New York vacation rental tax guide

With a bounty of popular destinations including New York City, the Hamptons, and the Adirondacks, the Empire State offers ample opportunity for short-term rental (STR) businesses.

But these opportunities come with tax obligations. Like hotel stays, STRs in New York state are subject to lodging taxes. Failure to comply with lodging tax laws can result in fines and interest penalties. Tax jurisdictions are increasingly making STR tax compliance a priority, so it’s important to address compliance before tax authorities address it for you.

Avalara MyLodgeTax put together this guide to help you comply with New York lodging tax laws at the state level. Local jurisdictions such as cities or counties may have their own lodging tax rules. For more information on the tax rates and jurisdictions that apply to your rental’s specific location, use our lodging tax lookup tool.

No lodging rental tax guide is a substitute for professional tax advice. Consider this an asset to help you understand and prioritize your vacation rental questions and concerns. Questions pertaining to specific situations or out-of-the-ordinary conditions are best solved with a certified tax professional familiar with New York state tax laws.

Lodging tax basics

Lodging taxes are calculated as a percentage of the cost of a guest’s stay and added to the price on the bill. The guest pays the tax, but the STR operator is responsible for collecting and paying it to the proper tax authority.

What’s the definition of “short-term rental” in New York State?

An STR in New York is defined as “an entire dwelling unit, or a room, group of rooms, other living or sleeping space, or any other space within a dwelling, made available for rent by guests for less than 30 consecutive days, where the unit is offered for tourist or transient use.” State-administered lodging taxes apply to occupancy of less than 90 consecutive days.

Who’s required to collect and file taxes on short-term rentals in New York?

If you collect payment from short-term guests renting out a room, apartment, house, or other dwelling for more than three days a year, you’re likely responsible for collecting, filing, and remitting lodging taxes to New York state authorities.

Location is key to compliance 

The location of your rental is a crucial piece of information for lodging tax compliance. Your address determines which tax jurisdictions you’re required to report to, which taxes you need to collect, and the appropriate tax rates.

Use our lodging tax lookup tool to get a rate report specific to your New York rental’s address. The report includes the estimated total tax rate to collect from guests, number of required registrations, number and frequency of returns per year, and minimum number of rented days to qualify as a taxable stay. It should be noted that tax rates and the rules governing them change frequently. Please consider your tax rate report to be informative rather than authoritative.

Local short-term rental regulations 

Short-term rental operators in New York should be aware of the local regulations that apply to them, including rules covering:

• Legality
• Permits, licenses, and registration
• Zoning
• Advertising
• Neighborhood notification
• Building and housing standards

Homeowner associations (HOAs), condominium communities, co-ops, and landlords may also have specific rules regarding vacation rentals. It’s your responsibility to be aware of STR policies that apply to your property.

Registering with tax authorities

Before you can begin collecting taxes on your New York STR, you’re legally required to register with the New York Department of Taxation and Finance to receive a New York State Sales Tax Certificate of Authority. You must register at least 20 days before you begin collecting taxes from guests.

You’re not required to register if you rent out your own property for three or fewer days a year and do not use a booking service such as Airbnb or Vrbo. If a booking service facilitates all of your STR transactions, you’re not required to register with the state or collect lodging taxes, but only if you’ve received Form ST-155, Booking Service Certificate of Collection, from the booking service, or a publicly available agreement with the marketplace stating the booking service will collect lodging taxes on these sales.

Depending on your jurisdiction, you may be required to register with your local tax authority and file local lodging tax returns in addition to state registration and filing.

Collecting lodging tax

Once you’ve registered with tax authorities, you’re ready to start collecting lodging taxes, which you’ll add to your guest’s bill when they pay for their stay.

Which lodging taxes apply to New York short-term rentals?

In New York, a number of different lodging taxes may apply to your STR, depending on your location. These can include:

What’s the tax rate?

Before you can begin collecting lodging taxes, you need to know the correct rate to charge to avoid compliance issues. Our lodging tax lookup tool can give you a rate report specific to your New York address.

What charges are taxable?

In New York state, the whole amount guests must pay to stay and have the right to use the STR is subject to lodging taxes, whether the guest stays or not. If an STR operator keeps any amount of the rent charged for occupancy when a guest doesn’t show up or cancel a reservation on time, that amount is taxable. Charges such as cleaning fees, extra person fees, and pet fees are taxable if they are part of the charge for occupancy. Separate charges for services, such as parking, transportation, or recreation equipment rental, may be subject to other types of taxes

What happens when my short-term rental marketplace (such as Airbnb or Vrbo) collects taxes for me?

“Booking services” including STR marketplaces, are required to collect state-administered lodging taxes on behalf of hosts when they facilitate stays. If a booking service facilitates all of your STR transactions, you’re not required to register with the state or collect lodging taxes, but only if you’ve received Form ST-155, Booking Service Certificate of Collection, from the booking service, or a publicly available agreement with the marketplace stating the booking service will collect sales tax and unit fees on these sales.

Marketplaces may also collect some local lodging taxes. If taxes aren’t being collected for you, you’re responsible for collecting and remitting them to tax authorities.

Are guests ever exempt from taxes?

There are situations in which you aren’t required to collect lodging taxes. For example, a guest who rents for a long term rather than a short term is exempt from short-term lodging taxes.

In New York state, some exempt organizations, such as religious groups, youth sports groups, charitable organizations, and authorized representatives of veterans posts or organizations, are exempt from paying sales tax on STR rentals. Employees of the federal government (including military personnel) and New York state and its political subdivisions who occupy STRs while traveling on official business are also exempt from sales tax. Exemption certificates are required.

Filing lodging tax returns

After you’ve collected taxes from your guests, it’s time to file your tax returns with the New York State Department of Taxation and Finance. In New York state, you can file lodging tax returns and pay tax online. The New York State Department of Taxation and Finance allows credit card payments, but you may be charged convenience fees for this type of payment.

When do I need to file my returns?

You’ll be assigned a filing frequency and due dates when you register with the tax authority. For filing with the New York State Department of Taxation and Finance, state sales tax due dates are as follows:

I didn’t rent my property during this filing period. Am I still required to file a lodging tax return with the New York State Department of Taxation and Finance?

Yes. STR operators registered with the New York State Department of Taxation and Finance are required to file returns each assigned filing period, regardless of whether you had any STR income or collected any lodging taxes. Such returns are commonly known as “zero dollar returns.” Local tax authorities may have their own requirements.

Are there penalties for filing taxes late?

Whether you choose to offer STRs through a marketplace like Airbnb or Vrbo, or directly to guests, you open the door to tax liability at the state and local level. As tax revenue is a major source of local funding, tax authorities are becoming more aggressive in their efforts to identify individuals and businesses violating local tax laws. Failure to register with tax authorities and file lodging tax returns in New York state on time may result in late fees, interest payments, and in extreme cases, legal action.

I’ve been offering short-term rentals without collecting lodging tax. What options do I have?

If you’re already operating an STR but not collecting lodging taxes, you may be in violation of New York state tax laws. Take the time to review your legal responsibility (with a tax professional, if necessary) and understand the risk of continuing to not collect tax.

STR operators in New York state may be able to take advantage of a voluntary disclosure agreement (VDA). A VDA offers an opportunity for hosts to proactively disclose prior period tax liabilities in accordance with a binding agreement with the New York State Department of Taxation and Finance. VDAs are offered to encourage cooperation with state tax laws and may result in some or all penalty and interest payments being waived.

Are there options for outsourcing lodging tax filing?

Yes. Many STR operators in New York state file several state and local lodging tax returns every year. Filing solutions such as Avalara MyLodgeTax can relieve this burden.