Avalara MyLodgeTax > Blog > Lodging Taxes > What defines a break in the continuous occupancy of a rented room?

What defines a break in the continuous occupancy of a rented room? The long and short of it.

  • Sep 5, 2017 | MyLodgeTax

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When renting out your home or property for short-term rentals, a day can make a big difference. In many tax jurisdictions, you’re required to collect sales tax or occupancy tax on short-term rentals, but not on longer-term rentals. So it’s crucial to know what’s considered “short term” and “long term” in your location — and what’s considered a “break” in occupancy.

Those time periods can vary by location. In Florida, for instance, any rentals of 180 consecutive days or fewer, essentially up to six months, are considered short term, but in many other states and jurisdictions, 30 days is the magic number.

In Colorado, for example, rentals under 30 days are subject to sales tax, but rentals for at least “30 consecutive days of paid use by any single payor or customer” are not taxed.

Jurisdictions can have very different definitions of occupancy. In the Denver suburb of Wheat Ridge, Colorado, a break in continuous occupancy is explicitly defined as “any transfer between occupants (consumers), persons, or entities,” which would restart the 30-day period required for exemption from accommodations tax. However, switching to a different room within the same accommodations during the 30-day period is not considered a break.

Rhode Island has one of the most detailed definitions of a break in occupancy. Its rules state that a break occurs when “a guest terminates his occupancy by checking out or by transferring from one hotel to another hotel” even if the hotels are operated by the same owner. However, as in Wheat Ridge, moving to a different room within the same accommodations is not considered a break in occupancy.

Some jurisdictions focus on defining the renter for the purpose of short-term vs. long-term rentals. Suffolk County, New York, exempts “permanent residents” from lodging taxes. A permanent resident is defined as a person “occupying” rental accommodations for at least 30 consecutive days.

Texas also defines the person rather than the transaction, but goes into more detail, stating that lodging tax is imposed on a “person who, under a lease, concession, permit, right of access, license, contract, or agreement, pays for the use or possession or for the right to the use or possession of a room or space in a hotel costing $15 or more each day.”

Other jurisdictions do not drill down on occupancy, and instead focus on rental agreement and payment. For example, in Washington state, the law was changed in 2001 so that as long as the renter pays for accommodations for 30 days or more, that charge is exempt from sales tax or accommodations tax. There are no occupancy rules in order to qualify, as long as the renter commits to 30 days or more in advance and pays accordingly.

North Carolina’s rules make no mention of occupancy at all, simply stating that “an accommodation rented to the same person for a period of 90 or more continuous days” is not subject to sales or lodging taxes. The rules in Tennessee are similar, with occupancy tax only applied to accommodation rentals for “a period of 30 consecutive days or less to the same occupant.”

As you can see, the rules for what constitutes a break in continuous residency when it comes to short-term vs. long-term rentals can be different in each jurisdiction. As with any question related to accommodation taxes, it’s important to understand the specific laws for your location.

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.
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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.