If You Host Through Airbnb or a Similar Service, Beware of the Hotel Occupancy Tax

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By Mike Stoltzfus, CPA, MT
Tax Manager

Michael A. Stoltzfus

Michael A. Stoltzfus

If you are a homeowner renting out a home, room, or apartment to guests for less than 30 consecutive days through an app or website like Airbnb, this post applies directly to you. In the Commonwealth of Pennsylvania, you may be required to pay the hotel occupancy tax.

What is the hotel occupancy tax?

The hotel occupancy tax is similar to the Pennsylvania sales tax, the key difference being its application to the rental of sleeping accommodations rather than the purchase of fast food or luxury items.

Pennsylvania has historically assessed the six percent hotel occupancy tax on the rental of hotel rooms. Under state law, the renting of sleeping accommodations for less than 30 days is considered a hotel rental. In addition to the state tax, some counties also assess their own hotel tax, which goes to the county treasurer.

What action is the State taking?

The Pennsylvania Department of Revenue recently mailed more than 2,500 questionnaires to property owners who have spaces listed on home-sharing websites. The questionnaires/letters are meant to determine whether these owners are required to register as business owners who should be collecting and remitting the hotel occupancy tax to state of Pennsylvania.

It is not unreasonable to assume that the Department may eventually branch out to explore other homeowners who are renting space without listing it on home-sharing websites or mobile apps.

What does this mean for local hosts?

If the services your business provides are similar to those provided by a hotel (housing guests for less than 30 days at a time), you may be required to register, collect, and remit the hotel occupancy tax. Taxpayers should check to see if third-party brokers like Airbnb or home-sharing websites are voluntarily collecting and remitting the tax on behalf of the host.

In addition, whatever income you receive from these short term rentals is subject to federal and state income taxes, as well.

It may be time to raise rent.

If you are a local home-sharing host and are losing sleep over your tax obligations as they relate to hotel occupancy, contact the experienced staff at Simon Lever. We can help acquaint you with your responsibilities under the Commonwealth’s hotel occupancy provisions. As a CPA and Tax Manager, I am happy to answer all of your hotel occupancy questions so you can rest assured.

Give us a call at 717-569-7081. Let’s start a conversation that will put your mind at ease.

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