HotSpot Tax Services caters to the vacation rental industry and has a great list of reasons why vacation rental tax compliance is important. Among the best is that it creates an important revenue stream for state and local governments that can in turn protect our industry.
Tax is a scary little word – no one enjoys paying or collecting them – but you shouldn’t second guess your own willingness to comply. You are doing the right thing. What’s the best way to present them to guests?
Listing Taxes vs. Rolling Them Into Your Rates
You may worry about turning off potential renters by posting taxes when others don’t, but the alternative is kind of an accounting hassle. If you list them, it’s a simple calculation that gets added onto any transaction and fairly quickly passed on to the government. If you roll them into your rates, you’ll need to backtrack on the math to achieve a whole number every time your rate shifts or you offer a deal – then keep track of all the variations down to the penny for your own records.
Some states mandate that taxes be listed clearly and separately from vacation rental rates, so be sure you’re aware of the rules in your area.
For more ins and outs, see my post Licensing And Collecting Taxes For Your Vacation Rental.
photo credit: 401(k)