Short-Term Rentals: How Much Does the Owner Really Keep? Costs, Taxes and the Reality Behind Apparent Earnings
In recent years, short-term rentals have frequently been presented as one of the most profitable forms of property investment. Many owners have envisioned high returns and quick gains, particularly in major cities and tourist destinations.
The reality, however, is considerably more complex.
Behind the apparently high revenues of short-term rentals lies a structure of costs, taxes and commissions that can significantly reduce the owner’s actual margin.
In many cases, the final net gain may represent only a limited portion of the total income collected.
The Illusion of Gross Income
One of the most common mistakes is confusing the price paid by the guest with the owner’s real earnings.
If a property generates, for example, €40,000 in annual gross income through online platforms, this does not mean the owner actually receives that figure. Before arriving at the net amount, a number of cost items must be considered:
- taxation
- platform commissions
- operational management
- cleaning and laundry
- maintenance
- utilities
- administrative costs
- property management fees
It is precisely here that the real return changes dramatically.
Taxation
Since 2024, the tax framework for short-term rentals has become more burdensome. The Budget Law introduced an increase in the flat-rate tax (cedolare secca) to 26% for properties let on short-term contracts beyond the first property.
This represents a significant difference compared to traditional long-term contracts (4+4 or similar), where the standard flat-rate tax remains at 21%.
A further aspect that is often overlooked is that taxation is calculated on gross rental income, without the possibility of deducting many of the operational expenses incurred by the owner.
Platform Commissions and Management Costs
A considerable burden also comes from OTA (Online Travel Agency) commissions — platforms such as Airbnb and Booking.com retain variable percentages that can range from 15% to over 20%, particularly when professional services or premium visibility options are used.
To this is often added the cost of property management. Many owners entrust the following to specialist external companies:
- check-in and check-out
- guest assistance
- booking management
- cleaning
- routine maintenance
These companies retain additional commissions, typically ranging between 20% and 30%.
The Hidden Costs
There are also less visible, yet constant, expenses:
- high utility bills
- frequent replacement of furnishings and appliances
- more intensive routine maintenance
- insurance
- local taxes
- vacancy periods
- bureaucratic and regulatory compliance
With short-term rentals, the wear and tear on the property is generally far greater than with a traditional tenancy.
How Much Does the Owner Really Keep?
When one adds together:
- taxation
- platform commissions
- management costs
- maintenance
- utilities and services
the final margin can be drastically reduced.
In many cases, the owner retains a significantly smaller share than the gross amount originally paid by the guest. This is precisely why the real return on short-term rentals is so frequently overestimated.
Milan and the Current Market
In Milan, short-term rentals continue to enjoy strong demand, particularly in certain central and premium areas. However, the market has become considerably more competitive and regulated than in previous years.
To achieve genuinely sustainable results today, it is essential to:
- own properties in strategic locations
- ensure a highly professional management approach
- carefully evaluate the relationship between gross and net return
In some cases, a well-structured traditional tenancy may offer greater stability, lower tax exposure and more efficient management over the long term.
For this reason, now more than ever, it is essential to rely on sector professionals capable of assessing the most appropriate property strategy based on the asset, its location and the owner’s objectives.
Via della Spiga Wonderful Houses accompanies its clients in the management and enhancement of their property portfolios, offering personalised consultancy to identify the most effective and sustainable solutions within the Milan market.
Contact us to discover the best strategies for maximising the value of your property in Milan.
