effective 2/15/15, Airbnb will charge guests 14.5% “transient lodging tax”

Photo by PoPville flickr user Jim Havard

“Dear PoPville,

As an Airbnb host, I just received this announcement that effective 2/15/15, Airbnb will charge guests 14.5% “transient lodging tax”. As a Host in DC, I’ve reported annual revenues on taxes, kept my head down, paid attention to how various jurisdictions have been navigating code, tax issues. It seems DC has taken a more constructive approach then, say, NYC but I suppose time will tell how it impacts overall bookings, how the hotel industry might respond in DC, and whether this really does clarify murky tax policy enough to prevent potential headaches down the road with DC tax authorities (unrelated experiences leave me wary). I wonder what others think, have heard?”

I’d be curious to also know how many folks here rent out rooms through airbnb? Will this change make you rethink it?

Letter from Airbnb after the jump.

We’re pleased to announce that we’ve been working with the District of Columbia on an occupancy tax collection and remittance program which will be launching on February 15, 2015.
This program is designed to make collecting and remitting taxes easier for Airbnb hosts. When we collect this tax from guests on your behalf, it won’t affect your payouts. Just like before, you’ll receive your accommodation fee minus the 3% Airbnb host service fee.
What is changing?

  • For reservations in the District of Columbia booked on or after February 15, 2015, guests will see a line item for the district-imposed 14.5% Transient Lodging Tax. The tax will be added to the total amount paid by guests of the District of Columbia on stays of less than 91 days – hosts will not have to do anything extra.
  • If you’ve already been collecting the District of Columbia Transient Lodging Tax from Airbnb guests, you should not do so after February 15, 2015.
The Airbnb community contributes substantial, positive economic impacts in neighborhoods across the District of Columbia, and this initiative will continue to make the community even stronger.
We’ve posted more information about this announcement on our Public Policy blog and we hope you’ll check it out. To learn more about how taxes work for Airbnb hosts, please visit our Help Center.
Washington, D.C. is a great place to call home and we look forward to continuing to work with everyone here to make it an even better place to live, work and visit.
The Airbnb Team

22 Comment

  • As far as I know, short-term leases (IIRC, less than 30 days) are not valid in DC. So the city is going to collect tax from a service that is almost certainly illegal… seems about right.

    • Why would you think the service is illegal? Seems to follow under the Bed & Breakfast definition:

      Establishments engaged in providing short-term lodging to include guesthouses, housekeeping cabins and cottages, tourist homes and youth hostels. Excludes Boarding houses, hotels & motels, Apartment Houses (with three or more units) or Rooming House (with six or more occupants), and the One and Two family Rentals.

      • In order to qualify as a bed and breakfast, you need a bed and breakfast license. Do you think people renting out their spaces on Airbnb have gone through the process of securing one?

        • Some people have, including us

        • justinbc

          This is the case in most cities. Like everything in life, some people do follow the rules and some don’t. The fees really aren’t that much in order to do business legally.

        • You also need to not live in a One or Two family rental… basically, every airbnb in DC is illegal. There is no business license you can get that will allow short term rentals in a residential neighborhood. This told to me personally by an investigator for DCRA. AirBnb is skating on this one, and really ought to spend some of the millions that hosts generate for them lobbying the city to change the regs.

    • Accountering

      AirBNB should have insisted that as part of this change, the city legalize what is already happening. It seems like AirBNB gave up a lot, in return for essentially nothing.

      • Operating a short-term rental is already legal in this city, it’s just that very few AirBnB hosts bother to go through the permit process.

        • airgng4ever, please do tell which business license you got that allows for short term rentals in anything from R1-R5

          • Gpublic, here is the info for the license/permits: http://dcra.dc.gov/service/get-bed-and-breakfast-license.

            The investigator gave you incorrect information. B&Bs in dc are classified as Home Occupation Permits, and are allowed in residential areas. We live in an r-4 district and were issued permits. Where I think some hosts might run into problems becoming legal with DC are with the parking requirements, surveyors plat, and a few other quirky requirements that someone else pointed out. A single family house shouldn’t have a problem getting a b&b permit; but someone renting out one room or an apartment or condo in a larger building (which is usually against the lease or building rules anyway). In other words, Dcra needs to expand its definition of b&b so that others can get permits.

          • Here is the link for the home occupation permit information. http://dcra.dc.gov/service/get-home-occupation-permit. There are a couple checklists at the bottom of the page with additional info. I would recommend pulling up the DCMR as well because I believe the rule about maximum square footage does not apply to b&b HOPs.

          • Ok one more thing for folks who want to be legal with their AirBnB rental. A b&b permit like the one I described above isn’t the only option. And I realized that another restriction for a b&b permit is that the facility is not supposed to have cooking facilities, a major problem for hosts who are trying to rent out their entire house. I think, but am not certain, that you could get a one family rental license. This is the license that people who rent one room or the entire get, and i don’t believe that permit is related at all to the duration of the stay (short term transient vs a typical long term lease). Since airbnb will be paying the 14.5% tax starting feb 15, the only tax that a host will pay is income tax at the end of he year, which airbnb automatically reports to the irs anyway. A one family rental permit obviously includes houses with full kitchens, but i believe it does require an inspection.

          • I am aiming to list my condo bc I travel a lot, but also keep it legal. I even changed insurance companies to have a policy that would cover short-term rentals. I was on DC’s website figuring out how to apply for a BBL and B&B HOP, which I think are the requirements, but it got confusing quickly. Were you able to get an eHOP? Or did you have the get the HOP first, then apply for the BBL? Were you able to any or all of it online, or did you have to deal with the in-person aspect?

          • Wanna Be Host, I’m not as familiar with the process for a condo, but I can tell you definitively that you cannot go through the eHOP process for a B&B HOP. It has to be the in-person process. If I remember correctly, it’s because they want to see the surveyors plat and drawing for parking.

            Have you checked to make sure this is ok with your condo association as well? Usually condo bylaws prohibit short-term rentals like this.

  • I’ve rented out a separate apt. – the whole third floor of my house for vacation stays on Homeaway/VRBO since 2006 – before Airbnb was invented. Because it doesn’t have a separate entrance however, (people come through the main part of the house) I just declare all that income as “roommate” income on my taxes, the same as if I had a permanent housemate. Believe me – I did several rounds with DCRA trying to decide what exactly this was – (as recently as a year ago – they had no idea at all what Airbnb even was.) It doesn’t fit the city definition of rooming house, boarding house or bandb.

    It will be interesting to see how this shakes out for airbnb. Since they already charge the guest 12% booking fees, an extra 14% makes a $100.00 apt. $126.00 for the guest.

  • Makes sense. The DC hotel tax was already 14.5 % so airbnb (along with a few other cities) have agreed to collect and remit the same tax on their rooms to avoid what was probably going to be crippling lawsuits from cities all over the nation. There is likely 3-5 million a year in “hoteling” that the city was unable to tax.

    All this will do is likely drive business to established hotels as the going per night rate of airbnb isn’t that much lower than the going rate of an average downtown hotel. Airbnb hosts will likely increase costs to accommodate the 14.5% they now have to pay in tax.

    Like in most cases the tax man gets the last word. Amazon is being forced to do the same with state sales tax.

  • VRBO/Airbnb are the Uber of lodging. Most jurisdictions collect a pretty hefty tax on hotel or B&B occupancies, so I’m not surprised that the District is trying to get their piece of the pie. Believe it or not, OTR are probably the most smartly-run department in DC government.

    • It’s the same with every company – take care of your Sales department first.
      No surprise that the revenue generating portion of the government is pretty good at what they do. They carry a heavy stick.

  • We are very happy that they are charging the hotel tax automatically, not only because it’s the right thing for airbnb to do, but mainly because we’ve been running a legal airbnb property for over a year now and have been paying the 14.5% hotel tax on a monthly basis out of our own pocket the entire time. To any airbnb hosts who say this new tax policy is wrong, sorry but it’s falling on deaf ears.

    I believe someone else commented that their property didn’t fit dcra’s definition of a bed and breakfast. There are some strange Dcra requirements, such as a parking space and a surveyors plat of the property. I agree that that needs to be revised to account for airbnb hosts who may not have a parking space. But the 14.5% hotel tax has always been clear: Anyone renting ther property for less than 91 days is subject to the 14.5% sales and use tax. The fact that the Dcra process is confusing or cumbersome isn’t an excuse, in my opinion. We went through it, and it sucked, but we still did it. For our property, we got a Home Occupation Permit for a b&b through Dcra, and a basic business license for a transient housing facility as well. So it can be done.

    Oh, and one other thing. If anyone is considering going through the permitting process, you are not required to offer breakfast. The Dcra b&b application asks if meals are offered, but nowhere in the DCMR does it say that breakfast is required. If you’re unsure, say yes and give your guests a couple granola bars for breakfast.

    Anyway, went off on a tangent there, but I’m glad everyone is now on a level playing field now.

    • Would you be willing to connect to talk about how you made your listing legal? I am aiming to be a host bc I travel a lot, but also keep it legal. I even changed insurance companies to have a policy that would cover short-term rentals. I was on DC’s website figuring out how to apply for a BBL and B&B HOP, which I think are the requirements, but it got confusing quickly.

  • I believe California is/has implemented the same tax crackdown on AirBNB rentals. Pretty sure it will go nationwide eventually.

  • I definitely think the tax is fair. My next door neighbors have been on Airbnb for over two years now. Their basement was has no C of O, it would not pass because of the ceiling height and egress, they have no BBL and rent out two other properties. Yet somehow their house consistently appraises for significantly less than mine despite the larger sq footage and addition they never filed with DCRA. All of this information is on the real property database and is public information. They also rent their parking pad to zip car.

    While I do believe it is only fair to charge taxes and make sure their stuff is up-to-code, I will concede a personal irritation with the congested parking and different groups of people checking in at all hours of the night (sometimes 5-6 people) they are also complete and utter jerks about everything. I dream of reporting them but that would make me equally as jerky.

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