Sales Tax Requirements for Vacation Rental Homes
Do you know the rules for your state, county and/or city sales and lodging taxes?
As a vacation rental property owner, you are required to charge and collect sales tax on all short-term rentals in most states. In some cases short-term rentals are defined as rental periods up to six months. Many of these sales taxes are specific to lodging and are a significant tax revenue source in resort communities. These taxes are established by state, county and local governments, and may be referred to as sales, lodging, hotel, room, occupancy, or transient accommodations taxes.
Non-compliance may result in significant penalties and interest charged by tax authorities on taxes not remitted.
As a vacation rental property owner, you're required to do the following:
Register your property. The registration process varies by location. In some states you are only required to register with the state and in other locations you are required to register with the state, county and city. It is important to check with each governmental authority.
Collect sales tax from renters. The tax you are required to collect is set by state, county and city governments. In some areas there is one rate for the entire state, in others, the taxes charged varies by the county and city. Generally, these taxes range from 5% to 15% tax on the total rent charges, typically averaging around 10%.
File tax returns monthly and/or quarterly. Once you collect the tax from your renters, you are required to file the appropriate tax returns to the state, county or city (potentially all three based on the location of your property). These returns are typically due monthly or quarterly.
Make tax payments to city, state, and county tax authorities. Along with the tax return, payment must be remitted each month or quarter to the appropriate state, county and/or city. Due dates for these tax returns and payments vary.
Article written by Kim Stephens. Kim is a Certified Public Accountant (CPA) with over 16 years of experience in accounting and finance. Kim is also the co-founder of HotSpot Tax Services, a company solely dedicated to helping vacation property owners with sales and lodging tax compliance. Kim can be reached at 877-589-0207 or www.hotspottax.com.
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