Oregon vacation rental tax guide

With a bounty of popular destinations including Portland, Willamette Valley, and the Oregon Coast, the Beaver State offers ample opportunity for short-term rental (STR) businesses.

But these opportunities come with tax obligations. Like hotel stays, STR stays in Oregon are subject to lodging taxes. Failure to comply with state and local 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 Oregon 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 tax guide is a substitute for professional tax advice. Consider this an asset to help you understand and prioritize your lodging tax questions and concerns. Questions pertaining to specific situations or out-of-the-ordinary conditions are best solved with a certified tax professional familiar with Oregon tax laws.

Lodging tax basics

Lodging tax is calculated as a percentage of the cost of your 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 Oregon?

In Oregon, occupancy of transient lodging for less than 30 consecutive days is subject to state lodging tax.

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

If you collect payment from short-term guests renting out a room, apartment, house, or other dwelling, you may be responsible for collecting, filing, and remitting lodging taxes to the Oregon Department of Revenue. Under the law, whoever collects payment for occupancy of transient lodgings, including transient lodging hosts and transient lodging intermediaries such as Airbnb or Vrbo, is responsible for collecting and remitting lodging tax.

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 Oregon 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

STR operators in Oregon 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

Oregon STR operators are  required to register with the Oregon Department of Revenue for Transient Lodging Tax. You can register online.

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 filing.

Collecting lodging taxes

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

Which taxes apply to Oregon short-term rentals?

In Oregon, state and local lodging tax may apply to your STR, depending on your location.

Tax rates

Before you can begin collecting STR 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 Oregon address.

What charges are taxable?

If a separate fee is charged for a service that’s not optional, or if the value of a service is included in the standard lodging rate, the amount charged for the service is subject to the state lodging tax. This includes items such as cleaning fees, pet charges, extra bed fees, etc. If a separate fee is charged for an optional service, that fee is not subject to state lodging tax, including such items as room service, use of an honor bar, or restaurant meals charged to the room. If the host offers a lodging package that includes something not associated with the actual lodging or something provided by a third party, only the regular lodging rate that would have been charged, absent the package item, is subject to state lodging tax.

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

“Transient lodging intermediaries” such as Airbnb and Vrbo are required to collect Oregon state lodging taxes for you when they receive payment from your guests. Some local authorities may require marketplaces to collect local taxes as well. If taxes aren’t being collected for you, you’re responsible for collecting and remitting them to tax authorities.

Are guests ever exempt from lodging taxes?

There are situations in which you aren’t required to collect lodging taxes in Oregon. Guests who spend 30 or more consecutive days at a rental and federal employees on federal business are exempt from state lodging tax.

Operators with fewer than 30 days of rentals in a calendar year are exempt from collecting and paying state lodging tax. (This doesn’t apply to rentals by transient lodging intermediaries.)

Filing lodging tax returns

After you’ve collected taxes from your guests, it’s time to file your tax returns with the Oregon Department of Revenue. In Oregon, you can file returns and pay tax online. The Oregon Department of Revenue 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 Oregon Department of Revenue. State lodging 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 Oregon Department of Revenue?

Yes. In Oregon, you must file a return even if you don't collect any taxes during the reporting period.

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 tax laws. Failure to register with tax authorities and file lodging tax returns in Oregon 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 Oregon 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 Oregon 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 Oregon Department of Revenue. 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 Oregon file several state and local lodging tax returns every year. For many, filing solutions such as Avalara MyLodgeTax can relieve this burden.