Many property owners use online marketplaces or property managers to market and rent their property.
Some marketplaces have made an agreement with the department to collect and pay taxes due on short-term rentals for the property owner.
Check your contract with the online marketplace or property manager to determine if your agreement includes tax collection and payment.
Property owner/host responsibilities
When an online marketplace or property manager collects taxes on your behalf, you may still be required to register with the department or report your rental income on an excise tax return. If you are required to register then you will:
- Report all of your rental income under all appropriate tax classifications - Retailing and Retail Sales Tax.
- Claim a deduction for “Retail Sales Tax Collected by Facilitator” under the Retail Sales Tax classification.
You must pay any Retailing B&O tax due after taking the small business B&O tax credit, if applicable. The credit calculates automatically when you file electronically.
You cannot take a deduction for marketplace or property manager charges such as service fees or commissions because they are considered a cost of doing business.
Airbnb collects and sends the following taxes to the Department of Revenue on behalf of Airbnb ‘hosts’ who use the website for short-term lodging sales:
- State and local retail sales tax.
- Special hotel/motel taxes.
- Convention and trade center taxes.
(See Airbnb’s website for more information).
Host: The party who rents out an accommodation through a marketplace facilitator.