Utah vacation rental tax guide

Avalara free tax guides

Airbnb 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 Zion National Park, Park City, and Moab, the Beehive 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 Utah 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 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 Utah 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 Utah 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 is added to the price of 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 Utah?

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

 

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

If you collect payment from short-term guests renting out an apartment, house, or other dwelling, you’re likely responsible for collecting, filing, and remitting short-term rental tax to Utah tax authorities.

 

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 your tax rates. 

Use our lodging tax lookup tool to get a tax report specific to your Utah 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 state tax authorities

Before you can begin collecting taxes on your short-term rental in Utah, you’re legally required to register with the Utah State Tax Commission. Once you’ve registered, you’ll receive a state tax ID number and instructions on filing your taxes.

 

Do I need to form an LLC?

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

 

Local short-term rental regulations

Short-term rental operators in Utah 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 short-term rental policies that apply to your property.

Collecting short-term rental tax

Once you’re registered with tax authorities, you’re 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 Utah short-term rentals?

In Utah, short-term rentals are subject to state sales tax and transient room tax and may be subject to local transient room tax, depending on the jurisdiction.

Tax name File and remit to
State sales tax Utah State Tax Commission
State transient room tax Utah State Tax Commission
Local transient room tax Utah State Tax Commission 

 

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 Utah 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?

Utah imposes lodging tax on short-term rental charges, including fees such as pet fees, damage fees, reservation fees, and cleaning fees. Cancellation fees and parking fees aren’t taxable. Some fees may be subject to sales tax but not to transient room tax, and vice versa.

 

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. Airbnb and Vrbo collect Utah short-term rental taxes for you when the listing is booked. If taxes aren’t being collected for you, such as when guests book directly with you rather than through a marketplace, you’re responsible for collecting and remitting lodging taxes to tax authorities.

Are guests ever exempt from taxes?

There are situations in which you aren’t required to collect lodging taxes in Utah. A guest who rents for a long term rather than a short term is exempt from short-term lodging taxes. 

These guests are exempt from transient room taxes if they pay directly for the accommodations and provide proof of exemption:

  • Federal government agencies
  • Foreign diplomats with a U.S.-issued tax exemption
  • Qualified religious and charitable organizations

Filing short-term rental tax returns

After you’ve collected taxes from your guests, it’s time to file your tax returns with the Utah State Tax Commission. In Utah, you can file returns online or by mail. 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 tax commission allows credit card payments, but may charge a fee. 

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 Utah State Tax Commission. Due dates are as follows:

Filing frequency Due date
Monthly Due the last day of the month following the end of the filing period
Quarterly Due the last day of the month following the end of the filing period
Annually 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 Utah State Tax Commission?

Yes. Short-term rental operators registered with the Utah State Tax Commission are required to file returns each assigned filing period, regardless of whether there was any short-term rental income or any short-term rental taxes were collected. Such returns are commonly known as “zero dollar returns.” 

 

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 Utah 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 Utah 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 Utah 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 Utah State Tax Commission. 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 Utah file several lodging tax returns every year. For many, filing solutions such as MyLodgeTax can relieve this burden.

The Vacation Rental Property Owner