If you’re renting out a property through Airbnb or a similar short-term rental platform, or plan to, you should know that local law requires you to collect tax on each transaction. Tax rates vary by location and the duration of stay.
Maryland
The recently-passed Senate Bill 533, which is part of §11–101 of the Maryland Code, requires all Maryland properties rented through Airbnb or a similar platform to collect a 6% Sales and Use Tax - regardless of the length of stay. The tax is due monthly, and if no tax is due for a particular month, you must at least file by phone.
Properties in Montgomery County must also collect a 7% Room Rental and Transient Tax for stays under 31 nights. Cleaning fees are taxed in addition to the rental fee. You must submit these taxes to the Treasury Division each month - and will incur penalties if you fail to do so. Details can be found in Section 52-16 of the Montgomery County Code.
As a result of new laws passed in December 2018 by the Baltimore City Council, guests who stay in the city must pay 9.5% on top of the state’s 6% base tax. Obviously, this results in a steep 15.5% levy for staying anywhere within the Baltimore city limits. This policy applies to bookings made through Airbnb or by any other method. More information can be found in §21-2 of the Baltimore City Code.
Virginia
In northern Virginia, there is a state Retail Sales and Use Tax of 6%, which is applied to all rentals, regardless of how they are booked. The tax law, which is not new, can be found in Chapter 38 of the Code of Virginia. The state tax can be remitted online using Form ST-9. Properties in Virginia are also taxed at the local level based length of stay and location. Local tax authorities vary in their remission policies.
In Alexandria, the local tax is 8.5% plus $1.25 per room per night, with reservations exceeding 30 nights being exempt. Arlington County charges 7.25% on top of the state tax for short-term stays.
Fairfax County recently updated its tax law to add 6% to reservations under 30 consecutive days. Rentals in Vienna, Herndon and Clifton only pay 4%, although the towns themselves may charge a local tax on top of state and county taxes. County taxes must be submitted monthly, and penalties are applied to late payments.
District of Columbia
The District of Columbia now imposes a 14.95% tax on rentals of less than 91 nights. Airbnb, HomeAway and Oakwood collect this tax upfront. An unincorporated business must file Form D-30 by April 15th with the amount of tax due. You can file this form online at mytax.dc.gov. Fine points of the law can be found in Title 47, Chapters 20 and 22 in the Code of the District of Columbia.
If you need any advice about the taxes on your rental properties in the DMV area, contact a Glass Jacobson real estate CPA today.
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