Taxes for AirBnB Rental Properties

Owners who list their Maryland property on AirBnB should know a major change in the tax laws for short-term occupancy taxes. The change took effect on June 1, 2019. AirBnB has noted the tax on its website. Many property owners fear that the mandatory occupancy tax will reduce the number of guests who book their property, but owners of hotels and other businesses already subject to state occupancy taxes were for the change. If you are unsure what you should do if you rent your real estate short-term , contact a Maryland tax attorney to get the facts about AirBnB rental taxes.

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Maryland Occupancy Tax for AirBnB Rentals

Beginning on June 1, 2019, owners of short-term rentals on AirBnb and other short-term rental platforms must collect and remit an occupancy tax. 

Many short-term rentals were exempt from Maryland’s sales and use tax. However, the state legislature eliminated that exemption when it passed HB884/SB533. Owners must now collect the 6% Maryland sales and use tax when the property is booked. The tax must be remitted to the Maryland State Department of Assessments and Taxation (SDAT).

Some platforms, like AirBnB, collect the sales and use tax during booking and remit that payment directly to the Maryland SDAT. Property owners should check the terms of their agreements with the listing sites to determine if the sales tax is being collected and remitted or if they are responsible for manually collecting and remitting the tax to the SDAT. 

Owners must now collect the 6% Maryland sales and use tax when the property is booked. The tax must be remitted to the Maryland State Department of Assessments and Taxation (SDAT).

Local Taxes on Short-Term Rentals

 The state is following in the footsteps of several local governments collecting hotel and rental taxes on short-term rentals. AirBnB collects a 7% transient tax for listings in Montgomery County and a 9.5% Baltimore hotel room tax. These taxes are in addition to Maryland’s sales and use tax now collected from all AirBnB customers.

What Should You Do If You Have a Short-Term Rental? 

You are ultimately responsible for the collection and payment of any state and local taxes owed for short-term rentals. Many cities and counties throughout Maryland are considering legislation that would impose taxes on short-term rentals. Property owners need to check with their local government taxing entities to determine if they must collect and submit taxes on short-term rentals.

Property owners should also check with local officials to determine if they must obtain various licenses to offer short-term rentals. Many jurisdictions now require short-term rental owners to maintain various licenses if they intend to rent a room or their home short-term.

Property owners need to check with their local government taxing entities to determine if they must collect and submit taxes on short-term rentals.

Because short-term rentals can be considered a business by federal, state, and local taxing authorities, it is usually best to consult a Maryland tax attorney to ensure that you comply with all tax laws. Penalties and fines for failing to collect and submit required taxes could be substantial, depending on your specific situation. Contact Thienel Law today. Maryland tax attorney Steve Thienel is dedicated to assisting clients in Maryland, Virginia, and throughout the DC Metro area.