SHORT TERM RENTAL OF VACATION LODGING

TN DEPT. OF REVENUE PROBLEM RESOLUTION OFFICE
November 29, 2017
TAX CUTS AND JOBS ACT: KEY PROVISIONS AFFECTING INDIVIDUALS
January 24, 2018

SHORT TERM RENTAL OF VACATION LODGING

By Gina Lemons

The Tennessee Department of Revenue recently issued notices regarding taxability of short term rental of vacation lodging.

For sales tax purposes, a short term rental is one that lasts between one and 89 days. If the owner of a Tennessee property offers short term vacation rental through websites, such as vrbo.com, Airbnb.com, flipkey.com and homeaway.com, the rental income is subject to Tennessee sales tax. Any additional fees, such as nonrefundable pet deposits, damage protection, and cleaning fees are also subject to sales tax. The owner must register, collect and remit sales tax in the jurisdiction in which the property is located.

If the annual rental income and additional fees from short term lodging is $10,000 or more, the income is also subject to city and county business tax. For business tax purposes, a short term rental is one that lasts between one and 180 days.

The owner must register for and pay annual business tax in the jurisdiction in which the property is located. However, if the owner uses a management company to provide lodging services, then the management company is responsible for collecting and remitting sales tax; and, for paying business tax.

It is important to know what the local tax rates are; and where you stand as an owner. BCS Managed Accounting Services is available to help you with online registration and filing requirements.

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