Oregon vacation rental tax guide
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NOTE: The outbreak of COVID-19 (caused by the coronavirus) may have impacted vacation rental tax filing due dates in Oregon. Please consult your local tax authority for specific details. For more information, visit our ongoing coverage of the virus and its impact on sales tax compliance.
Airbnb, HomeAway, and VRBO have changed the way vacationers travel. More and more guests are choosing to rent private homes rather than book hotels. With a bounty of popular destinations including Portland and the Oregon Coast, the Beaver State offers prospective short-term rental hosts the opportunity to bring in extra income and meet new people.
But new income opportunities bring new tax implications. Like hotel, motel, and B&B stays, short-term rentals in Oregon are subject to tax. Tax authorities expect most short-term vacation rental hosts to collect 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 homeowners in the short term, but the sharing economy is increasingly being placed under the proverbial microscope. It’s recommended that you address compliance before tax authorities address it for you.
Avalara has put together this guide to help you comply with Oregon 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.
Disclaimer: No short-term vacation rental tax guide is a substitute for professional tax advice. Consider it 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 Oregon tax laws.
Short-term Rental Tax Basics
When you start operating a short-term rental, you may not have experience with lodging taxes, but you are probably familiar with income tax. It’s important to understand the difference between the two.
Income taxes are reported and paid annually to the federal and many state governments on "taxable" income, which is income after allowed expense deductions. You pay this tax directly to the government.
In contrast, a lodging tax on a short-term rental is a percentage of the cost of your guest’s stay that is added to the price of the bill. The guest pays the tax, but you are responsible for collecting the tax and paying it to the proper tax authority.
Taxes on short-term rentals can be known as transient lodging tax, room tax, occupancy tax, hotel/motel tax, and more. Usually, the total tax rate you charge your guest is made up of many different taxes required by the state or local entities such as counties, cities, and towns.
What is the definition of "short-term rental" in Oregon?
Short-term rentals in Oregon are defined as "temporary overnight stays" for a consecutive period of fewer than 30 days. Residents with a signed lease for continuous residence should not be charged short-term rental taxes. However, communities within Oregon may have their own definitions. Check with your local tax authority for the most up-to-date information.
Who is 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 for 30 days or more a year, you're responsible for collecting, filing, and remitting short-term rental taxes to the Oregon Department of Revenue. You may be the property owner, a renter subleasing a room, a third-party property management firm, or other party. If your online short-term rental platform, such as Airbnb, HomeAway, or VRBO, is collecting payment from your short-term rental guests on your behalf, they are responsible for lodging taxes on your bookings.
Location is key to compliance
The location of your rental is a crucial piece of information for short-term rental tax compliance. Your address will determine which tax jurisdictions you are required to report to, which taxes you need to collect, and your tax rates.
You can use our lodging tax lookup tool to get a rate report specific to your Oregon address. The report includes the estimated total tax rate to collect from guests, number of required registrations, number and frequency of returns per year, number of required registrations, 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 State Authorities
Oregon does not require registration in order for you to collect state lodging tax. You will file state lodging tax returns and pay any tax due online on the Oregon Department of Revenue’s website. The first time you file, you must complete first-time filers information. This serves as your registration.
You may also be required to register with local tax authorities. Be sure to check with them for details.
Do I need to form an LLC?
In Oregon, you do not need to form an LLC in order to collect state lodging taxes.
Along with tax obligations, short-term rental operators may be required to apply for short-term rental permits, business registrations and more. While this is not required on the state level, local tax authorities may have their own requirements.
Local short-term rental regulations
Short-term rental operators in Oregon should be aware of local laws and regulations that apply to them, including rules covering:
- Neighborhood notification
- Building and housing standards
Homeowner Associations (HOA) located in Oregon may also have specific rules regarding vacation rentals. As a member, it’s your responsibility to be aware of the association’s policy. It’s important to review this information to understand any restrictions or limitations on short-term vacation rentals.
Other rules and regulations associated with leases/subletting or condo/co-op rules may apply to your situation. A good place to start is by reviewing your signed lease and speaking with your landlord or property manager.
Collecting Short-term Rental Tax
Once you're registered with tax authorities, you are ready to start collecting rental tax, which you’ll add to your guest's bill when they pay for their stay.
Which taxes apply to Oregon short-term rentals?
In Oregon, a number of different lodging taxes may apply to your short-term rental, depending on your location. These can include:
Filed and remitted to
Oregon Transient Lodging Tax
Oregon Department of Revenue
City lodging tax
City tax authority
County lodging tax
County tax authority
The exact tax requirements for your short-term rental depend on its location.
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 important to make sure you have the latest rate to avoid over- or undercharging your guests and running into compliance issues. State and local tax authorities should have the latest rates posted. You can also use our lodging tax lookup tool to find the right rates.
What charges are taxable?
In Oregon, state lodging taxes must be paid on the "total retail price paid for occupancy of transient lodging." Any non-optional amount that the host receives from the guest or online rental platform (known as transient lodging intermediaries (TLIs) in Oregon) for use of the accommodation is considered part of the total retail price. This includes items such as cleaning fees, pet fees, rollaway bed fees, extra person fees, etc.
Fees that are refundable, such as damage deposits, are generally not subject to lodging taxes unless the host keeps the deposit. The same is true for optional fees. If you are charging fees to guests for performing optional laundry services that they choose to use, or a fee for arranging dry cleaning for them, for example, these are not subject to state lodging taxes.
What happens when my short-term rental platform (Airbnb, HomeAway, or VRBO) collects taxes for me?
Before collecting any short-term rental tax from your guests, you need to understand whether any taxes have already been collected for you. In Oregon, all vacation rental platforms (TLIs) that collect payment for short-term rental hosts are required by law to collect state lodging tax for you when the listing is booked and file the tax with the state. This includes Airbnb, HomeAway, VRBO, and others.
However, you may also be required to collect local taxes on your short-term rental, depending on your location. Some online rental platforms also collect some of these taxes for you. However, they may not collect all the local taxes you owe. If you rent your home through an online platform, be sure to identify which taxes are being collected and remitted on your behalf to avoid mistakenly collecting tax twice or failing to collect at all.
At the time of this guide's publication, Airbnb collects state lodging tax as well as local lodging taxes in these counties: Baker, Deschutes, Klamath, Lake, Lane, Multnomah, Tillamook, and Washington. Airbnb also collects local lodging tax in these cities: Bay City, Beaverton, Bend, Coos Bay, Cottage Grove, Eugene, Florence, Forest Grove, Hillsboro, Lincoln City, Newport, Portland, Redmond, Roseburg, Salem, Seaside, Springfield, Tigard, and Tualatin.
HomeAway and VRBO collect state lodging tax as well as local transient lodging tax in Portland and Multnomah County.
Even though Airbnb, HomeAway, and VRBO collect and remit these taxes for their hosts in Oregon State, hosts are still required to register with the Oregon DOR and file regular lodging tax returns reporting their rental income. Each local jurisdiction may have its own requirements.
Are guests ever exempt from taxes?
There are situations in which you aren’t required to collect lodging taxes in Oregon. For example, a guest who rents for a long term rather than a short term is exempt from short-term lodging taxes. In Oregon, Federal employees on federal business are also exempt from state lodging tax.
Filing Short-term Rental Tax Returns
After you've collected taxes from your guests, it’s time to file your tax returns with the Oregon Department of Revenue and local tax jurisdictions. In Oregon, you can file short-term rental tax returns online. In order to file, you will need to enter information on how much you received for your rentals. You'll also need to pay the tax amount due, usually via check or electronic transfer. The Oregon Department of Revenue allows credit card payments, but you may be charged convenience fees.
The law allows you to withhold 5 percent of the state lodging taxes you collect to cover your costs for record keeping, reporting, and collecting the tax.
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?
Oregon requires state lodging tax returns to be filed quarterly. Due dates are as follows:
Due on or before the last day of April, July, October, and January.
Due dates for local tax returns in Oregon may be different from the state's. We recommend contacting your local tax authority if you have any questions.
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 Oregon Department of Revenue?
Yes. Short-term rental operators in Oregon are required to file state lodging tax returns each assigned filing period, regardless of whether you had any short-term rental income or any short-term rental taxes were collected. Such returns are commonly known as "zero 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 direct to the consumer, 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 local tax laws.
Failure to pay Oregon short-term rental taxes on time will result in a penalty of 5 percent of the unpaid tax. If you file your return more than 30 days after the due date, you must pay an additional 20 percent penalty. Interest of an annual rate of 5 percent will accrue on any unpaid tax from the due date until the date payment in full is received.
I have been offering short-term rentals without collecting lodging tax. What options do I have?
If you’re already operating a short-term rental but are not collecting short-term rental 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.
Short-term rental hosts 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 transient occupancy tax filing?
Yes. Many short-term rental hosts in Oregon file several state and local lodging tax returns every year. For many, filing solutions such as MyLodgeTax can relieve this burden.