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5 lodging tax tips for Airbnb owners

  • Sep 14, 2017 | MyLodgeTax

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Airbnb offers vacation rental property owners a convenient platform to connect with potential guests, and its popularity is only growing.

While Airbnb makes it easy to make money from your property, there are complexities about renting that you as an owner should understand. These include lodging taxes, which can also be known as sales tax, occupancy tax, room tax, accommodations tax, bed tax, hotel tax, etc.

Once you start renting out your property for short-term stays, you become responsible for lodging taxes. Although it’s your guests who are actually paying the tax, as the property owner, you’re responsible for collecting the tax from your guests then filing and remitting lodging tax returns and payments. Failure to comply can result in penalties and fines — on top of any back taxes owed — and local authorities are paying increasing attention to short-term rentals.

Here are a few tips that can help you get lodging taxes right for your Airbnb listing.

1. Make sure you understand the difference between lodging taxes and income taxes.

When you receive income from renting out your property, you should include this amount on your yearly tax return and pay income tax on it. This is a tax you’re probably already familiar with. When you rent out your property, your tax obligations don’t end with income taxes. You’re also responsible for lodging tax, which is a percentage your guest pays based on the cost of the room. As the owner, you don’t actually pay this tax out of your own pocket. But again, you must collect it from your guests and file it with the appropriate tax agencies.

2. Find out which jurisdictions cover your property.

Lodging taxes can be levied by the state, county, city or other special tax jurisdiction, and your property can be governed by more than one. It’s crucial to know all of the jurisdictions whose rules apply to your property because they each have unique, specific requirements and rates. The total lodging tax rate you charge guests will be a combination of the rates of all jurisdictions that apply.

3. Get familiar with lodging tax filing rules.

Once you know your jurisdiction(s), you can research their registration and filing requirements. You’ll need to register with the jurisdiction before you can start collecting taxes. Once you’re registered, you’ll be required to file returns to report the amount of tax you have collected and to pay it. Depending on the jurisdiction, this may be once a quarter or once a month — and in most cases, you’re required to file even if you haven’t earned any rental income or collected any lodging tax for that time period. You still may be required to file a “zero-dollar return.”

4. Understand lodging tax exemptions.

There are situations in which you aren’t required to collect lodging taxes. For example, a guest who rents for a long term rather than a short term will be exempt from short-term lodging taxes. In many jurisdictions, short term is defined as anything less than 30 days, but this varies — in Florida, for instance, short term is considered anything under six months. There may also be exemptions for government employees or nonprofit, religious, or educational organizations. Make sure you know which exemptions can apply to your property.

5. Find out whether Airbnb is collecting lodging taxes for you.

In some places, Airbnb can take care of collecting and filing a portion of your lodging taxes for you. Check here to see if this service is available for your property’s location. Just be sure to read the fine print carefully to determine which locations are included and which specific taxes are being collected.

In most areas where Airbnb has arranged to pay the lodging taxes on behalf of their hosts, they’re only paying a portion. For example, Airbnb may be taking care of the state lodging taxes but not the city or county taxes. And remember, even if Airbnb is handling a part of the tax for you, you’re still ultimately responsible for any lodging taxes they aren’t collecting and filing on your behalf. Additionally, you’re responsible for lodging taxes on any rental revenues earned through other platforms.

To get the most out of your Airbnb experience, it’s important to get these taxes right!

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Avalara Author MyLodgeTax
At Avalara MyLodgeTax, we provide the fastest and easiest way for short-term and vacation rental property owners to comply with their lodging or occupancy tax requirements. We manage your lodging taxes so you don't have to and guarantee your compliance — period. If we make a mistake, we'll fix it at no cost to you. No contracts, no obligation, no worries. Never worry about lodging taxes again. Contact us at MyLodgeTax@Avalara.com.