By The Hospitable Team
Renting your property on Vrbo or other OTA websites is a great way to make the most of your space and increase your income. Starting on Vrbo is easy, but if you want to succeed as a Vrbo host, you should treat this as a business. And an important part of operating a short-term rental business is taking care of lodging taxes.
In fact, property owners don’t pay lodging taxes out of their pocket because guests do it. But short-term rental hosts are responsible for collecting these taxes at the time of payment. They are required to register with local tax authorities and file regular lodging tax returns.
Vrbo emphasizes that property owners and managers are responsible for understanding and complying with the laws and regulations applicable to their property listing. So in this guide, we cover the basics of Vrbo taxes that you need to know to get started.
You may also want to check out our article to learn more about vacation rental tax rules.
What Is Vrbo Lodging Tax?
Short-term rental hosts and property managers are required to collect lodging taxes from their guests and then pass them on to tax authorities. A Vrbo lodging tax is typically a percentage of the cost of the stay. It is added to the final bill and may be paid to the state, county, city, or other local government tax authority.
Depending on location, lodging taxes may be referred to as hotel taxes, occupancy taxes, tourist taxes, transient taxes, accommodations taxes, etc. Collecting lodging taxes is an essential aspect of the hosting process because lodging tax compliance is required by law and is the responsibility of the host.
It’s important to understand the difference between lodging taxes and income taxes. As a taxpayer, you pay income taxes to the federal government and perhaps your state once a year as a percentage of your annual income.
Your short-term rental guests pay lodging taxes, but you as the host are responsible for collecting them and remitting them to tax authorities. Lodging taxes are paid to state and local governments, usually each month or each quarter. And you should note that lodging tax requirements vary by city, county, region, state, and country.
Vrbo Tax Documents
If you have a listing on Vrbo, you will need to provide your taxpayer details to them. And before you can begin collecting lodging taxes from your guests, you need to register with tax agencies and get your Vrbo tax documents. Depending on the jurisdiction, you may receive a permit or license.
Keep in mind that you may have to register with more than one tax agency if your vacation rental property is governed by more than one jurisdiction. For example, it can be governed by both the city and state.
After you register, you’re allowed to start renting your property and collecting taxes from your guests. You should receive instructions from the tax agency on filing and remitting your returns, for example, what forms you need to file, when they’re due, and how often you need to do that.
And remember that Vrbo may require you to provide your tax registration number and documentation that you remitted all taxes to the appropriate jurisdiction.
Collecting Vrbo Taxes
Each jurisdiction has different rules that determine what amounts are subject to Vrbo lodging taxes. Generally, taxes are added to the rental amount paid by the traveler and include any owner fees (like Vrbo cleaning fee or pet fee). Lodging taxes are collected at the same time a guest pays the bill.
Now some governments require marketplaces like Vrbo or Airbnb to collect lodging taxes for all of their listings. Besides, Vrbo has some agreements with tax authorities in specific jurisdictions to collect taxes on behalf of hosts. Then, Vrbo collects lodging taxes for you when guests pay for their stay and remits them to the appropriate tax authorities.
Running a short-term rental business involves a lot of work. By collecting lodging taxes on your behalf, Vrbo takes some of the administrative burdens from you, saving you time and making your life easier. But with short-term rental software like Hospitable.com, you can automate a significant chunk of your business while improving your guest experience.
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But you should keep in mind that Vrbo doesn’t have agreements with all jurisdictions in the U.S., so the company may not collect all of the lodging taxes in your area. Besides, Vrbo may have agreements with only some of the jurisdictions that govern your vacation rental. Then you’re responsible for the taxes that the platform doesn’t collect.
You can find out if Vrbo collects and remits a lodging tax for a specific property if you log into your account. You need to select Calendar on the left navigation menu and choose settings. If you select Taxes from the drop-down menu, you’ll see what taxes they’re collecting for your listing.
Vrbo Tax Reporting
Vrbo doesn’t register your property with tax authorities or report your earnings or the amount of lodging tax paid on your behalf. And in most jurisdictions, you may still need to file a lodging tax return after Vrbo begins collecting and remitting this tax in your area.
In many jurisdictions, hosts are required to submit a tax return for lodging taxes even if the amount of tax they collected is equal to $0. And if you list your vacation home on multiple rental listing sites, you may still have a tax filing obligation on reservations booked on other sites. And you need a channel manager to overcome the operational challenges of listing on multiple OTAs.
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You should check the Vrbo tax reporting requirements for your specific location or consult your tax professional to avoid penalties for not reporting.
The Bottom Line
Vrbo makes lodging taxes easier for you by collecting and remitting Vrbo taxes in some jurisdictions where they are required to do it by law or an agreement. They collect lodging taxes when guests pay for their bookings on the platform and then remit the taxes to appropriate taxing authorities.
But as a host, you are also responsible for collecting and remitting lodging taxes when Vrbo isn’t liable to do so. And you still need to register and file with tax authorities to report your short-term rental earnings and taxes collected, even if Vrbo is collecting them for you.
*Hospitable does not provide tax, legal, or accounting advice. The information provided on this website is of a general nature. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You are advised to consult with a legal counsel or a tax professional to get professional advice and take into account your specific situation.
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