven under that scenario.

Seasonality is the second-order problem. A beach property might run 90% occupancy at $400 ADR from May through August and 25% occupancy at $150 ADR from November through February — averaging out to a blended 55% occupancy at a blended ADR somewhere between the two. The breakeven calculation here does not capture seasonality directly; operators should run the calculator with the blended annual occupancy and the blended annual target ADR, then separately model the peak / shoulder / off-season split to verify the blended ADR is achievable given the seasonal demand curve.

The conservative underwriting approach is to require the property to break even at 10 to 15 percentage points below market-average occupancy AND at 10% to 15% below market-average ADR simultaneously. Properties that pass that test are robust to most demand shocks (regulatory changes, new competition, seasonality shifts). Properties that only pass at headline market assumptions are fragile.

Lodging taxes

Short-term rentals — generally defined by most states as rentals under 30 days, though the threshold varies — trigger one or more of:

• State sales or transient occupancy tax (TOT). Varies widely. Oregon and Montana have no state lodging tax. Tennessee and Florida combined run above 7.5%. The state base typically funds general revenue.
• County or local lodging tax. Often 1% to 6% on top of the state. Funds tourism marketing, convention centers, or general county revenue depending on enabling statute.
• City-level transient occupancy tax. Nashville, Austin, Asheville, and most ski and beach municipalities layer 2% to 9% on top of the state and county base.
• Tourist development tax. Florida-specific; see the companion Florida vacation-rental calculator for the county-by-county TDT remittance workflow.

Most platforms remit lodging tax automatically on behalf of hosts under tax collection and remittance ("voluntary collection") agreements with state revenue departments. When the platform remits, the host's gross payout excludes the tax — the operator does not see it, and it does not flow through the breakeven math. The platform shows the guest a separate "Taxes" line at checkout and remits to the state directly.

When the platform does NOT remit — in jurisdictions without an agreement, or for direct bookings, or in jurisdictions where the state-level collection agreement does not extend to the county or city tax — the host must register with the state (and often the city or county) revenue department, collect the tax out of the gross nightly rate, file periodically (typically monthly or quarterly), and remit. The compliance failure mode here is severe: states audit STR listings against platform data and assess back taxes plus penalties, often with retroactive interest.

The operator should verify the remittance posture for every jurisdiction the property operates in. Avalara's MyLodgeTax reference identifies which states have platform agreements; the platform also surfaces this in the host dashboard under "Local taxes." Do not assume the platform handles every layer — state-level coverage frequently does not extend to county or city tax, leaving the operator on the hook for the local portion.

The calculator's lodgingTaxRemittedByHost toggle controls whether the lodging tax peel-off reduces the host's effective revenue per night. When false (the default — platform remits), the lodging tax does not affect the breakeven. When true, the tax comes out of the gross nightly rate alongside the platform fee and reduces the operator's retention by that amount.

The 14-day rule under IRC § 280A

A separate set of tax rules applies to short-term rentals of dwelling units that the taxpayer also uses personally. Under IRC § 280A(g) — the so-called "Augusta rule" or "14-day rule" — if a dwelling unit is used as a residence by the taxpayer and is rented for fewer than 15 days during the year, the rental income is excluded from gross income entirely. No Schedule E filing. No deduction for rental expenses (rental-prorated mortgage interest and property tax are still allowed as itemized deductions on Schedule A under the normal personal-residence rules). The rule is named after Augusta, Georgia, where homeowners traditionally rent their houses to spectators for the Masters tournament and exclude the income.

If the rental crosses 15 days, the full § 280A regime kicks in. Personal use above the greater of (a) 14 days or (b) 10% of the days rented at fair rental value pushes the unit into "personal residence" status — expense deductions are limited to rental income (no net loss), and the unit cannot generate passive losses against other income. Operators planning to use the property personally should track personal-use nights carefully and avoid crossing the threshold.

The calculator does NOT enforce the 14-day rule. It computes the breakeven ADR for an operating STR. If the property qualifies under § 280A(g), the tax treatment is different (no income at all) and the breakeven analysis is irrelevant — the question becomes "what is the maximum income I can earn in 14 days at peak rates" rather than "what ADR covers my annual cost stack." Operators in event-driven personal-residence-rental scenarios (Masters, Final Four, Super Bowl, festival weekends) should use the 14-day rule analysis instead of this calculator.

What this calculator does NOT model

The calculator surfaces the operating-economic breakeven. It does not model the following:

Depreciation under MACRS. Residential rental property is depreciated under the Modified Accelerated Cost Recovery System (MACRS) over 27.5 years on Schedule E and 39 years on Schedule C. Cost-segregation studies can accelerate the depreciation on building components (carpet, appliances, land improvements) over 5, 7, or 15 years. The breakeven calculation here is cash-flow-only; the depreciation deduction reduces taxable income but does not affect operating cash flow.

Passive-activity loss limits under IRC § 469. Rental real estate is presumptively passive under § 469. Losses can only offset passive income unless the taxpayer qualifies as a "real estate professional" under § 469(c)(7) — 750+ hours per year in real estate trades or businesses AND more than 50% of personal services in real estate. The calculator does not model the loss-suspension dynamic.

Material-participation tests. Whether the STR is reported on Schedule E (passive) or Schedule C (active trade or business) depends on the level of services provided. Substantial services (daily cleaning during a stay, on-site concierge, meals, vehicle service) push toward Schedule C with 15.3% self-employment tax. Hands-off rentals with cleaning between guests only push toward Schedule E. The IRS substantial-services test is fact-intensive — see IRS Publication 527 and Tax Topic 415.

State-specific STR registration. Many states and most cities require STR-specific registration, a permit number displayed on the listing, life-safety inspection (smoke detectors, CO detectors, egress), and posted-occupancy compliance. Some jurisdictions cap STR licenses or prohibit non-owner-occupied STRs entirely. The calculator assumes the property is legally operable as an STR in its jurisdiction; verify registration requirements before listing.

Property management fees. A full-service PM company typically charges 20% to 30% of gross (sometimes higher in resort markets). Co-hosts charge 10% to 20%. The calculator's platform-fee field can be overridden to layer in management fees — for example, an Airbnb listing at 15% host fee plus a 20% PM fee should use a total platform-fee override of 35%.

Working capital and startup capex. Furniture and furnishings ("FF&E") for a standard 3-bedroom STR run $20,000 to $50,000 at launch. Initial photography, listing setup, and marketing add $2,000 to $5,000. These are capitalized into property basis and depreciated separately — they do not appear in the operating breakeven but they do affect cash-on-cash return.

Sources

• IRC § 280A — Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc. The 14-day / 10% personal-use test and the § 280A(g) Augusta rule.
• IRC § 469 — Passive activity losses and credits limited. Including the § 469(c)(7) real-estate-professional election.
• IRS Publication 527 — Residential Rental Property. Plain-English guide to Schedule E reporting, depreciation, and the § 280A personal-use rules.
• IRS Tax Topic 415 — Renting Residential and Vacation Property. The Schedule C vs Schedule E classification framework.
• AirDNA Market Reports — Market-level occupancy, ADR, and RevPAR benchmarks by market and property type. The standard underwriting source for STR feasibility analysis.
• Key Data — Professional-manager STR data co-op (formerly Key Data Dashboard). Aggregated PM-platform data with property-type segmentation.
• Avalara MyLodgeTax — State-by-state lodging tax reference covering rates, registration requirements, filing frequency, and platform tax-collection-agreement status.
• State revenue departments — Authoritative source for lodging tax registration and remittance requirements; verify against the state department of revenue (DOR) before relying on third-party summaries.

Last reviewed: 2026-05-16 against IRC § 280A, IRC § 280A(g) (14-day rule), IRC § 469, IRC § 469(c)(7) (real-estate-professional election), IRS Publication 527, IRS Tax Topic 415, AirDNA Market Reports (current edition), Key Data STR benchmarks, Avalara MyLodgeTax state-by-state reference, and the current published host-fee schedules for Airbnb, Vrbo, and Booking.com.