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Occupancy tax rates every airbnb host should know is very important as more and more cities crackdown on what is commonly referred to as “hotel taxes”.  You may find yourself on the wrong side of the city when it comes to tax compliance for your business.  Hotel taxes, sometimes referred to as occupancy tax, lodging tax, room tax, or tourist tax is simply a tax on the rental of rooms that your state or locality may require.  What does this mean? This means that your visitors will have to pay the mandatory tax of the total rental amount to the city if they stay less than 30 days in your rental.  In addition, every municipality has its own licensing requirements, which typically need to be executed within 30 days of your hosting venture.  Noncompliance could mean penalties, fines and possible retroactive taxes assessed on your Airbnb business.

Why is this happening?  For thousands of traditional lodging owners and hosts, there are potentially difficult times ahead as hosting sites such as Airbnb are suspected of taking away revenues and future business, costing cities thousands, if not millions, in lost revenue.  In New York for example, Attorney General Eric Schneiderman issued a subpoena to crack down on hosts operating multiple listings, subletting their apartments for less than 30 days and evading taxes.  His own estimation alleges 72% of Airbnb hosts appearing to violate state and local laws in his review period.  This story is not unique to New York and simply put, most cities are now mandating all short-term rentals pay the required taxes that hotels and traditional bed & breakfasts pay.

As of the date of this writing Airbnb is collecting and remitting taxes in the following cities in the United States:

Chicago, IL – Chicago Hotel Accommodation Tax: 4.5% fee for reservations 29 nights and shorter.

District of Columbia – DC Sales Tax on Hotels (transient accommodations): 14.5% of the listing price fee for reservations 90 nights and shorter.

Malibu, CA – Malibu Transient Occupancy Tax: 12% of the listing price for reservations 30 nights and shorter.

Multnomah County and Portland, OR – Oregon Transient Lodging Tax: 1% of the listing price for reservations 30 nights or shorter.  1% is the State imposed tax rate only.  Additionally, there is the Multnohah County Transient Lodging tax at 11.5%.  Portland assesses 6% of the listing price for any reservation 30 nights or shorter.

North Carolina – North Carolina Sales Tax: 6.75-7.75% of the listing price.  The state also imposes a 4.75% tax and a local 2-2.75% tax which varies by county.

Oakland, CA – Oakland Transient Occupancy Tax: 14% of the listing price for reservations 30 nights or shorter.

Palo Alto, CA – Palo Alto Transient Occupancy Tax: 14% of the listing price for reservations 30 nights or shorter.

Philadelphia, PA – Philadelphia Hotel Room Rental Tax: 8.5% of the listing price for reservations 30 nights or shorter.

Phoenix, AZ – Phoenix Hotel/Motel Tax: 3% of the listing price for reservations 29 nights or shorter.  In addition, there is a Phoenix Transaction Privilege (Sales) Tax: 2% of the listing price for all reservations.

Rhode Island – Rhode Island Sales Tax: 7% of the listing price for reservations 30 nights or shorter.  Also, there is the Rhode Island Local Hotel Tax at 1% and the Rhode Island Statewide Hotel Tax at 5%.  Rentals of an entire home or apartment are excluded from this tax.

San Diego, CA – San Diego Transient Occupancy Tax: 10.5% of the listing price for reservations 30 nights or shorter.  In addition, there is the San Diego Tourism Marketing District Assessment at .55% of the listing price.

San Francisco, CA – San Francisco Transient Occupancy Tax: 14% of the listing price for reservations 29 nights or shorter.

San Jose, CA – San Jose Transient Occupancy Tax: 10% of the listing price for reservations 30 nights or shorter.

Airbnb has taken the position that homeowners who use its service are responsible for collecting hotel taxes for other taxing bodies. The host is also responsible for acquiring any and all licenses before renting out your property.  This is on ongoing issue and Airbnb has been quoted as saying “… the company looks forward to working with other state and local policymakers on the question of state occupancy taxes…”

We at the Shared Economy CPA believe that this list is the tip of the iceberg when it comes to city and local tax compliance by Airbnb.  The world is changing, travelers are looking for new ways to explore and experience cities.  Before you get caught in a red-tape predicament with your taxing authority, you can always book us for information about your location and tax responsibilities.