I’ve been hosting for a few months now and stalking this site as lots of great input and experiences can be found here. I’m working on my master spreadsheet for tracking and it’s about time to submit the quarterly tax submission for the sale tax here in WA state.
SO, buried in the ABB site I found how much ABB is remitting in taxes as I have to reference this payout on the quarterly tax form. It appears that ABB is submitting Occupancy Tax based on the nightly fee + service fees (that they charge the host). Please note that they call it Service Fee in the reservation and Host Fee in the tax summary.
It took me a while to figure out their math but it doesn’t make sense to me for ABB to pay Occupancy Tax on the Host fee. Usually I wouldn’t go through all of this trouble trying to figure out what they’re doing but now I’m wondering if I am reporting this tax correctly on my VRBO income.
Perhaps I’ve been looking at this too long…am I misinterpreting this? Here is a snapshot of a single reservation. Any input would be appreciated!
Reservation Payout
$116.42 x 19 nights $2212.00
Cleaning Fees $54.00
Service Fee -$67.98
Total $2198.02
ABB Remittance of Occupancy Tax
Currency USD
Amount 2198.02
Host Fee 67.98
Cleaning Fee 54
Gross Earnings 2266 <-- this is 2198.02+67.98
Occupancy Taxes 199.41
(Amount + host fee) x 8.8% = Occupancy taxes
I haven’t researched this, but I’ve just always paid lodging and sales tax on the gross (including the cleaning fee) because that is my advertised occupancy cost to the customer. Then I count the Air host fee as an expense deduction. The same as if I got the entire amount up front, and the Airbnb sent me a bill later for their “sales commission” or “marketing services,” or what-you-call-it.
I have come to the conclusion to do the same. Whereas I don’t understand their logic, it’s not worth my time to try to figure it out further.
Thank you!
Occupancy taxes are treated like sales taxes, which means that they are charged on the entire amount the customer pays you.
Our city makes Costco charge sales tax on the full price before the manufacturer rebates are deducted from the total you pay at the register.
I presume Airbnb would also need to remit the occupancy tax on their own fees which are not even shown, but irrelevant to you since you don’t ever see that money.
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In my area, even though Airbnb submits it, I still have to fill out and submit the corresponding paperwork.
This is an interesting tax question and subject to local and state rules in the U.S. See https://www.floridasalestax.com/florida-tax-law-blog/2016/july/fl-taxpayer-wins-reservation-cleaning-fees-not-t/ for the results of Florida cases in which Expedia and a management company renting out condos (and cleaning them) were not on the hook for lodging taxes for their fees.
in general, you as the rental owner generally need to pay lodging tax, if imposed, on the gross amount you charge, which includes any mandatory cleaning fee. However, any security deposit actually collected then refunded is not subject to lodging tax.
I think it is an interesting (and probably local) legal question whether lodging tax actually applies to the 3% Airbnb host fee that is netted out of your gross. I currently pay lodging and sales tax on the gross and have only considered the Airbnb host fee as an expense deduction for income tax purposes, under the theory that the netting is a type of shortcut. I.e., I could collect all the gross and then get a monthly bill from Air for the host fees, which I had assumed would be an equivalent transaction, financially speaking. But I will be checking on this with my local revenue office for sure!
Also if subject to sales tax, you may have to pay sales tax on both the amount charged plus any optional fees – extra cleaning, tour-guiding, etc.
I am probably out of luck, reviewed my local regulation, and lodging tax is applied to the “total price paid by the ultimate consumer for the use or possession of any room or space used.”
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Airbnb is not collecting lodging tax on the 3% credit card fee that you pay. Look at the total sales of 2266. Multiply that by the occupancy tax rate, and it comes out to the total occupancy taxes shown. Your reservation payout is not the same as your gross sales.
If you rented a hotel room in your area and the cost was $200 a night. Then the hotel would collect 8.8% of $200. The 3% the hotel pays to their credit card processor is just an expense for them, nothing to do with occupancy tax
