The Ins and Outs of DC’s New Airbnb Tax

• February 3, 2015

by Lark Turner

One of DC’s first Airbnb rentals, a Shaw carriage house.

Last week, Airbnb announced that it would start levying a hotel tax on the company’s rentals in DC.

Airbnb, which allows people to rent out their homes (or rooms in their homes) for short-term stays, has been making similar moves in other cities as it works to operate in less of a legal gray area. The increased fees are no doubt a bummer for travelers and hosts as it will make Airbnb rentals more expensive. But from the DC government’s perspective, Airbnb was making good on what it owed.

Though the 14.5 percent tax that will be tacked on Airbnb rentals starting in mid-February is known as the hotel tax, the city’s deputy chief financial officer Stephen Cordi told UrbanTurf it’s actually a sales tax levied at a specific rate on “transient accommodations.” So whether or not you think your Airbnb rental is technically a hotel, it doesn’t matter; if it’s being rented out to travelers for a short-term stay, it’s subject to the tax.

About a third of the tax will go toward a fund that helps finance costs associated with DC tourism: the Washington Convention and Sports Authority. The logic behind the tax is that tourists should help pay for services they frequently use, like the operation of the convention center. The rest of the tax will go to the city’s general fund.

Cordi said Airbnb reached out to the DC government about three months ago to start working out the details. The company’s action wasn’t all that unusual, he said.

“It’s routine business for us to be contacted by taxpayers if they feel they have an obligation to collect or pay DC taxes,” Cordi said. “It happens every day.”

When it happens, the company and the government typically work out the tax rate and whether or not the company owes anything in back taxes for previous operations. Cordi wouldn’t comment on whether or not Airbnb paid back taxes and if so, how much. It’s “part of the negotiation,” he said.

This article originally published at http://dc.urbanturf.com/articles/blog/airbnb_makes_good_on_taxes_with_the_dc_government/9483