Help me think through logistics for a voluntary refund?

I have strict cancelation policy and smart pricing set.

I had a guest from Germany book for a 11 day stay in July (peak season for us). She was very pleasant and communicative. Two days before her arrival she messaged that she has covid and is very ill. She did not request a refund, but asked what to do next. I told her to cancel her trip on the airbnb site which would open up my calendar, and that if I was able to rebook that time, I would refund her via the resolution center. She promptly did that and was appreciative.

I just got a booking for 10 days that overlaps the dates of her stay by 7 days, but the “smart rates” are lower now than when she booked, so instead of the (rounding figures) $2000 she paid, I am getting $1500 for the new 10 day stay, and two of those days are not in play for refunding her.

So what is fair to refund my German guest? I know I don’t technically have to, because she booked after the change in Airbnb’s covid policy. However, I can afford to be gracious about this, and I appreciate her tone – not demanding and entitled, but politely inquiring. And there have been many times people have been gracious to me when they didn’t have to be --so that’s the story on why I am refunding her.

I could work with round numbers and refund her $1000, which is pretty close to exactly what I get from my new booking for the specific days she cancelled. Or I could refund her $1500, because my new booking only happened because she cancelled, and I still come out ahead. I can’t refund her the full $2000 because I do have a strict cancellation policy for a reason.

I know I’m overthinking this. Are there aspects to this that I’m overlooking? Not sure how this works with taxes? What are the chances that an airbnb support staff will actually be helpful in navigating this?

I’ve never had to refund a guest before. Is this my next leveling up experience? (see recent post about unclogging a toilet).

You are quite the gracious host!

First, I wouldn’t refund anything until three days after the new guest’s stay is completed since until then you won’t have received the funds and know whether the new guest makes some claim for a refund against you.

Second, it’s an interesting question whether to refund the $1,000 or $1,500. If you hadn’t raised the issue my reflexive decision would have been to refund $1,000. But you make a good point on the idea that but for the cancellation you would not have received the $1,500 stay. I think you could justify either the $1,000 or the $1,500 payment since you’re not obligated to make any refund, and the promise you chose to make related to the days she had booked and canceled. I think if it were me I would refund just the $1,000 amount unless I felt particularly rich or generous or felt more sorry for the guest.

Third, you’re probably assuming that the guest did not have travel insurance and might have been elsewhere reimbursed for some or all of the cost of stay.

Fourth, your raising tax issues is another thoughtful question you ask. I don’t know the tax laws you’re subject to. I could imagine an argument that you’re not entitled to a deduction for what you give back because you have no legal obligation to make the payment. As a practical matter, in the U.S., I can’t imagine that the transaction would become scrutinized by the IRS. I don’t know how Airbnb would treat the payment for its reporting but if they didn’t subtract the amount from your income I would think that you could do so on your tax return. I would assume that the refund you make would reduce your income or be a deductible business expense.

Fifth, I wouldn’t expect insightful help fromAirbnb CS based on comments I’ve heard here.

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Be honest with her and say you were able to mitigate half of her loss and refund her the $1000.


“I would refund her via the resolution center. She promptly did that and was appreciative.”

Based on that you were able to recoup, approximately $1000 as it turned out, so send her $1000 and she would be double grateful. Always best to keep it simple, and definitely keep Airbnb OUT of the equation when possible.


If you get $1500 from the new booking, why not refund her that? Like you say, you still come out ahead.

I would not make any specific promise. I’d wait until I received payment for the new guest, then do the calculation. You don’t need to explain to them how you arrived at your total— just decide what seems fair and refund that


I agree in regards to refunding $1000 after you have received the funds.

YOU DO NOT REFUND ANYONE ANYTHING. That is part of AirBnb’s job. If they decide she should get a refund, and you approve, then she will.


You pay her what you earned for the overlapping 7 days of her stay, not what she lost, but what you recovered during that 7 days of the 10. The other 3 days and anything else you earned from the next stay is not even remotely owed to her.

Really nothing is owed to her but since you told her you would pay her for what you recovered for her days that she canceled, pay her (only) for them. You certainly do not owe her a particular amount, that wasn’t the deal. The deal is for what you recover on her days.

You can see the price breakdown for your new guest and add up the first 7 days, subtract the discount percentage that your current guest is getting (if any), then subtract your 3% host fee, and send her that amount.


As far as income goes, if you are in the US, if you just deduct the $1,000 from Rents Received Line 3 on Schedule E, your figure will not match what Airbnb sends on your 1099-K. In order to avoid any tedious back and forth with the IRS, even though you have retained documentation and can explain the discrepancy, I would probably list the $1,000 under Line 19 Other Expense and call it Guest Rebate or something.

If using Schedule C, you could put it under Returns and Allowances Line 2.

Regarding sales and/or lodging tax, if Airbnb has already collected and remitted the taxes, you would not have a way to reverse the payment and refund those to the guests as you are not filing them yourself. I can only do that for my direct bookings, as I have retained tax accounts in my name for that purpose.

For discussion purposes, not professional tax advice.


Thank you. That’s really helpful. The tax aspect is an area where I don’t have enough experience or knowledge. I can see that Airbnb returned her taxes and various fees, so that’s not part of my decision tree at all. But figuring out how to manage my taxes is another story. My accountant (DH) is a real stickler for letter of the law.

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Good to know that Airbnb returns taxes with a cancellation under stricter policies, I’ve wondered about that. I’m flexible cancellation, so the few cancellations I’ve had return everything.

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I one hundred percent agree with @KenH . You don’t have the guest’s money, Airbnb has it. So the guest has to go to them for a refund.

This is not being insensitive or ungracious, it’s a simple fact. You can’t refund something you don’t have. Let Airbnb earn its commission.

To be honest, I’ve never understood the ‘if I rebook’ thing.

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I think this was already said in a more sophisticated way, but my simple mind says…

  1. use the rate the new guest is paying per day less prorated commission (mine isn’t always exactly 3% so I’d check) x7
  2. Have ABB refund that specific amount you calculated so you don’t have to deal with tax implications. ABB will report fewer earnings and if the guest wants any more, such as ABB fees & taxes they need to work with ABB.

Sorry for the overlap in advice…I think mine reads a little differently :slight_smile:

And for the record I agree you don’t owe her anything but life is like a circle, you reap what you sow, karma, do unto others, etc., etc.


Why do you use ‘smart rates’?? I laugh when I see mine as sometimes they are 5 times what I charge and other times they are pitifully low. I keep the same rate all year, no arguments or problems !

I do exactly the same- my listing is the same price every day of the year. And I have never had any price glitching happen on my listing, which I think is more likely when a host is constantly fiddling with their pricing.

But I can also understand hosts wanting to maximize their income by upping rates during busy times of year and dropping rates to achieve full occupancy at slow times, or to fill empty dates. However, I think that’s best done manually rather than by using Airbnb’s smart pricing, and I’ve heard that pricing apps like Wheelhouse are much more on-point than Airbnb’s pricing.

Full occupancy and “not leaving money on the table” by being able to command higher rates on weekends or holidays or high season just isn’t that important to me, and probably isn’t to you, either.

Thank you ‘Muddy’ I’m a people person and enjoy company so I could
never run a place remotely or charge a ridiculous price!
I go back to Airbnbs original idea that people stay in my home with me
Money is useful but luckily is not my ‘be all and end all!!’

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Yes, I have never had a bad guest, and the majority of them have been truly wonderful. That to me is the important thing as a homeshare host, not wringing as much money out of the gig as possible.

But I can also appreciate that for many hosts, their rentals are their sole source of income, so maximizing their profits is a priority for them.

Actually, I do have the German guest’s money. It’s in my bank account. I also have the “replacement” guest’s money in my bank account. i am choosing to return a portion of the German guest’s money because my exchanges with her were exceptionally positive, and because I can. There is potential for her to book with us in the future, and I believe she would be an excellent repeat guest.

I am aware that I could have just ignored everything once I had her money and i could have “the easiest guests ever” for those 11 days – a clean and empty apartment space. But part of my reason for running a bnb space in this apartment in my family home is to put the space to work. I don’t like waste, either of space or of time or money. So by giving my first guest the choice to cancel and maybe be refunded if I could rebook, I was able to reduce waste. That’s my thinking, and I don’t hold it against anyone who has a different perspective or makes different choices for their business.

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your take was very helpful to me in thinking through the logistics ( and writing a note to self to explain it when tax time comes around). thank you.

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