Considering Selling an investment property in Maine to buy in Pennsylvania

Member since 2026 · 5 posts · 1 vote

I am considering selling an investment property in Bangor Maine to buy one in Easton Pennsylvania. I do not have anything picked out in Easton. I would like to know if anyone knows about AirBnB tax laws in Pennsylvania?

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Jason WrayPro Member

Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes

3mo

Michelle,

Buying in PA does offer a stronger purchase to cash flow versus Bangor, MN. I had a recent client in Kittery that sold and purchased (3) homes in PA and 10X'd her passive income. You just need to be aware of the zoning and what restrcitions apply based on the LTR/STR model.

If you have any questions or want to talk REI feel free to check out my profile and send me an email. I enjoy helping other BP members save time and money!

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Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
3mo
Michelle,
Buying in PA does offer a stronger purchase to cash flow versus Bangor, MN. I had a recent client in Kittery that sold and purchased (3) homes in PA and 10X'd her passive income. You just need to be aware of the zoning and what restrcitions apply based on the LTR/STR model.
If you have any questions or want to talk REI feel free to check out my profile and send me an email. I enjoy helping other BP members save time and money!
[email protected]727-637-4289
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Vijay FriedmanBusiness Member
Miami, FL · Member since 2026 · 766 posts · 122 votes
3mo
Quote from @Michelle Cutrufello:

I am considering selling an investment property in Bangor Maine to buy one in Easton Pennsylvania. I do not have anything picked out in Easton. I would like to know if anyone knows about AirBnB tax laws in Pennsylvania?

@Michelle Cutrufello
Easton has become a popular market for investors recently. One thing I'd also look into is whether your acquisition structure will be a straight purchase or part of a 1031 exchange, since that can impact your overall investment strategy. Hopefully some local PA investors can share their experience with the Airbnb regulations as well.
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Jaylan ArcherBusiness Member
Real Estate Agent · Portsmouth, NH · Member since 2014 · 150 posts · 65 votes
3mo
Hey Michelle!
One thing to consider selling your property in Maine is the Maine State Withholding Tax. You can apply for an exemption through the state but if you are selling a property in Maine as an out of state resident, the state will withhold 2.5% of the sales price of the property for taxes.
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Alex Olson
Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
3mo
1031 exchange is a fantastic way to switch markets and build cash flow.
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Mohammed Rahman
Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
3mo
Hey Michelle,
I too think that it may be worth exploring whether a 1031 exchange makes sense for your situation. Depending on your circumstances, that could help defer capital gains taxes and preserve more capital for your next investment property.

I'd also consider having a conversation with a local CPA and real estate attorney who are familiar with Pennsylvania short-term rentals. The rules can vary quite a bit from one municipality to another, so it's worth getting a clear understanding before moving forward.

Best of luck with the decision.
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Fulton Abraham Sanchez
CPA| New Clients Welcome| 50 States · Member since 2016 · 430 posts · 93 votes
3mo
@Michelle Cutrufello, hi. Before buying in the Easton area, I'd focus on local short-term rental rules, zoning requirements, and any occupancy taxes, as these can have a bigger impact on profitability than Pennsylvania state taxes. Since you're selling one investment property to acquire another, it may also be worth exploring whether a 1031 exchange fits your situation and goals.
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Michelle Cutrufello
OP
Member since 2026 · 5 posts · 1 vote
3mo
Hey I really want to thank all of you for the replies! I honestly dont want to sell this house at all because the interest rate I have on it is amazing and there is a good amount of equity in it but I have been renting it to the DOD for the last 6 years and there are a lot of questions as to whether they are going to renew and the rental market is EXTREMELY slow especially in November when the contract is up. And yes I will definitely be doing a 1031 exchange if I sell it.
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
3mo
Hey Michelle! Sorry for the late reply, but really great thread and a lot of good perspectives. Vijay and Mohammed both touched on the 1031 angle, which is honestly the most important tax piece to think through before you make any moves.

Jaylan's point about the Maine State Withholding Tax is also really important and often catches out-of-state sellers off guard. This is true and definitely worth looking into.

On the 1031 side, you can defer the capital gains and depreciation recapture from the Maine sale and roll the full proceeds into the Pennsylvania property. The key is having a qualified intermediary in place before you close on the Maine sale you can't touch the proceeds yourself or the exchange is disqualified.

On the STR side, as someone mentioned above it can be lucrative, but local zoning and STR regulations vary significantly, so that's definitely worth researching before you commit to a property.
As far as the tax laws, the federal tax rules apply the same regardless of the state. If you materially participate and meet the 7-day average stay rule, the income and losses from the property can become non-passive, you may be able to use the losses against other non-passive income like W-2 or business income (which is typically why people get into the STR market to begin with). But the benefit really depends on how much you're making on the other side and whether you get a cost seg to accelerate those losses. Definitely worth looping in a CPA to learn about all of this and see if it's a good fit for your income situation.

Another thing to consider, have you thought about turning your current property into an STR once your current tenants move out? Could be worth exploring!

Happy to connect!

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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
3mo
@Michelle Cutrufello, like others here mentioned, a 1031 is a good way to take advantage of the tax and reinvest in a property with a better performance potential. You definitely want to have a good grasp on the market.

If you're having trouble finding exactly what you want in the area you're targeting, don't get locked into that one option. You could look at a different property type in the same market, or even a completely different market altogether—an Airbnb or vacation rental somewhere else, for example.

It becomes much easier to identify the right replacement property. If you can identify the "why" of selling. Your "why" should be what drives the search for type and location.

But beyond that - beware the fluid nature of zoning and use laws. These seem to change on a dime. And todays air bnb is tomorrow's NIMBY community!
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Jason MalabuteBusiness Member
Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 899 votes
2mo
Sounds like you've already gotten a lot of good input here. On the 1031 side, the big benefit is that you can defer both the capital gains and the depreciation recapture from the Bangor sale and roll the full proceeds into the Easton property, but the piece people trip on is that you have to have a qualified intermediary lined up before you close on the Maine sale, because the moment the proceeds touch your own hands the exchange is blown. The point that was made about Maine's withholding on out-of-state sellers is also worth flagging early so it doesn't surprise you at closing. On the Airbnb question, the federal rules are the same no matter the state: if your average guest stay is seven days or less and you materially participate, the activity isn't treated as a regular passive rental, so the losses can potentially offset other non-passive income like W-2 or business income, and that effect is amplified if you run a cost segregation study to accelerate the deductions. Just keep in mind the local zoning and short-term rental ordinances in Easton can make or break the deal, so dig into those before you commit to a property. How all of this actually shakes out depends entirely on your specific numbers and situation, so it's worth running it by your own CPA before you pull the trigger.
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Pierre Guirguis
Lender · Marlboro, NJ · Member since 2025 · 243 posts · 147 votes
2mo
The ABE area is a solid place to be looking. There's steady job and population growth, good access to bigger metros nearby, and rental demand has stayed reliable. You also get a lot more for your money there than in most of the NY/NJ area, which helps the numbers work.

On the Airbnb tax: PA charges a 6% state hotel occupancy tax on stays under 30 days, and some counties add their own, so confirm Northampton County's local rate. Airbnb and Vrbo usually collect and remit the state piece for you, but you're still responsible for verifying it. More important than the tax: PA has no statewide STR law, so the rules are set town by town. Check Easton's own zoning and permit ordinance before you commit to a specific property, since that's what determines whether an STR is even allowed there.

Many people have mentioned 1031 exchange, and I agree it's a great tool and worth doing, just be mindful of the timing. Once Bangor closes, you have 45 days to identify your replacement in writing and 180 to close. Since you don't have anything picked yet, it's worth lining up some real targets before you sell so you're not racing the clock afterward. A couple other things to keep in mind: set up your qualified intermediary before the sale closes (the proceeds can't pass through your hands), and to fully defer the tax you generally want to reinvest all the proceeds and replace the debt. None of it's hard once you know the rules, it just rewards a little planning up front.
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