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Judge rules in favor of short-term rental owner in suit against New York City

  • Jun 30, 2020 | Jennifer Sokolowsky


A judge has ruled in favor of a short-term rental owner who was fined more than $4,000 by New York City for using his home for illegal occupancy and a series of other code violations.

Under New York State law, short-term rentals in multiple-family buildings are generally only allowed if the primary tenant lives in the apartment while paid guests stay there. However, single dwelling one-family homes and two-family homes such as duplexes or mother-in-law units are exempt from these rules.

The plaintiff in the case, Stanley Karol, occasionally rented out the basement of his Brooklyn home to guests and said the city fines were retaliation for his support for Airbnb.

The justice in the case, Arthur F. Engoron of the state Supreme Court of the 1st Judicial District, ruled that renting out one- and two-family homes for short-term stays is legal and ordered the city to return the fines to Karol.

“In sum, I say, ‘Leave the poor guy alone,’” Engoron wrote in his decision.

The Mayor’s Office of Special Enforcement (OSE), has fined many owners of one- or two-unit homes for short-term rental violations throughout the city. The recent ruling could change how this kind of enforcement is carried out.

New York City and Airbnb have engaged in legal battles for years. The two parties only recently announced the settlement of a 2018 lawsuit that Airbnb brought against the city over its short-term rental law.

The law required online rental platforms such as Airbnb and Vrbo to provide data on listings to OSE. Under the settlement, Airbnb will drop the lawsuit and the city will revise the law.

The new rules will require short-term rental platforms to provide a quarterly report to the city. That report would offer information on all listings for whole-home rentals that have at least five nights booked during the quarter. Listings for room rentals for two or fewer guests would be exempt.

The data will help enforce vacation rental laws, including lodging tax rules.

New York short-term rental hosts are required to collect lodging taxes from guests. Short-term rentals in New York City are subject to a New York City Hotel Room Occupancy Tax, which is collected by the city, while New York State collects state sales tax, New York City sales tax, and a Hotel Unit Fee of $1.50 per day.

Airbnb, Vrbo, and other vacation rental platforms don’t collect taxes on behalf of their hosts in New York City. That means hosts are responsible for registering with tax authorities, collecting lodging taxes from guests, and filing lodging tax returns. 

MyLodgeTax can help New York vacation rental hosts automate and simplify lodging tax obligations. For more on short-term rental taxes in New York State, see our Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.

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.
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