Kansas City ballot measures would apply fees and lodging taxes to STRs

Voters in Kansas City, Missouri, will decide whether to impose lodging taxes and fees on short-term rentals when they go to the ballot on April 4.

Currently, the city doesn’t collect lodging taxes on most short-term rentals (STRs) because its lodging taxes only apply to hotels. Under Missouri law, hotels are defined as having more than eight bedrooms for guest accommodations, and Kansas City has followed the state definition. The ballot measures would specifically authorize taxes and fees on short-term rentals.

The April ballot will include two questions:

• “Shall the City of Kansas City impose a Transient Boarding and Accommodation Tax of seven and one-half percent (7.5%) to all lodging establishments, including short-term rentals, not otherwise subject to the City’s Convention and Tourism Tax?”
• “Shall the City be authorized to impose the following license fee for the purpose of funding convention and tourism activities: Up to an additional $1.50 per occupied sleeping room per day on all hotels, motels and tourist courts, with such fees being in addition to the existing $1.50 occupancy fee on hotels and motels for a combined fee of $3.00 per occupied sleeping room per day also to be applied to all short-term rentals conducting business within the City?”

If approved, the occupancy fees could generate around $4.5 million annually, and the taxes could generate $2 million to $3 million each year.

Kansas City passed a short-term rental ordinance in 2018 that defines short-term rentals as “the rental of property, a dwelling unit or a portion thereof for a period of less than 30 consecutive days” where the host is not present during the rental period. The law requires STRs to register with the city. However, city reports show that most vacation rentals are unlicensed and don’t follow the law. More than 4,000 Kansas City vacation rentals have been listed online since 2018.

The city has missed out on about $3.7 million in uncollected permit fees and potential tax revenues, according to the city auditor’s office. A 2022 survey of residents showed that 58% of more than 1,700 respondents supported short-term rental fees and taxes.

Neighbors have been advocating for stricter regulations to control neighborhood disruption. In December, the City Council approved moving oversight of vacation rentals from City Planning and Development to the Neighborhoods Department.

The April vote will determine whether short-term rentals are subject to city lodging taxes, but vacation rentals are already subject to state lodging taxes. That means operators are required to register with state tax authorities, collect taxes from guests at the time of payment, and file lodging tax returns.

While Airbnb collects state lodging taxes on behalf of its short-term rental hosts, Vrbo does not. Hosts are required to remit taxes that are not collected by their short-term rental marketplace.

MyLodgeTax can help short-term rental hosts in Missouri simplify and automate lodging tax compliance. See our Missouri Vacation Rental Tax Guide for more on short-term rental taxes in the state. If you have tax questions related to properties in Missouri, drop us a line and we’ll get back to you with answers.

Vacation rentals are especially popular among younger guests. Just over half of all Airbnb bookings are by travelers between the age of 18 and 34, according to iPropertyManagement. Meanwhile, more hosts are managing more than one property, a trend called the “professionalization” of the STR industry. Almost 60% of 2019 bookings on Airbnb were for hosts with multiple listings on the marketplace. In 2020, more than 60% of hosts used a property manager for complete rental management.