358. The 4 Layers of Airbnb Taxes Every Host Needs to Know

Tim Hubbard (0:00)

If you think Airbnb is handling all of your short-term rental tax, well, you might be right, you might be partially right, or they might not be doing it at all. There's lots of tax combinations out there. So today, we're going to break that down, all the different layers, the county layers, the city, the state, and also give you a really cool tool that can generate a report for you for free, no strings attached. Stay tuned, let's talk about taxes.

Welcome to Short Term Rental Riches. We'll discuss investing in real estate, but with a specific focus on short-term rentals, quick, actionable items to acquire, manage, and scale your portfolio. I'm your host, Tim Hubbard.

Welcome back to Short Term Rental Riches podcast. I'm happy you're here again. Let's go ahead and jump right into it. There are really four tax layers when it comes to your vacation rental. You have a state layer, you have a city layer, you have a county layer, and then sometimes you have an HOA or administration layer that can be charging taxes separately.

It really comes down to your specific address. You can't assume that if you're two properties in the same city, that you have the same taxes. The way to be 100% certain is to call the different departments. Call the state, call the city, and I know what you're thinking. No one wants to get on the phone with city or government agencies because the wait times are really long. So we built a really cool tool for you. We'll make sure you have it. It's in the show notes. It's going to build a report for you, give you the numbers, all the links, everything you need to know. But I want to talk about what's actually in that report before you go and download it. So we have those four layers of tax, and you gotta be careful there might even be an additional one, which could be a neighborhood layer. Maybe there's some sort of historic districts or something that charges maybe not a percentage tax, but a per person tax. We'll talk about the types of taxes that are out there in a second. Before we talk about some of the types of taxes, let's talk about actually collecting it and remitting it, because this is where a lot of people get confused. A lot of people just assume, for example, that Airbnb is collecting all your taxes and remitting all your taxes to all the different agencies that they need to. But I'll tell you that in my experience and our team's experience, managing properties in over 50 cities, that sometimes Airbnb collects everything. Sometimes they collect nothing and you need to collect it and remit it back to the agency. Sometimes they only collect part of the taxes. Maybe they collect the county tax, but they're not collecting the state tax. The good news with Airbnb is that they do handle your whole payment. So the taxes that are still do, they're going to send back to you. You just need to make sure that you know what goes where. Now, there's quite a few places where Vrbo also does the same thing, where they'll collect the taxes and they will remit them on your behalf. But again, you got to double check. You got to make sure that they're actually remitting all of the taxes. If you have your own direct booking website set up, I hope you do. Or if you're set up on Google or booking.com and you're collecting payments, maybe through Stripe, well, you got to make sure this setup gets done right in the first place so that you're collecting the correct amount because if you're not remitting collect amount, it is your responsibility at the end of the day and it could result in pretty big fines. It could result in actually losing a permit as well. And in some places, Airbnb and Vrbo require a permit number on your listing to actually actively list your property available for rent. So we got to make sure we do our due diligence on what each channel we're listing our property on actually collects versus what they don't. Our reports are going to break those insights out for you as well. All right, let's talk about the types of taxes. So the big one that most people think about is the transient occupancy tax. This is the same tax most hotels pay, only fair that we pay ourselves for our short-term rental accommodations. But there can be a lot of other taxes that come into the equation. Maybe there's a county tax, maybe there's a sales tax. Sometimes there is a tax per guest per night, like a tourism type of tax. So you really need to do your due diligence and make sure, again, we're going to give you in our report the places where you need to go to confirm this 100%.