Friday, October 30, 2015

Thrifty Thinking: MyLodgeTax

Airbnb is slated to double its bookings in 2015 to 80 million, as reported by Reuters last week, proving that the short-term vacation rental option is not slowing down anytime soon. As more and more first-time rental owners are utilizing the vacation rental site (or other sites such as HomeAway and VRBO), they need to be aware of the taxes they are required to pay when listing their home for rent. While many do not know it, renting a home for the short-term is basically running a small business, and this requires compliance with the taxes laid out by city and state governing bodies. Understanding these taxes can be incredibly confusing, as they vary per city and state and are constantly changing.
I recently had a chance to interview Rob Stephens, general manager of Avalara MyLodgeTax,about  how rental owners can easily get compliance to protect themselves from auditors. Avalara MyLodgeTax manages the complexity of a rental owner’s tax requirements so they do not have to. 
  • How has the short-term vacation rental industry changed the way people book hotels?
The vast inventory, growth, and ease of use of vacation rental websites has provided another lodging alternative for travelers. At this point in time the hotel industry is still very healthy, growing, and the rise of the vacation rental market is not significantly impacting hotels. But as more travelers try vacation rentals, research reveals that travelers love the vacation rental option. But awareness and trial of the vacation rental segment is still relatively low compared to hotels, but is changing. The vacation rental market is growing rapidly and increasingly popular, and it will continue to be an available and easier option for travelers to book.
Tactically speaking it is becoming easier to book vacation rentals, which offers huge choices and online booking options, which 3 to 5 years ago did not exist.     
  • Why are taxes often overlooked?
Taxes are overlooked because most people participating in the marketplace are simply unfamiliar with hotel occupancy tax requirements. Hotel taxes are a class of business taxes (which includes people renting their homes or rooms) which mean no one is going to tell you or inform you of the requirements. It is your obligation as a ‘business’ to figure them out and comply. Also, compliance is not easy, the average vacation rental owner is required to register with two different tax agencies and file returns on a monthly or quarterly basis with the same agencies. Lack of awareness and the complexity of the requirements are a huge deterrent to people collecting and remitting the taxes.
  • How can owners make sure they are being compliant when they rent out their properties?
Avalara MyLodgeTax solves this problem and guarantees full compliance for a nominal cost ($10 to $15 per month). Absent using Avalara MyLodgeTax to automate these requirements, owners will have to research occupancy tax and licensing requirements with the city, county and state tax agencies where their property is located. Most accountants are not familiar with this type of taxes and do not typically handle them. But even owners with good intentions and diligently trying to manage the requirement miss some areas.
About Rob Stephens, Co-Founder and General Manager of Avalara MyLodgeTax
Finance expert for the rapidly growing short-term lodging marketplace, Rob Stephens co-founded Avalara MyLodgeTax (formerly HotSpot Tax) in 2002 out of his own necessity to understand and manage hotel tax compliance with his rental property. Avalara MyLodgeTax is the leading provider of tax compliance solutions for the vacation rental industry. Avalara MyLodgeTax simplifies compliance and manages the licenses and hotel occupancy tax filings for thousands of vacation rental owners and managers across the United States. Rob’s passion and know-how with complicated lodging tax compliance in the vacation rental industry has presented him with regular speaking engagements at industry events. Rob has owned and managed his own vacation rental in Vail, CO since 1999.

No comments:

Post a Comment