Louisville, Kentucky, and Airbnb announce tax agreement
- Mar 21, 2018 | Jennifer Sokolowsky
Short-term vacation rental platform Airbnb has made a deal with Louisville Metro to collect lodging tax on Airbnb bookings in Louisville and Jefferson County, Kentucky. Airbnb will start collecting the tax from guests on behalf of hosts April 1.
The agreement does not include a provision for Airbnb to release the names and addresses of its hosts, which some neighborhood advocates had wanted. Without identification of hosts, they say, it’s hard to enforce short-term rental laws.
Louisville passed a law in 2016 requiring short-term rental businesses to register with the city for a $25 fee, as well as collect lodging taxes from guests and file them monthly with the city’s revenue commission. Few complied.
Meanwhile, the industry has grown in Louisville. According to Airbnb, its Louisville operators hosted 78,000 guests and earned about $10 million in 2017, a 60 percent jump over the previous year.
Last year, there were about 1,700 short-term rental hosts listed with Airbnb alone, but fewer than 265 had registered with the city. Many hosts in the area only rent their properties out once a year for the annual Kentucky Derby in May.
Louisville expects the tax to generate approximately $950,000 a year in revenues. Funding from the short-term accommodations tax goes toward the Louisville Convention & Visitors Bureau, bond payments for renovations to the Kentucky International Convention Center, funding for the Kentucky Center for the Performing Arts, and matching money for the state.
Airbnb announced a similar tax collection deal with Lexington in February. Airbnb also made an agreement with the state of Kentucky last year to collect the state sales tax of 6 percent and state lodging tax of 1 percent automatically on all Kentucky bookings.
Even though Airbnb collects these taxes on behalf of hosts, tax authorities ultimately consider the hosts, not Airbnb, responsible for compliance.
Short-term rental hosts who use other platforms, such as VRBO or HomeAway, must take care of collecting and remitting both city and the state taxes on short-term rentals themselves. Many short-term rental operators use the MyLodgeTax service to help them manage all of their lodging tax compliance.