The 4 Layers of Airbnb Taxes Every Host Needs to Know

If you think Airbnb is handling all of your short-term rental tax, well, you might be right. You might be partially right, or they might not be doing it at all. There's lots of tax combinations out there. And so today, we're going to break that down. All the different layers, the county layers, the city, the state, and also give you a really cool tool that can generate a report for you for free. No strings attached. Stay tuned. Let's talk about taxes. Welcome back to the short-term rental

riches podcast. I'm happy you're here again. Let's go ahead and jump right into it. There are really four tax layers when it comes to your vacation rental. You have a state layer, you have a city layer, you have a county layer, and then sometimes you have an HOA or administration layer that can be charging taxes separately. It really comes down to your specific address. You can't assume that if you're two properties in the same city that you have the same taxes. The way to be 100%

certain is to call the different departments. Call the state. Call the city. And I know what you're thinking. No one wants to get on the phone with city or government agencies because of wait times. So, we built a really cool tool for you. We'll make sure you have it. It's in the show notes. It's going to build a report for you, give you the numbers, all the links, everything you need to know. But, I want to talk about what's actually in that report before you go

and download it. So, we have those four layers of tax. And you got to be careful. There might even be an additional one which could be a neighborhood layer. Maybe there's some sort of historic district or something that charges a per person tax. We'll talk about the types of taxes that are out there in a second. Before we talk about some of the types of taxes, let's talk about actually collecting it and remitting it because this is where a lot of people get confused. A lot

of people just assume, for example, that Airbnb is collecting all your taxes and remitting all your taxes to all the different agencies that they need to. But I'll tell you that in my experience and our team's experience managing properties in over 50 cities that sometimes Airbnb collects everything. Sometimes they collect nothing and you need to collect it and remit it back to the agency. Sometimes they only collect part of the taxes. Maybe they collect the county tax, but they're not collecting the state tax. The good

news with Airbnb is that they do handle your whole payment. So the taxes that are still due, they're going to send back to you. You just need to make sure that you know what goes where. Now, there's quite a few places where VBO also does the same thing where they'll collect the taxes and they will remit them on your behalf, but again, you got to double check. You got to make sure that they're actually remitting all of the taxes. If you have your own directbooking website

set up, I hope you do. Or if you're set up on Google or booking.com and you're collecting payments maybe through Stripe, well, you got to make sure this setup gets done right in the first place so that you're collecting the correct amount because if you're not remitting collect amount, it is your responsibility at the end of the day and it could result in pretty big fines and actually losing a permit as well. And in some places, Airbnb and Brbo require a permit number on your listing

to actually actively list your property available for rent. So, we got to make sure we do our due diligence on what each channel we're listing our property on actually collects versus what they don't. Our reports going to break those insights out for you as well. All right, let's talk about the types of taxes. So, the big one that most people think about is the transient occupancy tax. This is the same tax most hotels pay only fair that we pay ourselves for our short-term rental accommodations. But

there can be a lot of other taxes that come into the equation. Maybe there's a county tax, maybe there's a sales tax. Sometimes there is a tax per guest per night like a tourism type of tax. So, you really need to do your due diligence and make sure again we're going to give you in our report the places where you need to go to confirm this 100%. Sometimes the taxes are easy. there's just a a blanket tax in your area. But sometimes, like Florida's got a

whole bunch of them. There might be all kinds of combinations. And to make it even more challenging, they might be due at different times. Maybe there's a monthly tax due. Maybe there's a quarterly tax due. Maybe there's an annual tax due or some sort of annual or quarterly filing. So, you can see how it starts to get pretty complicated. You want to make sure you've got all your tees crossed, all your eyes dotted, and you've got things nice and organized. We've referred quite a bit in

the past to a company called Avalara or My Lodge Tax. I think they charge at the time of this recording like 39 bucks a month to handle this for you. Again, depends on how complex your taxes are, if that makes sense for you. But it's also a lot easier to do this research. A lot of what they were charging for, actually, I think they charge a fee to get started as well, is to do all this research. And so with AI today, our team loves AI.

We've built this cool skill that you can download and do a lot of this research for you. So, we've got different layers of tax. We have different types of tax. A lot of this is based on the definition of what your area calls a short-term rental. And this changes as well. Most people think that a short-term rental when it comes to taxes is anything 30 nights or less. But in Florida, for example, they consider anything 6 months or less a short-term rental, which means you have

to pay taxes on anything 6 months or less. This is a really important one to know, especially if you have a property where you're sort of in between doing mid-term rentals and short-term rentals. Because if your average nightly stay was, you know, 3 weeks or something, maybe people are staying there longer and you could bump it up to 30 nights, but then by doing so, no longer pay the short-term rental tax of maybe 10%. Sometimes it's higher, then that really needs to be factored into your

equation. Could mean that you want to adjust your calendar availability, so you're really only allowing mid-term rentals. What our team likes to do, though, is just maximize the potential for a property. So, if you can legally offer a short-term rental, we would want to be doing that. If you're out there and you've got a whole bunch of taxes, once you know your taxes, you know the types of taxes, you know the definition of what a short-term rental is in your area, well, you can plug these

in to your travel agencies like Airbnb. If they're not collecting your tax automatically, most of the time, you're going to have to plug this into bookings. And if you're taking direct bookings, again, you're going to have to make sure all this is set up right. You can use a property management software program to help you set up these taxes. Most of them have a nice little handy spot where you plug it in and it'll tack that on top of the reservation charge if you're using a

tool like Stripe, for example. Most PMS programs are also going to have a setting defining what a short-term rental is. So, they will know automatically if a reservation surpasses 30 nights that it no longer needs to charge the short-term rental tax. So, you can automate a lot of this. You just got to make sure it's set up right in the first place. One other sort of side note is we can't really stop there, right? Like sometimes taxes changes and regulations change. So you want to make

sure that you're either doing this research on a somewhat regular basis, you know, maybe twice a year or you're running our little AI report to help you uncover if anything's changed. So knowing all the taxes, knowing the amounts and the types, that's one thing, but there's usually a process that comes before that. That's actually getting the license. Most frequently, it's getting some sort of tax license with with your state. Sometimes they require on-site inspections to make sure everything's up to par. You've got your fire extinguishers

in the right spot, your smoke detectors in the right spot. So, I know taxes aren't most people's favorite subject. They're certainly not mine, but there are easier ways to do this now if you have access to an AI tool like Chad GBT or Claude or something like that. You can do a lot of this research so much easier than you could in the past. But you got to make sure it's thorough. You got to make sure all these boxes are checked that we talked about today.

There's one other one that I actually left out and that's that sometimes the tax isn't charged on the whole reservation, right? Sometimes it's only on the actual reservation, maybe not the cleaning feed. So, one other thing to look at. Again, we created a handy report for you. I want to give you the whole breakdown and then give you the shortcut and it's also going to give you the links so you can verify for yourself to make sure that you do actually have things set up. Can

do that today and then you can do that in a year from now just to make sure things don't change. I hope that gave you a little bit more insight and I hope you enjoy our tool. I know I do every time I run it and it comes up with this nice, beautiful report. Till next time, I hope you have a fabulous week.