Oregon vacation rental tax guide

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Airbnb and HomeAway/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, Ashland, 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 and B&B stays, short-term rentals in Oregon are subject to tax. Tax authorities require short-term vacation rental hosts 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 vacation rental operators 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 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.

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 Oregon tax laws.

Short-term rental tax basics

When you start operating a short-term rental, while you might not have experience with lodging taxes, 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 the tax and paying it to the proper tax authority.

What’s the definition of “short-term rental” in Oregon?

For tax purposes, short-term rentals in Oregon are defined as reservations of fewer than 30 consecutive days.

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 short-term rental 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 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 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.

Registering with tax authorities

Oregon does not require registration in order for you to collect state lodging tax. As a host, you’ll file state lodging tax returns and pay any tax due online on the Oregon Department of Revenue website. The first time you file, you must provide first-time filer’s information. This serves as your registration.

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

Do I need to form an LLC?

In Oregon, you don’t need to form an LLC to register with tax authorities.

Local short-term rental regulations

Short-term rental 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) 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 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 ready to start collecting rental tax, 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 short-term rental, depending on your location.

Tax name

File and remit to

State lodging tax

Oregon Department of Revenue

Local lodging tax

Local tax authority

 

 

Tax rates

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 Oregon 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?

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 HomeAway/Vrbo) collects taxes for me? 

Before collecting any short-term rental taxes from your guests, you need to be aware of whether taxes have already been collected for you. All vacation rental marketplaces are required to collect Oregon state short-term rental 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 state tax authorities.

Are guests ever exempt from 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 does not apply to rentals by transient lodging intermediaries.)

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. In Oregon, you can file returns online. In order to file, you’ll need to enter information on how much you charged for your rentals. You’ll also need to pay the tax amount due. The Oregon Department of Revenue 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 Oregon Department of Revenue, state lodging tax due dates are as follows:

Filing frequency

Due date

Quarterly

Due the last day of the month following the end of the filing period

 

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?

No. In Oregon, you’re only required to file and pay if you collect payment from lodging customers within the filing period. 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 directly 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 tax laws. Failure to register with tax authorities and file short-term rental 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 a short-term rental but you’re 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 lodging tax filing?

Yes. Numerous 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.

The Vacation Rental Property Owner

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