Virginia changes requirements for accommodations intermediaries

A Virginia law spelling out new requirements for accommodations intermediaries, including short-term rental marketplaces such as Airbnb and Vrbo went into effect on October 1.

Previously, when accommodations intermediaries collected lodging taxes from guests, they either submitted them to the Virginia Department of Taxation, local authorities, or in the case of hotels, to the hotel where the tax was collected, depending on circumstances.

Now, intermediaries are required to collect taxes and remit them only either to the Department of Taxation or local authorities, depending on the tax. The new law specifies that intermediaries are liable for remitting lodging taxes. Previously, intermediaries were not liable for taxes they collected and remitted to an accommodations provider rather than tax authorities.

The law broadens the definition of accommodations intermediary to mean a person or entity other than an accommodations provider that facilitates the sale of an accommodation and either collects a room charge or fee from the customer as compensation for facilitating the sale. Licensed real estate agents are not considered accommodations intermediaries when they act within the scope of their license.

Accommodations intermediaries are also required to submit information on the transactions they have facilitated, on a monthly basis, to tax authorities.

Short-term rentals in Virginia are subject to state and regional sales and use tax, which are administered by the Virginia Department of Taxation, as well as regional transient occupancy tax and local lodging tax, which are administered by local tax authorities. For tax purposes, a short-term rental in Virginia is defined as a stay of fewer than 90 days.

In Virginia, if all of a host’s short-term rental transactions are conducted through an intermediary such as Airbnb or Vrbo, they do not need to register to collect Virginia sales tax. If taxes aren’t being collected on a host’s behalf, the operator is responsible for collecting and remitting lodging taxes to state tax authorities.

While statewide law governs short-term rental taxes in Virginia, local communities also have their own rules for short-term rental operations.

In Norfolk, for example, the City Council recently passed an ordinance that increased the number of short-term rentals that will be allowed in the Ocean View neighborhood.

Under the new law, the limit on vacation rentals permitted in Ocean View apartment buildings increased from nine to 24 units. The ordinance also requires hosts to get a conditional use permit to operate short-term rentals with more than four bedrooms or located in apartment buildings. All short-term rentals operating with three or more units in the same building are required to obtain a certificate of occupancy, and properties with more than nine vacation rental units must have on-site management.

Virginia Beach has also recently loosened its restrictions on coastal vacation rentals. The City Council voted to allow new short-term rentals to operate in the Oceanfront Resort zoning district. Operators are required to have a conditional use permit in order to offer vacation rentals in the new overlay district. Short-term rentals can operate in specific areas of Virginia Beach if 75% of people in a neighborhood petition the City Council to allow them.

In addition to state and local sales tax, short-term rentals in both Norfolk and Virginia Beach are subject to local transient occupancy taxes.

While Vrbo collects state and local sales taxes and local transient occupancy tax on behalf of its Norfolk and Virginia Beach hosts, Airbnb only collects state sales tax for its listings in those cities. Hosts are responsible for any taxes that are not collected on their behalf.

MyLodgeTax can help short-term rental hosts automate and simplify lodging tax compliance at the city, county, and state level, including tax registration and filing. For more on short-term rental lodging taxes in Virginia, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.