Does VRBO Pay Local Taxes for Hosts?

VRBO connects property owners with travelers seeking short-term accommodations. For individuals listing properties, understanding tax responsibilities is an important aspect of managing a rental business. Local taxation for short-term rentals can be complex, involving various levies imposed by different governmental bodies. Property owners must navigate these obligations to ensure compliance and avoid penalties.

Understanding Short-Term Rental Taxes

Short-term rental properties are subject to several local taxes, distinct from standard property or federal income taxes. One common type is the occupancy tax, often called lodging, hotel, or tourist tax, levied on the cost of the stay. These taxes are imposed by cities, counties, or states to fund local tourism, infrastructure, or general revenue. Rates and names vary significantly by location across the United States.

Sales tax may also apply to accommodations charges in some jurisdictions. Some localities may impose specific tourism taxes. These local taxes are generally paid by the guest as an addition to their booking cost, but the property owner or platform is responsible for collecting and remitting them. The exact combination and rates depend on the specific address, as there are no uniform federal rules for lodging taxes. Rentals may be subject to taxes from state, county, and city levels.

VRBO’s Tax Collection Process

VRBO collects and remits certain local taxes for short-term rentals. In many jurisdictions, VRBO has agreements with tax agencies to collect specific lodging taxes directly from guests during booking. Applicable taxes are automatically calculated and added to the guest’s total payment. VRBO then remits these taxes to the relevant tax authority on behalf of the host. This simplifies compliance for hosts in those areas, relieving them of independently collecting and remitting those taxes.

However, this automatic collection and remittance is not universal. It depends on the specific city, county, or state and whether VRBO has an agreement with that tax authority. VRBO provides hosts with tax reports, accessible through their host dashboard, detailing collected and remitted taxes. In some instances, VRBO may collect taxes but send the amount to the host for self-remittance, especially where the platform is only obligated to collect a portion of the total tax.

Host Tax Obligations

Even with VRBO collecting some taxes, property owners retain significant tax responsibilities. Hosts are primarily responsible for collecting and remitting any local taxes that VRBO does not automatically handle. This often occurs when VRBO does not have a direct agreement with a specific local tax authority, or when only a portion of the total taxes is covered by their agreement. For instance, VRBO might collect a state occupancy tax, but the host remains responsible for a separate city or county occupancy tax.

Beyond transactional taxes, hosts must also ensure compliance with other local regulations for operating a short-term rental. This includes obtaining any necessary business licenses, permits, or registrations required by local authorities. Some municipalities may require hosts to register their short-term rental properties and pay associated fees, which may need annual renewal. Failure to secure these required operational documents can result in fines or the inability to legally operate the rental.

Furthermore, hosts are responsible for reporting all rental income for federal and state income tax purposes. This income must be declared on personal or business tax returns, and hosts can typically deduct various expenses related to the rental activity, such as cleaning fees, utilities, and maintenance costs, to reduce their taxable income. Accurate record-keeping of all collected income, expenses, and taxes, whether collected by VRBO or directly by the host, is important for proper financial reporting and to demonstrate compliance during an audit.

Researching Local Tax Rules

Determining specific local tax obligations begins with leveraging VRBO’s own resources. Hosts can typically find information regarding tax collection in their property’s dashboard or within VRBO’s tax help sections, which often list the jurisdictions where the platform collects taxes on their behalf. This provides an initial understanding of what taxes VRBO handles automatically.

For comprehensive and definitive information, consulting official local government websites is important. This includes searching the websites of the city, county, and state tax assessor’s office, finance department, or tourism board where the property is located. These sites are the authoritative sources for detailed regulations, registration procedures, tax rates, and remittance schedules. Many municipalities offer dedicated pages for short-term rental operators, often including step-by-step permit guides or tax information.

If online resources are unclear, hosts can contact local authorities directly for clarification. Seeking guidance from a local tax professional or accountant specializing in short-term rentals can offer tailored advice and ensure full compliance with all applicable regulations.