Are You Actually Paying All Your STR Taxes? with Pam Knudsen

SPEAKER_1 (0:05)

Welcome to The Short Term Show, the show about short term rentals and long term wealth. With real property owners hosting real properties, who are crushing it in the vacation and short term rental space.

And here's your host, Avery Carl.

Avery Carl (0:29)

Hey, y'all, welcome back to another episode of The Short Term Show. I'm your host, Avery Carl. And today, we are going to talk about an app that a lot of you have a lot of questions about all basically all short term rental owners should be using it if you're not already. So listen up, I've got Pam Knudsen at Avalara, MyLodgeTax, and she's going to talk to us a little bit about what that platform does and how we should be using it. How's it going, Pam?

Pam Knudsen (0:57)

I'm great. How are you doing?

Avery Carl (0:58)

I am doing so great. Thanks for coming on.

Pam Knudsen (1:01)

Of course. Thank you for having me.

Avery Carl (1:03)

Yeah. Yeah. So for our listeners who might be new to short term rentals, can you explain what Avalara, MyLodgeTax is?

Pam Knudsen (1:13)

Sure. Avalara, MyLodgeTax is really a technology that helps enable their compliance to be a little bit more straightforward and easy. So they don't have to navigate the ever shifting landscape of compliance when it comes to the taxes that they have to calculate, charge, collect, and remit back to the taxing authorities, as well as the licensing and registration that goes along with it.

Avery Carl (1:37)

Gotcha. So guys, this is not about your income taxes with your CPA.

This is how you pay your state and local occupancy tax, if there is one, bed taxes, sales tax, things like that. So this app helps you to do that. And can you explain how an owner would sign up for and get hooked up with MyLodgeTax?

Pam Knudsen (2:03)

It's really simple. You can just go out to our website. You can go out to avalara.com and you'll find the MyLodge. You can find the link to the MyLodge piece in there. And you can just go out. You can sign up. It's an online buy. It's really straightforward.

That comes through and then you'll get contacted by our team to go through all the pieces of information we need to help you get set up.

Avery Carl (2:22)

Awesome. So it's as easy as that, guys. So let's talk about what all of these little taxes, I call them little taxes, because they're just, you know, little bites out of your income here and there.

All these little taxes that depend, it's all dependent on what market you're buying in, whether your market has, I mean, they're going to have sales tax usually. Sometimes they call it an occupancy tax or a hotel tax or a bed tax. So when you're a new short-term rental investor or an experienced short-term rental investor, who figures out what those taxes are, calculates those, collects those and then sends them in to the municipality that they need to go to.

Pam Knudsen (3:05)

You know, and that's actually part of the complicated part of this is because it really kind of depends on how you do your bookings and whether you use platforms, whether you use direct bookings like what you do. And it also is jurisdictionally dependent. So every jurisdiction has a little bit different set of rules that apply to this. And so knowing all of that is a critical function in this process to do this.

So and I can go into some examples if you kind of want.

Avery Carl (3:33)

Yeah, let's go into some examples and kind of figure out how people figure out these little bits and pieces.

Pam Knudsen (3:40)

So, you know, part of what happens with short term rentals is unlike sales tax, sales taxes for the most part, sales tax is very much done at a state level. Short term rental taxes are done at a state and local level, which means you've got the state, the county, the city, and potentially some local special jurisdictions that may come in to apply. And so you have to know what all of those taxing pieces are to determine what's the amount you need to charge from a tax standpoint. And then filing standpoint also goes across all of those different areas as well, state, local, city, or state, county, city. So you have to understand what each one of those are. And your booking platform may handle some of it. Like if you use something like Airbnb or Vrbo or something like that, they may handle some of it, they may not handle all of it.

If you have a property manager that you're using, again, they may handle some of it, but not all of it. And it's very jurisdictionally dependent.