New York vacation rental tax guide
Avalara free tax guides
Airbnb and Vrbo have changed the way vacationers travel, with many guests choosing to rent private homes rather than book hotels. With a bounty of popular destinations including New York City, the Hamptons, and the Adirondacks, the Empire State offers prospective short-term rental hosts the opportunity to bring in extra income.
But new income opportunities bring new tax implications. Like hotel and B&B stays, short-term rentals in New York State are subject to tax. Vacation rental hosts are required to collect applicable short-term rental taxes from their guests and remit them to the proper authorities.
Failure to comply with state and local tax laws can result in fines and interest penalties. These may not catch up with you in the short term, but the sharing economy is under increased scrutiny, so it’s important to address compliance before tax authorities address it for you.
Avalara MyLodgeTax has put together this guide to help you comply with New York short-term rental tax laws. For more information on the tax rates and jurisdictions that apply to your rental’s specific location, use our lodging tax lookup tool.
No short-term vacation 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.
Short-term rental tax basics
When you start operating a short-term rental, you might not have experience with lodging taxes, but you’re probably familiar with income tax. It’s important to understand the difference between the two.
Income tax is reported and paid annually to the federal government and many state governments on “taxable” income, which is income after allowed expense deductions. You pay this tax directly to the government.
Lodging tax on a short-term rental is a percentage of the cost of your guest’s stay that’s added to the price on the bill. The guest pays the tax, but you’re responsible for collecting and paying it to the proper tax authority.
What’s the definition of “short-term rental” in New York State?
For tax purposes, short-term rentals in New York are defined as reservations 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, you're likely responsible for collecting, filing, and remitting short-term rental taxes to New York authorities.
The rental of a bungalow, defined as a single-family living unit with its own kitchen, bathroom, and sleeping rooms rented fully furnished, is not subject to lodging taxes as long as no housekeeping, food services, or other common hotel services are provided.
Location is key to compliance
The location of your rental is a crucial piece of information for short-term rental 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.
Registering with tax authorities
Before you can begin collecting taxes on your short-term rental in New York, 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.
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.
Do I need to form an LLC?
In New York, you don’t need to form an LLC to register with tax authorities.
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:
- Permits, licenses, and registration
- 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 short-term rental policies that apply to your property.
Collecting short-term rental 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 taxes apply to New York short-term rentals?
In New York, a number of different lodging taxes may apply to your short-term rental, depending on your location. These can include:
File and remit to
State and local sales tax
New York State Department of Taxation and Finance
|New York City Hotel Unit Fee
|New York Department of Taxation and Finance
Local lodging tax
Local tax authority
Before you can begin collecting short-term rental taxes, you need to know the correct rate to charge. Rates can and do change frequently, so it’s critical to make sure you have the latest rate to avoid over- or undercharging your guests and running into compliance issues.
Our lodging tax lookup tool can give you a rate report specific to your New York address. The report includes the estimated total tax rate to collect from guests, required registrations, frequency of returns per year, and minimum number of rented days to qualify as a taxable stay.
What charges are taxable?
In New York State, any amount that guests must pay for their stay is considered part of the rental fee and is taxable. This includes items such as cleaning fees, pet fees, rollaway bed fees, extra person fees, etc. Separately stated charges for services or items that are not required for occupancy are not taxable, including charges for internet access, food and drink, entertainment, valet and laundry service, theater ticket service, and parking or transportation service. Guaranteed no-show fees are taxable, while cancellation fees are not.
What happens when my short-term rental marketplace (such as Airbnb or Vrbo) collects taxes for me?
Before collecting any short-term rental taxes from your guests, you need to be aware of whether any taxes have already been collected for you. Some vacation rental marketplaces collect lodging taxes for you when the listing is booked.
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, exempt groups, including religious and charitable organizations, diplomatic personnel, authorized representatives of veterans’ posts or organizations, and certain Indian tribes or nations, can purchase occupancy without paying sales tax. Employees of the United Nations, federal government (including military personnel), and state and local governments who are traveling on official business may also be exempt from lodging taxes. Exemption certificates are required.
Filing short-term rental 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 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.
Take the time to double-check your returns prior to submitting. Simple mistakes such as typos, missing signatures, and incorrect tax information can lead to unwanted delays.
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:
Due the 20th day of the month following the end of the filing period
|Due the 20th day of the month following the end of the filing period
|Due by March 20 each year
I didn’t rent my property during this filing period. Am I still required to file a tax return for my short-term rental with the New York State Department of Taxation and Finance?
Yes. Short-term rental operators registered with the New York State Department of Taxation and Finance are required to file returns each assigned filing period, regardless of whether there was short-term rental income or any short-term rental taxes were collected. 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 short-term rentals 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 not in compliance with tax laws. Failure to register with tax authorities and file short-term rental 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 a short-term rental but not collecting short-term rental 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.
Short-term rental hosts 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. Numerous short-term rental hosts in New York State file several state and local lodging tax returns every year. For many, filing solutions such as MyLodgeTax can relieve this burden.