New year brings changes to short-term rental rules

The rules surrounding short-term rentals are changing constantly. An increasing number of communities are moving to regulate the industry — and make sure short-term rentals are generating tax revenue.

Short-term rental laws are very local in nature and vary from state to state, even town to town. Rules can range from outright short-term rental bans to zoning restrictions; caps on the number of short-term rentals in a given area; occupation limits; and requirements for parking, trash disposal, and noise, among others. In addition, new lodging taxes may be levied or rates may change.

Several communities across the country passed laws that went into effect this year starting January 1. Short-term rental hosts need to be aware of these changes. Communities are also starting to put more resources into enforcement, so it’s important for short-term rental owners to be certain they comply.

Here are some of the new rules that went into effect January 1, 2019, across the United States.

Arizona

New state law requires all online short-term vacation rental platforms to collect lodging tax

Effective January 1, all online short-term vacation rental marketplaces, including Airbnb, VRBO, and HomeAway, are required to register with the Arizona Department of Revenue and collect lodging tax on bookings, including state transaction privilege tax, county excise tax, and local transient occupancy tax.

Previously, Airbnb was the only online marketplace that collected taxes on short-term rentals booked through its platform, as a result of a voluntary agreement reached with the state in 2017. As of January 1, HomeAway/VRBO also collects taxes on behalf of their hosts.

For more on short-term rental taxes in Arizona, see our Arizona Vacation Rental Tax Guide.

California

Tax rate increases in areas of Marin, Napa, and Sonoma counties

Several ballot initiatives raising transient occupancy taxes in parts of Marin, Napa,  and Sonoma counties passed in November and went into effect starting January 1, including:

• In West Marin County, the transient occupancy tax rose from 10% to 14%. Reservations made before January 1, 2019, are taxed under the old rate.
  
• Sausalito’s transient occupancy tax rose from 12% to 14%.
  
• Napa’s city transient occupancy tax rose from 12% to 13%.
  
• Yountville’s transient occupancy tax rose from 12% to 13%.
  
• St. Helena’s transient occupancy tax rose from 12% to 13%.
  
• Sebastopol’s transient occupancy tax rose from 10% to 12%.
  
• Sonoma’s city transient occupancy tax rose from 10% to 12%, and the City Council is authorized to further increase the tax rate to 13% within the next five years (by January 1, 2024).
  

MyLodgeTax can help California hosts keep up with lodging tax rates and simplify compliance. For more on short-term rental taxes in California, see our California Lodging Tax Guide.

Colorado

New rules for short-term rentals in Colorado Springs

Starting January 1, a new Colorado Springs law requires short-term rental operators to apply for a short-term rental permit. Hosts must also follow neighborhood rules on noise, traffic, and parking.

Hosts are also required to apply for a city tax license and collect lodging and sales taxes from guests and remit them to the city. Colorado Springs is a “home rule” city and collects its own taxes on short-term rentals. Colorado Springs hosts must also collect state and county sales taxes on their short-term rentals, which are remitted to the state.

Airbnb collects city, state, and county sales and lodging taxes on behalf of its hosts in Colorado Springs. However, Colorado short-term rental operators are still responsible for registering with city and state tax authorities.

Short-term rental hosts using other online rental platforms, such as VRBO and HomeAway, that do not collect taxes on their behalf, must register then collect and remit taxes themselves.

MyLodgeTax can help simplify tax compliance for Colorado hosts. For more on short-term rental taxes in Colorado, see our Colorado Vacation Rental Tax Guide.

Hawaii

Lodging taxes go up in Kauai and Hawaii counties

Kauai County and Hawaii County started adding local surcharges to the state general excise tax (GET) beginning January 1. In the state of Hawaii, short-term rental income is subject to a 10.25 percent transient accommodations tax (TAT), in addition to the GET. Hosts can pass these taxes on to their guests.

In Kauai, a 0.5 percent surcharge was added to the state rate of 4 percent for a total GET rate of 4.5 percent. In Hawaii County, a 0.25 percent surcharge was added, for a total rate of 4.25 percent

Unlike many states, Hawaii does not allow short-term rental platforms such as Airbnb and HomeAway to collect lodging taxes on behalf on their hosts. This means that hosts are responsible for collecting all lodging taxes on their short-term rentals and remitting the taxes to authorities.

Many Hawaii short-term rental operators use MyLodgeTax automation to simplify and manage lodging tax compliance. For more on short-term rental taxes in Hawaii, see our Hawaii Vacation Rental Tax Guide.

Massachusetts

Strict new Boston short-term rental law goes into effect

After nearly three years of study and debate, this summer Boston passed new rules for short-term rentals that are some of the strictest in the country. The ordinance requires short-term rentals to be registered with the city and allows short-term rentals to be offered only by owners who live in the properties they rent out. The new law went into effect on January 1.

However, enforcement of some of the new rules in Boston has been delayed due to a lawsuit by Airbnb. Airbnb targeted the portion of the ordinance requiring short-term rental platforms to share data with the city and remove any hosts who break the rules. The lawsuit claimed those provisions violate federal laws that protect online platforms from punishment for content.

Airbnb and Boston agreed that those requirements would not be enforced until a judge rules on Airbnb’s request for an injunction while the case proceeds. Enforcement of the rules may be delayed until at least March.

The Boston law also requires short-term rentals in the city to comply with tax requirements. Due to a state short-term rental law that was recently passed, all short-term rentals in Massachusetts will be subject to lodging taxes beginning in July. Short-term rentals in Boston will be subject to state and city lodging taxes.

The state law requires short-term rental platforms such as Airbnb to register with the state, report the total revenue of operators, and notify operators when taxes are remitted for them.

While short-term rental platforms including Airbnb and HomeAway collect lodging taxes on behalf of their hosts in some states, neither do so yet in Massachusetts. This means short-term rental operators are responsible for registering with state and local authorities, collecting state and local taxes, and remitting taxes to the proper authorities. MyLodgeTax can help Massachusetts short-term rental hosts comply with the new tax rules.

Ohio

Columbus begins regulating and taxing short-term rentals

A new short-term rental law went into effect in Columbus, Ohio, on January 1. The new ordinance requires short-term rental hosts to hold a permit and display the permit number in any advertising. They must also provide contact information for rental properties; keep four years’ worth of records that show guest names, room rates, and the dates and durations of stays; and carry a liability insurance policy of at least $300,000.

Short-term rental operators must also collect the city’s hotel/motel tax from guests and pass the tax revenue on to the city. While some short-term rental platforms such as Airbnb, HomeAway, and VRBO collect lodging taxes on behalf of their hosts when guests book, no platforms collect lodging taxes for hosts in Columbus. MyLodgeTax can help automate lodging tax compliance for Ohio short-term rental hosts.

The new law also prohibits short-term rental hosts from discriminating against potential guests based on race, sex, sexual orientation, gender identity or expression, color, religion, ancestry, national origin, age, disability, familial status, or military status.

The city may deny permit applications or renewal for a variety of infractions, including patterns of felony drug-related activity, prostitution, human trafficking, gang activity, calls for service that result in police or fire department visits, or other conduct that endangers neighborhood safety.

Washington

New rules for Seattle short-term rentals go into effect

New short-term rental rules passed in 2017 went into effect on January 1. The new regulations require all Seattle short-term rental operators to obtain a short-term rental license. Hosts are allowed to rent out one dwelling unit, or part of one, in addition to their primary residence. However, there are some exceptions for short-term rentals that were legally operating before September 2017.

Seattle short-term rental operators are also subject to lodging taxes and must register with the state for tax purposes. Both HomeAway/VRBO and Airbnb collect lodging taxes for Washington hosts, including combined sales taxes, Convention and Trade Center tax, special hotel/motel tax, regional transit authority tax, and tourism promotion area charges.

Even though HomeAway and Airbnb collect lodging taxes for their hosts, Washington state hosts are still required to register with the state Department of Revenue and file lodging tax returns reporting their rental income. Short-term rental operators may also be required to pay business taxes.

Washington state hosts who do not have platforms collecting taxes for them are responsible for registration, collection, and filing of all taxes due on their short-term rentals. MyLodgeTax can help Seattle short-term rental hosts figure out their lodging tax obligations and take care of any lodging taxes that are not collected for them.

Short-term rental lodging taxes in King County rise

Starting January 1, lodging taxes on short-term rentals went up King County, Washington, due to expansion of the Convention and Trade Center tax. Previously, the tax only applied to lodging businesses with more than 60 units. Now the tax applies to smaller businesses as well, including short-term rentals.

In Seattle, the Convention and Trade Center tax on short-term rentals rose to 7 percent; elsewhere in King County, the tax is 2.8 percent. Previously, short-term rental hosts in Seattle and King County were only required to collect combined state and local sales taxes. The Convention and Trade Center tax is in addition to those taxes.

For more on short-term rental taxes in Washington, see our Washington Vacation Rental Tax Guide.