Everything you need to know about TOT and Hotel Taxes
BY MIKEL HUBBARD
FORMER HGTV PRODUCER | CO-FOUNDER, THE HOST CO |
OWNER, TIMES EIGHT PROPERTY & DESIGN
Communities are now insisting on getting their fair share of your rental income through Transient Occupancy Taxes and we say… GOOD! Tourists support the local economy, but they also use your roads and services, so they should pay their fair share.
And paying those taxes is a great way to let your community know you support them and they should support you too!
Pay it forward, kids.WHAT ARE TOT TAXES?
TOT stands for Transient Occupancy Tax, or it might simply be called a short term rental / hotel tax. It’s a tax on all stays under 30 days. Hotels have been paying these for years and now it’s time for short term rentals to abide by the same rules.
Let’s give this guy a hand - he’s paying taxes!HOW DO I PAY THEM?
Generally, when you register your short term rental with the city, they’ll start sending you regular reminders to pay and a sheet to fill out to explain how much you owe.
THEY WANT PROOF?
Sometimes, your city will want to see your income and what the city has paid in TOT Taxes if they’re collecting them for you. In Airbnb, this can be done by going under your transaction history.
If you’ve updated your Airbnb desktop go to Performance > Earnings > Transaction History > Gross Earnings (set your date range) > Download CSV
You can edit that spreadsheet as needed before you submit in case there are multiple properties there that don’t pertain to the same municipality. You can also go to completed earnings and edit the listings if you don’t need proof of Airbnb remitting taxes on your behalf.
Yeah, yeah. No one said it would be fun.HOW DO I CALCULATE THEM?
Again, check with your city but the taxes are usually in the 7-10% range and are applied to the entire cost of the booking (minus the Airbnb fee). That means you should pay taxes on the full amount you received from the guest including cleaning fees, pet fees, etc. Some municipalities only require that you pay taxes on the room rate itself, so check.
But most importantly, you aren’t paying taxes on the amount you receive from Airbnb after they take their cut from credit card fees, you’re paying taxes on the amount YOU charged the guest (meaning without the guest’s Airbnb booking fee).
Staring into the abyss that are your TOT taxes.UH, I HAVEN’T BEEN PAYING THESE AND HAD NO IDEA I WAS SUPPOSED TO. AM I SUPPOSED TO PAY BACK TAXES FROM THE LAST FIVE YEARS?
If you gotta pay, you gotta pay. But tax people aren’t as scary as you think and since this is fairly new territory, municipalities are pretty forgiving except to the most egregious abusers like companies with 1000 units. We’re not lawyers, but we find it’s better to say today is my first day and I’m going to start paying today. Or commit to starting at the first of the year. But ignoring it indefinitely is probably not the best policy.
Got a hot tip on TOT? Sound juicy! Share in the comments!