More states, cities and counties are working with Airbnb on short term rental tax agreements to generate revenues, but there are myriad concerns:
- How Airbnb reports data
- How short term rentals affect rental markets and neighborhood quality of life
- How to impose rental caps to both streamline burdens on less frequent hosts, as well as help preserve rental supplies in neighborhoods where owners might essentially convert rentals into short term rentals
Counties Level the Playing Field
In 2016, more than 2.1 million stays in New York state were booked through Airbnb, according to Community Newspapers Holding Inc. The report also indicated that so far, 12 New York counties have signed contracts with Airbnb to collect taxes on rooms and homes rented out over the online platform.
In Otsego County, home to the National Baseball Hall of Fame, operators of local inns and bed and breakfast businesses are pleased the county now has a mechanism for getting its bed tax money from Airbnb customers, said Otsego Treasurer Dan Crowell.
Cities Grapple with Community & Market Concerns
Smaller cities are also working with Airbnb on their own short term rental tax agreements. Union City, N.Y., is working on a deal for Airbnb to collect the city’s 12.45 percent hotel room tax rate to Airbnb users whenever they book a room, home or apartment, according to the East Bay Times.
Beginning in June, under a recent agreement with the city of Hot Springs, Ark., Airbnb will collect a 3 percent lodging tax on bookings in the city.
In the town of Woodstock, N.Y., opponents of short-stay rentals have voiced concerns that short-term rental hosts are violating town codes by not being on the premises when they rent their homes, or are not adequately maintaining properties. However, Union City is considering requiring Airbnb hosts to take out business licenses that would subject short term rentals to code enforcement checks that could address some opponent concerns there.
In large cities, Airbnb is often opposed by both hotel or neighborhood groups.
The New York Hotel Trades Council is fighting hard to disrupt any chance at a short term rental tax agreement in New York City. Earlier this year, hotel associations issued a report that criticized Airbnb’s tax agreements with 12 cities for “unusual and legally questionable latitude to determine how much they will pay in taxes.”
Union City City Attorney Ben Reyes said Airbnb will only provide the city with aggregated, anonymous data about rentals under that city’s impending deal. But, Airbnb audits are possible.
It is currently illegal in the Big Apple to rent a space for fewer than 30 days without being properly licensed as a hotel, motel or bed and breakfast. The state of New York also passed a law fining Airbnb hosts that advertise illegal New York City listings. In March, a landowner in Trump Tower was fined $1,000 for an Airbnb advertisement. In April, Mayor Bill de Blasio added 16 new positions to the Office of Special Enforcement devoted to inspecting and fining landlords and leaseholders that rent out for fewer than 30 day, according to Crain’s New York.
In Los Angeles, organizations like Keep Neighborhoods First are proposing a 60-day cap they believe would limit incentives for landlords to enter the short term rental market and preserve affordable housing. The city’s Planning and Land Use Management Committee is considering a Home Sharing Ordinance that governs a 14 percent Transient Occupancy Tax that is currently projecting $27.5 million in revenues for the next fiscal year, according to City Watch LA. City officials are reportedly considering caps and how they would reduce the projected revenue.
Housing Impact Fees
Airbnb began collecting and remitting city sales and lodging taxes for all hosts in Steamboat Springs, Colo., and the city council is considering additional impact fees on short-term rentals to help fund community housing.
But a move to generate revenue and thereby address affordable housing concerns with seed funding would require an independent impact study. The city would need to answer questions like how impact fees would affect the market, according to Steamboat Today.
The squeeze might not be worth the juice,” said Councilman Scott Ford, after elected officials received a legal briefing.
States Seeking Revenue Opportunities
While states like New York appear far from making statewide short term rental tax agreements, in February, Airbnb began collecting state, county and city taxes from Arkansas hosts under a state deal.
The Massachusetts Senate is currently looking at a state budget proposal that would accrue an estimated $18 million from new state tax collections on nightly Airbnb stays. But, Governor Charlie Baker has proposed applying the short term rental tax only on hosts that rent at least 150 days per year. Boston Mayor Marty Walsh believes any state short term rental revenue should also come back to the city.