Blog :: 12-2019

Short Term Rental Regulations

Short-Term Rental Regulations Finalized: What You Need to Know

The Department of Revenue (DOR) just released the final version of its Short-Term Rental Regulations.

Read the full regulations here

 

Here’s what you need to know:

 

  1. Realtors® can provide mandated insurance - This means that Realtors® who provide services online, (or via phone application or similar electronic processes) that allow short-term rental operators to list their property and collect rent, and a allow a person to make a reservation, will be able to provide the operator the $1 million in liability insurance required by statute.

    Previously: Under the old version of the regulations, only online service providers such as AirBnB, Expedia, HomeAway, or VRBO could provide this insurance.

  2. Removal of the Mid-Stay Rate Change Requirement - New or amended tax rates will take effect only for subsequent transfers of occupancy. For example, if a town adopts a new tax effective July 6, occupants who have rented the property from July 3 to July 10 would not have to pay the new rate even though it will change during their occupancy. However, the occupant whose stay begins on July 10 (and all subsequent occupants) will need to pay the new rate.

    Previously: The original regulations required short-term rentals to adjust the tax rate in the middle of an occupancy when municipalities would adopt or amend local taxes.

Additional Changes:

14-Day Exemption is Clarified

  • A property is exempt from the short-term rental tax if it is rented for 14-days or less per calendar year, the operator registers with DOR, and files a declaration stating that they intend to rent their property for 14-days or less.

  • An operator with multiple properties can qualify for an exemption at each of them.

 Tax Itemization Clarified

  • DOR clarified that taxes must be itemized as laid out in Section 11(f) of the regulations, not as shown in examples following Section 5.Note: MAR requested this clarification in its comments.

  • MAR recommends using its uniform short-term rental lease to assure compliance with the law and regulations.

Expands Accepted Forms of Identification for Tax Returns

  • While Realtors® are still required to assure that operators with whom they contracted are registered with DOR, they can submit returns using the operator’s certificate number, federal Employer Identification Number (EIN), Social Security Number (SSN), or other identifying information approved by DOR.

Notification Requirement Clarified

  • The new regulations specify that this Realtors® must notify operators within 30 days of filing a return.

  • This notification must include an itemization of the date of each occupancy, the rent imposed on each occupancy, including any booking fees charged, as well as amounts of all state and local excises and any applicable local fees collected and remitted to the Commissioner on behalf of the operator.

Requires Accounting Consistency

  • The final regulations contain new language requiring reasonable and consistent accounting methods as well as adjustments for any filed returns that use different methods in order to prevent double-counting or omissions.

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