Avalara MyLodgeTax > Blog > State and Local News > New Orleans voters approve new short-term rental tax

New Orleans voters approve new short-term rental tax

  • Nov 19, 2019 | Jennifer Sokolowsky

Bourbon Street, New Orleans

Voters in New Orleans, Louisiana, have approved a ballot measure that raises taxes on short-term rentals by 6.75%.

More than two-thirds of voters in a special election said yes to the new occupancy tax, which will go into effect on January 1. The tax is expected to generate $10.5 million every year for the city, with 75% going to a city infrastructure fund and the remaining 25% funding tourism promotion.

The ballot measure was part of Mayor LaToya Cantrell’s “fair share” deal with the state to raise funds for improving city infrastructure, including roads and water and sewage systems.

Vacation rental hosts will be required to collect the new occupancy tax from guests, along with existing lodging taxes that include a city housing improvement fund fee, city hotel-motel sales tax, city hotel occupancy privilege tax, and Louisiana state sales tax. Short-term rental operators must register with both city and state tax authorities then file regular lodging tax returns with both.

Airbnb collects both the city and state taxes for hosts listing on its platform. Vrbo also collects city taxes for New Orleans hosts, but doesn’t collect state sales tax.

Hosts must collect lodging taxes directly from guests if their platform doesn’t collect it for them, and they’re required to register and file lodging tax returns even if taxes are being collected on their behalf.

MyLodgeTax can help short-term rental hosts in New Orleans simplify and automate lodging tax compliance. See our Louisiana Vacation Rental Tax Guide for more on short-term rental taxes in the state, and if you have tax questions related to New Orleans properties, drop us a line and we’ll get back to you with answers.

Earlier this year, the New Orleans City Council finalized new short-term rental rules, which go into effect December 1.

Under the new ordinance, short-term rentals will remain illegal in most of the French Quarter, and vacation rentals in the Garden District will be banned.

The new rules also require vacation rental owners in residential neighborhoods to live on the rental property as their primary residence, called a “homestead exemption.” Owners with homestead exemptions will be allowed to operate up to three vacation rental units. Current short-term rental hosts operating without a homestead exemption will not be grandfathered in once the new law goes into effect.

The rules also limit short-term rental units to no more than 25% of commercial or mixed-use property. However, under the city’s “legal conforming use” law, owners with commercial licenses that are granted by December 1 will be able to continue operating such units even if they exceed the new 25% cap.

Council members also raised the existing Neighborhood Housing Improvement Fund Fee on short-term rentals from $1 per night to $5 for residential rentals and $12 for commercial properties.

The new short-term regulations have been controversial, and a group of short-term rental owners recently sued the city over the law. The suit represents hosts who were previously granted “temporary” short-term rental licenses, which allowed owners to rent out an entire home for up to 90 days per year.

The City Council placed a moratorium on issuing new temporary licenses last year while it deliberated over new short-term rental rules. Under the latest ordinance, these types of licenses are no longer available.

The lawsuit, filed by the Alliance for Neighborhood Prosperity, argues that the city is violating the rights of hosts who formerly held temporary licenses.

“We were granted a license and had a fair and reasonable expectation that we were going to be able to renew our licenses, as long as we followed the rules,” Eric Bay, president of the Alliance for Neighborhood Prosperity, said.

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.