June 20th, 2016

Airbnb Inks Deal with PA Department of Revenue to Collect Hotel Occupancy Taxes

Pennsylvania law requires anyone who rents out their property to provide lodging for less than 30 days to collect and remit a 6-percent hotel occupancy tax to the Pennsylvania Department of Revenue. Despite the name, the term “hotel” includes not only traditional hotels but also houses, rooms, or apartments offered for short-term rentals, including those rentals facilitated online or through third-party brokers.  Until now, the state was missing out on a large portion of that revenue.

Starting July 1, 2016, under an agreement with the Department of Revenue, Airbnb, an online home-sharing service, will voluntarily start collecting and remitting the state’s 6-percent hotel occupancy tax for short-term rentals within Pennsylvania. According to the Airbnb website, Airbnb will collect tax on the listing price of any rental, including any cleaning fee, for reservations 29 nights or shorter within the state of Pennsylvania.  Pennsylvania Department of Revenue Secretary Eileen McNulty expects that the impact will be nearly $1 million in new revenue for the state.

Airbnb also collects additional hotel taxes imposed by the City of Philadelphia and Allegheny County for rentals within those jurisdictions. Although both Lehigh County and Northampton County levy hotel taxes of their own, those county taxes are not part of the current deal with Airbnb.

While the agreement with the Department of Revenue strictly addresses rentals facilitated by Airbnb, the Pennsylvania hotel occupancy tax applies to all short-term rentals, even if those taxes are not collected and remitted on behalf of hosts. Therefore, potential hosts are urged to consider potential tax implications, as well as any applicable state and local use, zoning, or safety regulations before listing their property for rent.

Attorney Sarah M. Jolly is an experienced real estate attorney assisting businesses and individuals with commercial and residential real estate matters.

The content found in this resource is for informational reference use only and is not considered legal advice. Laws at all levels of government change frequently and the information found here may be or become outdated. It is recommended to consult your attorney for the most up-to-date information regarding current laws and legal matters.