Pennsylvania vacation rental tax guide

With a bounty of popular destinations including Philadelphia, Hershey Park, and the Poconos, the Keystone State offers ample opportunity for short-term rental (STR) businesses.

But these opportunities come with tax obligations. Like hotel stays, STR stays in Pennsylvania 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 Pennsylvania 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 Pennsylvania tax laws.

Short-term rental 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 Pennsylvania?

In Pennsylvania, state hotel occupancy tax applies to room rental charges for periods of less than 30 days by the same person. In addition to hotels, the tax applies to rentals of rooms, apartments, and houses arranged through online or third-party brokers.

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

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 lodging taxes to Pennsylvania tax 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 Pennsylvania 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 Pennsylvania 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 STR in Pennsylvania, you’re legally required to register with the Pennsylvania Department of Revenue. You can register online to receive a Sales, Use, and Hotel Occupancy Tax License.

If all your transactions go through a marketplace such as Airbnb or Vrbo, you’re not required to register with the state or collect state lodging taxes. Depending on your jurisdiction, you may also be required to register with your local tax authority and file local lodging tax returns.

Collecting lodging taxes

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 Pennsylvania short-term rentals?

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

Tax rates

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 Pennsylvania address.

What charges are taxable?

In Pennsylvania, any amount charged in order to use accommodations is taxable. This includes items such as cleaning fees, pet fees, rollaway bed fees, extra person fees, no-show fees, early departure fees, late departure fees, and damage fees. Cancellation fees are not taxable.

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

In Pennsylvania, “booking agents” such as Airbnb and Vrbo are required to collect state-administered 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 lodging taxes?

There are situations in which you aren’t required to collect lodging taxes in Pennsylvania. For example, a guest who rents for a long term rather than a short term is exempt from lodging taxes. In Pennsylvania, federal employees on official business and foreign diplomats are exempt from lodging taxes. Documentation is required.

Filing lodging tax returns

After you’ve collected taxes from your guests, it’s time to file your tax returns with the Pennsylvania Department of Revenue. In Pennsylvania, you must file returns online or via telefile. You may pay lodging taxes online, by phone, or via mail. The Pennsylvania 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 tax authority. For filing with the Pennsylvania Department of Revenue, state hotel occupancy 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 Pennsylvania Department of Revenue?

Yes. STR operators registered with the Pennsylvania Department of Revenue are required to file returns each assigned filing period, regardless of whether you had any short-term rental income or collected 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 tax laws. Failure to register with tax authorities and file lodging tax returns in Pennsylvania 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 Pennsylvania tax laws. Take the time to review your legal responsibility (with a tax professional, if necessary) and understand the risks.

STR hosts in Pennsylvania 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 Pennsylvania 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 Pennsylvania file several state and local lodging tax returns every year. Filing solutions such as Avalara MyLodgeTax can relieve this burden.