New City of Seattle flat tax, per night

Beginning sometime in 2019, the City of Seattle will begin charging a flat tax on short term rentals. $8/night for a room and $14/night for an entire unit or whole house. As far as I know, only the idea of taxation has been voted on and the council bifurcated the other rulemaking from the tax. I have no idea what kind of cooperation Air intends to provide or how the city will regulate and ensure compliance. Supposedly, operators will have to display their city license number on their listing. If Air or other platforms do not cooperator, it seems impossible that the city will have enough resources to ensure compliance.

We already pay a state B&O tax which Air collects and remits for users. I feel that the city flat tax rate is really regressive vs. a percentage. In the off season, $14 can take a real bite out of gross! To me, this feels like a big money grab by the city with insufficient evidence to show taxation will have a positive effect on affordable housing. In fact, it will make housing less affordable for the folks who do STR so they can afford their mortgage.

I’m wondering if other Seattleites have thoughts about this tax or have started thinking about strategies. At the very least, I plan to add $14.00 to my nightly rate. I may also start looking at other platforms though I’m not confident that will be as fruitful.

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I’m not quite a Seattle host as we just moved from Seattle to White Center. That said, I’m still following this closely as White Center will likely be annexed by Seattle in 2018 so we will also be subject to this tax.

I expect Airbnb will collect and remit the tax on our behalf. I doubt they will not comply - I imagine that would put all STRs at risk of being illegalized by the city.

Who knows though. I agree that it’s unfair. We rent two private rooms at 20-25 bucks a night in the off season… 8 bucks is a huge percentage of that. I’m a bleeding heart who’s happy to pay taxes but a flat tax is not a good solution.

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Being a flat rate, rather than a percentage, seems like an ill considered regressive tax measure that will not even dent the profits of of the high end listings but greatly damage the lower ends of the market- arguably the most authentic Airbnb’s from the real
People who probably need the $ the most.

Would be good to see if the Seattle government put the money into affordable housing for the working class, rather than general government coffers, or worse supporting the hotel industry controlled by multinationals and rich socialites.

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That really sux!

@Rja – with the cost of living being what it is in-and-around Seattle, how can you justify only charging $20-$25 per night for a room, low-season or not??? Seems ridiculously low to me. What are others iin your part of town charging for comparable stays??

Obviously everyone in the area should raise their rates by $15 per night. Gotta pay for the Mayor’s second mansion some how!!:sweat_smile:

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@KenH

Well, we do charge a $35 cleaning fee as well, as that is our cost to get cleaners in. But unless we are busy we just do it ourselves and pocket that too.

My wife and I both have 9-5s…we’ve automated as much of the Airbnb stuff as possible so we can generally just monitor it. We don’t have kids etc etc, so we aren’t looking to live off this but rather just get some extra $$ towards our mortgage. We’re on the cheaper side in our immediate area, but on par with other listings - as I noted above, we are just outside seattle city limits, so we are a bit less desirable than an Airbnb in one of the core Seattle neighborhoods. Seattle also seems to be pretty saturated with open rooms this time of year, and closer to downtown.

Maybe I should raise the prices by a few bucks though. We are currently using Wheelhouse and I have the base price set quite low as it seems to overvalue our rooms, but maybe I am undervaluing them. :slight_smile:

@Emily, the city’s plan is to put the money toward affordable housing. However, from what I’ve read, the administrative costs of the new tax are going to eat the majority of the funds raised. All in all, it seems ill considered–as you said–and a lose/lose proposition for everyone but the hotels.

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There’s a huge upside to giving it a try! I would recommend starting when vacancy rates get lower again, maybe in March/April. Or right now, if you’re already getting booked up.

I will certainly consider it! It looks like at our current base price, Wheelhouse has us peaking around $43/night during the summer. With the recommended base price ($37 a night) it peaks at ~$53 a night during the summer.

Cheers!

I assume this is a tax that is charged to the guest…no?

This will really hurt the little guys. Are hotels going to also have to charge $8 a night for the room?

If Air collects and remits it to the city, it will be taken out of our daily rate, just like the Air service fee. That’s why I’m thinking that I will have to add $14 to my daily rate.

I don’t know what hotels in Seattle pay exactly. I just took a quick look and it seems they are paying a 15.6% tax while B&Bs pay around 10%. So, under the new tax scheme for STRs, a host renting out a room will have to charge $80/night to pay a tax rate on par with B&Bs. If they charge $70/night, they’re paying an 11.5% tax rate.

Again, I find it ridiculous to charge a flat tax while B&Bs and hotels pay a percentage.

The flat tax def. sucks.

I still don’t follow why you are saying taxes are coming out of the daily rate though - if Air is collecting and remitting on behalf of the host, the service fee and taxes are added to the total.

This is the first I’ve heard about needing to obtain a license from the city. Do you know how we go about obtaining one?

What is unclear to me about this tax is if it replaces the percentage tax our guests already pay, or is in addition.

I’m sorry to get political, but for a city that thinks of itself as progressive, Seattle sure loves regressive taxes. Why should a guest staying in a $50 space pay the same tax as a guest staying in a $500 space? I suspect this tax is designed to target small hosts with the hope we’ll take on roommate-tenants instead of guests.

I’ve never been involved with AirBnB lobbying before because I do think AirBnB should be regulated, but in a way that is fair and not burdensome to mom-and-pop hosts. This new tax makes me want to bring my concerns to city council.

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Hi @Xena,

It’s not going to be implemented until 2019, so the details are TBD. Perhaps we’ll pay the license fee on the DOL site. Maybe Air will collect and remit the tax for us. I know that I will raise my rates if necessary to cover anything additional coming out of my pocket.

The city council had public discussion on the new regulations and has already decided on the $8/$14 nightly tax, but they have a lot of other additional details to work out.

You know how expensive it is to live in Seattle and how much we pay in property taxes. I think it’s sad that it was not really a consideration in thinking about “affordability” that many hosts do STR so they can afford the property taxes.

Keep me posted if you hear of any STR operators organizing against these flat taxes.

The flat tax will almost certainly hurt individuals using AirBnB to afford staying in their homes, which was not the intent of regulating STR. Our property taxes here are indeed quite high; mine are almost as much as the interest I pay on my mortgage. I worry about what they’ll be in 30 years, when I’m retired and trying to afford to stay in my home.