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Collecting Airbnb Occupancy Tax Strategies

My state will require that we start collecting occupancy taxes starting in July 2019. As far as a know, Airbnb is not going to collect them for us. I have been unable to get Airbnb to give me an answer.

For folks who have to collect the Occupany taxes on their own, how do you add the tax to the cost since there doesn’t seem to be a mechanism?

Per the website, you have to use a Special Offer or collect it in person.
https://www.airbnb.com/help/article/481/how-do-taxes-work-for-hosts

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Geez, you think Airbnb customer support would have provide me with that link.

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You could raise your rate slightly to cover the tax and just pay them direct.

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I opened at the beginning of last summer. I disclosed our local 12% tax early in my listing, but since folks book without reading the entire listing, my message to them when they book says

"This is in my listing, but I want to make sure that you’ve seen it:

The City and Borough of Juneau tax law requires the collection of a 5% sales tax and a 7% bed tax (total 12%) on all charges and fees from all guests staying in accommodations for 29 consecutive days or less.

Unfortunately, our city has not reached an agreement for tax collection with AirBnB, so AirBnB does not collect this tax. City code does not allow us to include the tax in our room rates.

This tax will be collected separately at check-in. I accept cash or credit cards.

The tax on your room charge and fees is $XX.XX."

I have had no problem collecting the tax when I am in the house at check-in. It’s been a bit more of a problem when they use self check-in when I’m not here, since many guests are here to enjoy our beautiful outdoors, and with long Alaskan summer days it can be quite late when they return. I usually catch up with them the next morning.

But even though the City supposedly doesn’t allow including the tax in our rentals, I’m going to start including it in the rental price starting this week (they rarely audit sales tax except when they go after a business for non-payment). I’ll have to raise the rent 12% but I’d rather do that than have to send extra emails and fuss with the collection.

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We have included the taxes in the nightly rate.

I there are a lot of host in my area that collect taxes and other fees (linnen, cleaning, etc) at check in, which is against AirBnB terms but it seems AirBnB does not care.

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I almost never see my guests at check in so I have to do it before they arrive. Just one more extra step added. If I do it with special requests and the guests hasn’t paid in full, I have to wait until a week before.

Do you know if we have to pay the tax on cleaning, other special fees charged or just the nightly rate? Do we remove the fee that Airbnb takes?

Are you in Massachusetts? I am, and trying to figure out how to manage this. Not seeing much coming from Airbnb to support hosts with this effort.

According to my reading, if in the U.S., in addition to your rental charge, the IRS generally considers payments the tenant pays for your rental expenses (such as cleaning service) as taxable rental income. Not a professional interpretation, please consult with your tax advisor.
You can deduct any payments to a cleaning service as a business expenses, within various limits. depending on the type of rental, generally relating to proportion of personal use days. Cleaning you do yourself is not a deductible expense. Your cleaning supplies and equipment would be deductible in that case.
The income inclusive of Airbnb fees is your rental income. Airbnb fees charged to you are then a deductible expense, reducing your taxable income, again subject to limits.
See https://www.irs.gov/help/ita/is-my-residential-rental-income-taxable-and-or-are-my-expenses-deductible for a quick check, note disclaimer.

Yes, I went on another forum and asked folks how they collect if Airbnb doesn’t collect (and unless it’s required by the new law they won’t and I don’t recall seeing this a requirement).

So what was suggested was:
a) build it into your price
b) disclose in listing that once it’s booked you will collect as a special request. (Can be a problem with the split pays because you can’t collect until they pay their booking first. )
c) Collect when they arrive. (I do self-check in so this isn’t practical.)

I have decided I am going to disclose in listing and send a special request for taxes and keep a separate bookkeeping ledge for the collection. I decided against option A because I don’t want my daily rental fee to be higher than others who are going to collect after the booking.

Yeah, it’s a bit more work but I’m going to start with option B.

Sorry that my question wasn’t clearer. My question wasn’t about what is taxable and what is deductible.

My question was do I have to charge the hotel tax on the cleaning portion of the booking or just the daily rate?

You could check with your local tax authority on that one. I pay lodging and sales tax on the all-in cost, because that’s what guests pay, The rule for me is “You need to collect and remit 7.25% Transient Occupancy Tax (TOT) of total price paid by the ultimate consumer for the use or possession of any room or space used for lodging.” I haven’t discussed it with them, but I sure don’t think I’d win an argument to exclude the cleaning fee. If I got the guests theatre tickets and collected with a special request, that’s a different matter.
I build the tax into my price by calculating a base rate of Total Price/(1 + Tax Rate), and report the base to the taxing authorities. I’ve got 7.25% county lodging tax and 6% state sales tax, so the base rate for a $100 rental charge is 100 divided by 1.1325, or $88.30. My state requires that all the taxes be broken out for the consumer’s invoice, so I describe the rates and calculation in my listing and create a hotel-type receipt with the base rate and taxes shown.
By building the tax in, Airbnb gets a little extra on its 3% fee, but in the above example, it’s an additional 35 cents on the $11.70 in taxes, well worth it for me not to bug my guests with extra fees through special requests or cash collections. I get a lot of business travelers, it’s self check-in, and I assume it would be annoying. But all hosts handle things differently for their different markets.

Dpfrom Va is that a typo should be $ 18.30??

I have decided at least for my 1st 5 or 10 guests that it is included, and it says so if you read the listing.
In the future I am going to try the white envelope technique with a note: “Due to our unique location, Airbnb is unable to collect and remit taxes normally added to your reservation. Please pay they amount requested so we can send it to Ventura County.” We are onsite hosts. I think its 8 percent. Glamping Hub can send it for us but Air won’t.

Here’s the math.
For a $100 “all-in” Airbnb room night charge, $88.30 is the base rate. State sales tax is 6% of that or $5.30. Local lodging tax is 7.25% of that or $6.40. All those add up to the all-in $100 charge.
So when I file and pay the taxes on line, I put in $88.30 as the rental revenue in order for the taxes to calculate correctly. I’ve solved the equation for the base rental rate by dividing the all-in charge by 1 plus the tax percentages.

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Thank you for clarifying all the math, it is very helpful:)

I think the invoice showing the lower base rate also really demonstrates to my guests how favorably I compare to hotels. Hotel adverts only show the base rate, never include the taxes. So the local hotel prices “look” cheaper than they are. Of course guests don’t see that calculation until after they book, but I hope it helps me to get those repeat guests.

And the 5 stars for Value!!!

I have it in my rules I collect 10% tax and need a copy of ID before check in. I put in a request 48 hours after booking so they cannot cancel on grace period. On check in day when they ask for the door code I tell ask them to snap a pic of ID and text it and if they have not paid tax they need to do it then. Then they get the code. Air is the only platform I have to do this the rest just collect it for me.

RR

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Thanks for the info.
I think it is shameful that there is so little support on this topic. I am guessing that compliance on this will be minimal. City of Cambridge passed a Short Term Rental Ordinance last year. Compliance is at about 10%, as the city has no teeth to enforce it. Not clear to me that any authority will know what the tax liability is and how they will enforce.

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