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New Mexico law requires all vacation rentals to collect lodging taxes

  • Mar 4, 2019 | Jennifer Sokolowsky

New Mexico capitol

New Mexico Governor Michelle Lujan Grisham has signed a bill that will increase the number of vacation rentals in the state that are required to collect local lodging taxes from guests.

The new law, which goes into effect on January 1, 2020, closes a loophole that exempted short-term rental hosts offering fewer than three rooms from collecting local lodging tax.  

The sponsor of Senate Bill 106, Senator John Sapien, said he wanted to level the tax playing field between hotels and short-term rentals. The bill is similar to previous legislation vetoed during the 2017 legislative session by then Governor Susana Martinez, who said short-term rentals help bring more people to the state to support the tourism industry.

The passage of the latest bill means all short-term rental hosts, no matter how many rooms they offer, must pay local lodgers’ tax in communities that levy this tax. This involves registering with tax authorities, collecting the taxes from guests, and filing lodging tax returns.

In some cities and counties, including Taos County, Albuquerque, Ruidoso, Santa Fe, Taos, and Taos Ski Valley, Airbnb already automatically collects local lodging taxes on behalf of its hosts when guests pay for their stay.

However, Airbnb does not register with tax authorities or file tax returns on their behalf. Other platforms, including HomeAway and VRBO, do not collect any taxes for their hosts.

Vacation rental hosts in New Mexico are also required to pay the state’s gross receipts tax (which they can pass on to guests). This tax varies from 5.125 percent to 8.8675 percent, depending on the location of the rental. None of the short-term rental platforms, including Airbnb, collect this tax for operators.

MyLodgeTax can help all New Mexico short-term rental hosts comply with lodging tax requirements, from registration to filing. For more on short-term rental taxes in New Mexico, see our state Vacation Rental Tax Guide.

According to a 2017 study by the New Mexico Hospitality Association, more than 4,000 short-term rental properties are operating in New Mexico.

Local communities are becoming more active in regulating vacation rentals. Taos passed regulations last year requiring owners of short-term rentals to register with the town and pay a $300 annual fee, along with a $100 affordable housing fee on whole-home rentals. Operators must also have a local contact available at all times.

In 2016, Santa Fe also passed short-term rental rules requiring vacation rental operators to get an annual permit costing $100 to $325, along with a one-time $100 application fee. Short-term rental permits in residential areas are capped at 1,000, and operators are only allowed to rent out the property once during a seven-day period.

New Mexico isn’t the only state to extend taxes to short-term rentals recently. Earlier this year, Massachusetts Governor Charlie Baker signed a bill into law to regulate and tax short-term rentals in the state for the first time. The law went into effect on July 1.

And in New Jersey, a new lodging tax that applies to all short-term rentals that are either privately listed or arranged through online rental platforms such as Airbnb, VRBO, and HomeAway went into effect October 1.    

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
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.