Taxes
- Manage Listings > Edit > Pricing > Rates & Fees
- Enter the total percent amount in the Collect total tax of field.
Note: Do not use the Future tax rate change field unless entering a future tax rate increase. Ex: Beginning October 1st, your lodging tax rate will change from 12% to 13%.
Example: You receive a notice from your county, state, city, etc. that your lodging or occupancy tax rate will change from 12% to 13% on October 1st. As soon as you receive this notice, update your Houfy listing so that any new reservations made beginning this date will have the appropriate taxes collected.
But what about existing reservations that begin after the new tax change date? Owners typically handle this in one of two ways:
- They include in their contract (that the guest already signed) that guest will be notified and is responsible for any subsequent increase in the occupancy tax.
- The owner chooses to pay the difference out of his/her own pocket.
How Do I Add the Future Tax Rate?
- Menu>Manage Listings>Edit>Pricing>Rates & Fees.
- Check box next to Future tax rate change.
- Enter future tax percent and select starting date.
- Click top right arrow to display Drop-down Menu > Manage Listings > Edit > Pricing > Rates & Fees.
- Enter the total percent amount in the Collect total tax of field.
Note: Do not use the Future tax rate change field unless entering a future tax rate increase. Ex: Beginning October 1st, your lodging tax rate will change from 12% to 13%.
No. Houfy doesn't interfere between guest and host payment transactions. Square and Stripe are payment options integrated with Houfy. If you do connect a Square or Stripe account to your Houfy listing, the funds never touch Houfy's bank account.
Why do some listing platforms collect tax for me?
For the most part, tax collection and remittance by listing sites is because of their voluntary agreements with tax authorities. These are often created as a means of deterring restrictions/bans on short term rentals. In very few cases is a rental platform actually required to collect lodging tax for their hosts.
For example, you sometimes hear hosts complain that only the state tax (or another specific portion) is collected by the site, and they must collect the remaining local county/city taxes separately. This is because the state has agreed for their "portion" to be collected/remitted on behalf of the owner, but the local government has no such agreement.
You may still be required to register and file periodic returns.
When a listing site collects/remits lodging tax on your behalf, they generally do so in one lump sum, with zero identifying host information. Be sure to check your local laws to see if your jurisdiction requires individuals to file a return, regardless if a site collects/remits the taxes.
Even if a site collects tax on the original reservation, additional taxes may need to be collected later.
Let's say an Airbnb guest books and last minute wants to bring their pet, and you collect a $100 pet fee. If your state requires lodging tax on pet fees (such as North Carolina), then you need to make sure you have met all of your lodging tax obligations.
Airbnb sometimes suggests to collect these fees via the resolution center, especially if the reservation has ended and you no longer have the ability to "alter" it. Get it in writing from Airbnb if they state guest payments made to you via the resolution center are exempt from lodging tax.
It's important to thoroughly understand your local tax laws and what is required to be 100% compliant. Never assume a listing site is handling all of your lodging tax obligations. Be sure to register in all applicable jurisdictions, and learn the filing requirements for each one.
If you need any assistance, Avalara is an excellent resource and their site provides a wealth of information. These guys specialize in the collection and remittance of lodging taxes. They are happy to answer any questions, or handle your lodging taxes for you.
Generally, yes. But not always. The answer will depend on your specific state and local laws. In only a few areas is the clean fee considered to be a nontaxable charge. Even though the amount of the clean fee is typically itemized separately from the nightly rate–it's still considered part of the total reservation cost.
Get to know all of your lodging tax laws before opening your doors for business. And don't rely on short term rental platforms to inform you of your tax obligations! If the laws are not completely clear, be sure to gain clarification by calling or visiting your local tax office in person.
Even if a platform does collect and remit lodging tax, that doesn't apply to the payments guests often send hosts such as pet fees, additional guest fees, extra parking fees, additional nights, etc. You'll also want to be registered so repeat guests can book your property directly.
It's best to get set up with your state and city/county tax offices before accepting reservations. Otherwise your booking opportunities will be very limited. Not to mention, travelers are often put off if an owner can only do business through sites that charge them unnecessary service fees.
My tax advisor says clean fees are not taxable
This very well might be true. But triple check yourself just to be on the safe side. So, why do I suggest this? Because sometimes CPAs and tax advisors assume all services or labor are nontaxable, without checking any accommodation tax laws.
For example, let's say a computer shop sells both computers, as well as a service to set them up in customers' homes. The computer might be taxed at one sales tax rate, and the "service/labor" setup is considered nontaxable. A tax advisor not familiar with lodging tax, nor different types of sales tax, might assume all labor is nontaxable without ever looking up the applicable laws.
There is no shortage of owners who discovered years later they were incorrectly informed. Not only were they liable for back taxes, but for the penalties and late filing fees as well. Be sure your tax advisor verifies and shows you that the law applies to accommodations and not just general labor and services.
If you have any doubts at all about your lodging taxes, I highly suggest contacting Avalara. The company specializes in the collection and remittance of short term rental taxes. They have a ton of free information on their website, as well as a phone number to call if you have any questions.
