U.S. government is very incompetent too. Same with CPAs, attorneys, IRS, etc. You can receive many different answers. And there is not always a correct answer, as the law is often times open to interpretation. That’s why you will hear some CPA’s say you file Schedule E for Airbnb as rental income. Others will say it is schedule C to be recogized as self employment income.
Actually I do not know the answer as to whether or not Airbnb charged them a separate booking fee. I always assumed they did. If not, then maybe having them go through Air is simpler if you don’t mind paying the 3% fee.
As far as making tax reporting more complicated. Air actually makes it complicated for me. I use many different sites so I collect lodging tax from many different sources. I used to have to collect Air’s tax in cash. Then they started collecting for my state but not for my county. So then I would have to note on my state form which amount of revenue was exempt from me having to submit the tax. Then guests were confused why Air was collecting some tax, yet I was asking them to pay the county tax.
So now Air collects all my tax, and I am in one of the few states where the booking fee is also taxed. So if my guests pays a $100 booking fee, my state adds $11.75 tax on top of it.
Each month I have to report to the county and separately to the state, the taxes I owe, even if I had zero bookings. Even if solely used Air, I would still have to report each month that I owe zero in taxes.
Another thing to consider is whether or not the stay is extended vs. a new reservation. If you are in the same household then you can agree to do a quick damage inspection of the room before you agree to a cash extension. That way you can report to Air within 48 hrs. any damage.
I have only extended guests by one night and I rent out a separate home. So obviously I am not going to go over to do a damage inspection because I really wouldn’t discover many things until I actually clean the entire house. So in esssence, I am taking a risk and I suppose the guest could claim the damage didn’t happen until the last day that they paid in cash. But in all likelihood that issue probably would never come up. So I would have 24 hrs. to report the damage. And the guest has the option to accept/decline anyway. If guest declines then Air will determine. But I wonder if Air even charges the guest credit for damage they decline, or if Air takes it out of their own pocket.
In U.S. VISA credit card does not allow their card to be charged for damages that the cardholder does not approve. So the whole idea of feeling protected by a damage deposit on credit card is really just to make guest think you can withold it. But it is good Air does compensate you out of their pocket if they rule in your favor.
It’s very common for repeat guests to write two reviews. The guest might say the same thing or might have some new comment to make. You as a host will also have the opportunity to review the guest twice (or for each booking). I think it’s a nice thing for guests to see that a review from a repeat guest as obviously you don’t go back to a place where it wasn’t good, and it really is a strong review.
As you say, Faheem, there are several different views here, but I think the one think coming up loud and clear is: do what is most comfortable for you. And the other thing to bear in mind is - hey! your first guests and they liked it so much they want to come back - that’s a great result!
However, everyone’s missing the important question here … did they like the electric kettle!!!
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Lol. They suggested it, but I don’t think they used it. 
Actually, I don’t think anyone has used it yet. We don’t drink a lot of hot beverages around here. If they come back, maybe they’ll try it then.
Oh, I see. Yes, that makes sense.
I see. That sounds like a fair amount of work and planning, and I’m not set up for any of this. As I already concluded, I think it’s best to stay with Airbnb for now. After all, they handle most of this stuff for the host, even if they do overcharge for it, imo.
Hi @cabinhost,
Yes, I used to live in the US, and have had the fun experience of trying to read the tax and immigration laws, both of which were very badly (or at least, obscurely) written. Often one could easily interpret the meaning as being the opposite of what was actually intended. Given that it really isn’t that hard to write clearly - a bright high school student could do it - one can’t help suspecting some method in the madness. One should not need to “interpret” the law. The law should clearly say what it means, using as many words as necessary. And India is similar to the US in that respect, at least.
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Oh dear, what a lot of anxiety!
If you are a registered B&B (UK ) pay normal taxes, have your own B&B insurance
and are checked for food safety then you accept cash in hand!
Airbnb charges the guest and costs you a premium too so taking cash when it is
there in his hand is a no-brainer!
I would be very disappointed if a returning guest came through Airbnb.
Get them to book directly with you.
Do you really consider 3% as “costs you a premium”? I think of 3% as almost negligible since it’s just covering the credit card transaction fee. The OP is clearly not a licensed B&B (“I don’t know what I’m doing, have no experience, and no real backup…”)
To be clear, my question was whether the guest had to pay an additional booking fee when the reservation is changed/extended. As I write it, the idea sounds a bit crazy, but it would be nice to have confirmation it is not the case.
Yes, that tax situation sounds like a mess. I imagine I have a similar situation here. Though taxing the booking fee is nuts. How do they justify that?
Hi @courgette3,
Most of the things you have mentioned don’t apply to me. I’m not even located in the UK. And I’m certainly not a registered B&B. I don’t even know if such a thing exists in India.
I wouldn’t consider taking cash to extend a reservation. It’s too messy. And in the case I mentioned, it’s a new reservation, of course.
But damages etc. are a bit of a side issue in my case. It could be different with an experienced host.
Faheem, I realised that you had different problems which Is why I put ( UK )
but some of the others were USA or UK so my comments would apply to them.
However, if he had the cash in his hand, I see no reason why you didn’t take it
and I would not have reduced my charges either.
My state taxes the total gross receipts derived from the accommodation.
“Examples of items that are taxable as part of the accommodation rental include: credit card
fees; damage fees; early/late departure fees; extra person charges; in-room safe rentals;
inspection fees; linen fees; maid/cleaning fees; “peace of mind” fees (similar to insurance but
provided by hotel or rental agency rather than third-party carrier); pet fees (incurred by
guests who have pets traveling with them); reservation fees (also referred to as a handling,
processing, or administrative fee); security deposits; smoking fees; transfer fees (for
changing to a different room or unit or a different date); tentative reservation fees (for priority
reservation the following year); charges for cribs and roll-away beds; and charges for
microwave ovens and refrigerators.”
What I am a bit confused about is the damage fees part. To me, it sounds like if I withhold for example $100 for damaged linens, that I have to add the lodging tax to it too. And this would mean I really do not have the full damage deposit to use unless I tax it in the beginning, and then refund it along with the tax. But no one in my area charges tax on the damage deposit when they collect, so I don’t either.
Your state sounds rather greedy. Is this normal for the US? And what state is this again? I used to live in NC once - the Triangle. It was nice, but NC really loved to tax things. 
Here in the uk they take the tax off for us (vat) and its 20%. 20% of the service fee they charge guests can mount up.
I think what courgette3 means is that as long as you are operating legally, then at least in the UK you can accept cash payment.
I am only registered to collect and remit the lodging tax. No license is required for short term rentals, no inspection required, etc. But I can accept any form of payment I wish.
I have taken cash before and also offered cash and got stiffed a couple times. Be aware that people also say I’ll owe you when they are trying to scam you. Cash up front if its in cash at all is my rule.
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