Wisconsin vacation rental tax guide

With a bounty of popular destinations including Madison, Green Bay, and Lake Michigan, the Badger State offers ample opportunity for short-term rental (STR) businesses.

But these opportunities come with tax obligations. Like hotel stays, STRs in Wisconsin are subject to lodging taxes.

Failure to comply with tax laws can result in fines and 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 Wisconsin 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 questions and concerns. Questions pertaining to specific situations or out-of-the-ordinary conditions are best solved with a certified tax professional familiar with Wisconsin tax laws.

Lodging tax is calculated as a percentage of the cost of your guest’s stay and added to the price of 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 Wisconsin?

Furnishing lodging to the same person or entity for a continuous period of less than one month is subject to Wisconsin lodging taxes.

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

If you receive payment from short-term guests renting out an apartment, house, or other dwelling, and your taxable sales amount to more than $2,000 in a calendar year, you’re likely responsible for collecting, filing, and remitting lodging taxes to Wisconsin tax authorities.

If a marketplace such as Airbnb or Vrbo collects all lodging taxes on your behalf, you don’t need to collect and remit those taxes. However, you’re responsible for any taxes not collected for you.

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 your tax rates.

Use our lodging tax lookup tool to get a tax report specific to your Wisconsin 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.

State and local short-term rental regulations

The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) requires Wisconsin STRs to have a current tourist rooming house (TRH) license.

STR operators in Wisconsin should also be aware of 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.

Before you can begin collecting taxes on your STR in Wisconsin, you’re legally required to register with the Wisconsin Department of Revenue to receive a sales tax seller’s permit. If all your transactions go through a marketplace such as Airbnb or Vrbo, you’re not required to register with the Wisconsin Department of Revenue or collect state lodging taxes.

Once you’re 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 Wisconsin short-term rentals?

In Wisconsin, STRs are subject to state sales tax as well as local taxes, depending on the jurisdiction.

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 Wisconsin address.

What charges are taxable?

Wisconsin imposes lodging tax on the entire sales price charged to the purchaser of lodging, including fees such as pet fees and cleaning fees. Amounts charged to customers as security deposits aren’t taxable if they’re refunded to the customer. Forfeited room deposits and cancellation fees aren’t taxable unless the provider keeps the unit available for the guest that’s charged the deposit. Damage fees aren’t taxable.

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

“Marketplace providers” such as Airbnb and Vrbo are required to register with the Wisconsin Department of Revenue and collect state and local lodging taxes for listings they facilitate. If all your transactions go through a marketplace, you’re not required to register with the Wisconsin Department of Revenue or collect state lodging taxes.

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 state tax authorities.

Are guests ever exempt from taxes?

There are situations in which you aren’t required to collect lodging tax in Wisconsin. A guest who rents for a long term rather than a short term is exempt from short-term lodging taxes. STR operators whose sales amount to less than $2,000 in a calendar year aren’t required to collect lodging tax.

The following guests are exempt from state and local lodging taxes if they pay directly for the accommodations and provide required documentation:

• Federal and Wisconsin governmental agencies
• Federally recognized American Indian tribes or bands in Wisconsin
• Certain nonprofit organizations
• Foreign diplomats with an exemption card issued by the federal Department of State

After you’ve collected taxes from your guests, it’s time to file your tax returns with the Wisconsin Department of Revenue. In Wisconsin, you must file returns and pay tax online. The tax commission allows credit card payments, but may charge a fee.

When do I need to file my returns?

You’ll be assigned a filing frequency and due dates when you register with the Wisconsin Department of Revenue. 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 Wisconsin Department of Revenue?

Yes. STR operators registered with the Wisconsin Department of Revenue are required to file returns each assigned filing period, regardless of whether you had STR income or collected lodging taxes. Such returns are commonly known as “zero dollar returns.”

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 Wisconsin 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 Wisconsin tax laws. Take the time to review your legal responsibility (with a tax professional, if necessary) and understand the risks.

STR hosts in Wisconsin 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 Wisconsin 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. Many STR operators in Wisconsin file several lodging tax returns every year. Filing solutions such as Avalara MyLodgeTax can relieve this burden.