Watch Out for Nightly and Weekly Rental Taxes Issues

I love talking with property owners because we get to exchange ideas and learn more about furnished rental details and trends from around the world.

Grief Per Dollar Higher with Vacation Rentals

Last year I was discussing monthly corporate housing rentals vs. vacation rentals with an owner and she informed me how much she loved having monthly corporate renters compared to weekly rentals and of course I asked her why.

“GPD” she told me.

Ok thats great, but what is GPD?  “You know,” she says “Grief per Dollar.”

Lodging tax is just another one of those griefs that apply to weekly rentals (since they’re hotel alternatives) but they don’t apply to monthly corporate housing.  Plus, lodging tax on private residential rentals is something that a lot of municipalities are really working to enforce these days – so be aware, know your laws, and complete the paperwork to avoid costly fines.

Resorts Enforcing Lodging Taxes

Several weeks ago The Denver Post ran an article about how ski town Crested Butte is struggling to get weekly and nightly rental property owners to pay their taxes. Many homeowners are doing cash deals and not paying the tax man their due.

If you’re renting your home as a nightly or weekly rental you have to collect and pay lodging taxes on your total revenues collected – because essentially you are operating as a hotel. There are no deductions from sales taxes as it is a tax on revenue, not net income. The tax you’re required to collect depends on where your property is based and local rules – but expect to pay somewhere in the ballpark of 10%. You must also file monthly or quarterly tax returns.

Corporate rentals are different. They are typically 30 day or longer stays and are not subject to the same lodging taxes as nightly and weekly rentals.  Most states don’t charge lodging taxes on rentals of 30 days are more execept for Florida – although as a corporate rental owner, you should discuss taxes with your accountant and/or lawyer. In most cases, you would only be taxed on the income you make from the property after deductions.

You may be seeing more regulations around nightly and weekly rentals in the near future. If you don’t want to deal with those hassles, check out the benefits of corporate rentals instead!

Tip! Need help with your vacation rental taxes? Check out Hot Spot Tax Services online.

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