Have you heard of Airbnb, a service listing vacation rentals all over the world? If you have used it, you probably noticed you didn’t have the same taxes due as if you had been in a hotel. However, if you’ll be staying in the city of Los Angeles in the future, you’ll now be charged the 14% tourist tax starting in August. The vacation rental service has also made agreements with other cities across the United States to collect required taxes from the homeowners hosting on their platform.
Officials have estimated that this additional tax will provide the city of Los Angeles with several million of tax dollars every year. However, the collection of this new tax does not make short-term rentals legal in the city. In most places around Los Angeles, it is illegal to rent out your home for less than 30 days. The industry of short-term rentals is yet to be regulated locally. LA City Council is currently working towards resolving this legal matter.
Also, those who have rented out parts of their homes for Airbnb in the past should note that the city of Los Angeles is not prohibited from collecting taxes from previously earned funds. Under the proposal from the city, hosts of the service could be fined for breaking the rules in LA.
So if you’ll be visiting Los Angeles and renting out space through Airbnb, be prepared to pay more for your stay. And if you are the one renting your space, be aware that failing to charge and remit tax could be costly to you if the city becomes aware of your collecting income for the use of your home.
Photo courtesy of freedigitalphotos.net/phaendin
