Short-term rental website Airbnb has announced it wants to team up with cities throughout the country to collect taxes from people renting out rooms and homes on its website.
Right now, the City of Austin is only able to collect taxes from short-term rental operators that have registered their properties. Airbnb's proposal would allow the city to collect on any rental property booked through the site, regardless of whether it's registered.
But first, what are the taxes they'll collect? It’s called the HOT Tax.
“The HOT Tax, or the Hotel Occupancy tax, is a tax that is imposed on the rental of a room or a space in a hotel costing more than $15 or more a day,” says Kevin Lyons with the Texas State Comptroller’s office.
As Lyons explains, the state collects six percent from anyone with a space to rent, whether you’re an owner of a hotel or someone renting out a room in your home. Those taxes, however, aren’t just collected on the price of the room.
“You might have bought a robe, you might have paid for some toothpaste or some coffee,” he says. “You know, whatever was taxable.”
In 2015, the State of Texas collected roughly $55 million in HOT tax revenue from owners of hotels, motels or short-term rentals in the City of Austin.
But, the City of Austin collects its own HOT Tax as well and, at nine percent, the city pulls in more money from room rentals than the state. Plus, while the state can only collect on rooms going for $15 or more each day, the city can collect on rooms going for $2 or more each day. Last fiscal year, the City of Austin reeled in about $79 million in HOT taxes. But again, when it comes to short-term rentals, the city can only collect taxes from those operating legally – that is, with a license. That’s where AirBnB’s offer comes in. If the company were to collect taxes from people using their site, that would mean everyone, licensed or not, would have to pay up.
When asked about allowing AirBnB to collect taxes on behalf of the City of Austin, Mayor Steve Adler said that it “seems like an interesting idea” and that he was “anxious to learn more.”