Renting your home for a week? Be ready to pay 7% county tax

It may come as a surprise to Airbnb hosts in Allegheny County but, like their counterparts in Philadelphia, they should be paying a hotel occupancy tax.

As the City of Brotherly Love prepares for an influx of out-oftown visitors during a visit by Pope Francis later this year, Philadelphia this week began collecting occupancy tax from short-term rentals such as those found on websites such as Airbnb and Homeaway.

Philadelphia already collects the 8.5 percent occupancy tax from traditional hotels.

San Francisco-based Airbnb is one of several online shortterm lodging rental companies that connect travelers with hosts in private residences who offer a room or an entire house, often for a lower rate than a

hotel. The company is valued at more than $20 billion, with an estimated 1.2 million rentals around the world.

Under Allegheny County regulations, Airbnb hosts owe the 7 percent occupancy tax required of “an apartment-hotel which rents certain apartments or rooms for occupancy on a week-toweek basis, or other periods less than 30 days.” Anyone hosting a short-term rental here is supposed to register his or her property with the county within 30 days.

That’s the only mechanism through which Allegheny County can collect the occupancy tax, as one Airbnb host, who asked that his name not be used, found out when he tried to pay the county and his check was returned. In Philadelphia and about a dozen other areas, including Portland, Ore.; San Francisco; Washington, D.C.; and Chicago, Airbnb handles collection and remittance of occupancy taxes.

Allegheny County’s hotel occupancy tax supports the David L. Lawrence Convention Center, the Greater Pittsburgh Convention and Visitors Bureau, the Sports and Exhibition Authority, and the Convention Visitors Bureau of Greater Monroeville. According to the treasurer office’s website, in calendar year 2014, the tax generated $31.6 million.

“Allegheny County’s occupancy tax is not confusing at all,” said county treasurer solicitor Michael McCabe. “Airbnb rentals absolutely are taxable. If you’re letting rooms for a fee, that use falls under the occupancy tax.”

It’s also incumbent on property owners to be sure that zoning in the municipality where the rental is located allows such commercial property use, he added.

Airbnb did not reply to questions about its housing inventory in Allegheny County, or how it advises local hosts on tax matters. On its website, it describes a feature called “opt-in for host remittance of taxes,” which are calculated and charged to guests, and then remitted to the host.

“Hosts are then solely responsible for remitting the occupancy tax amounts directly to the Tax Authority,” the website’s help center page states.

Mr. McCabe said the Allegheny County treasurer’s office enforces non-payment of occupancy taxes. He pointed to the former Pittsburgh Downtown Hilton Hotel, which faced court action and a possible shutdown in 2008 because it owed more than $440,000 in delinquent taxes. The taxes were repaid, but the hotel eventually was sold and is now part of the Wyndham chain.

If back taxes are owed, there’s also a 5 percent penalty on any balance and monthly interest of 1 percent.

Who has and has not paid occupancy taxes is confidential under the taxpayers’ bill of rights, Mr. McCabe said. Until the county pursues legal action, it’s not able to release that information.

Tim Zugger, president of the Greater Pittsburgh Hotel Association, said his organization would support efforts to enforce the collection of the occupancy tax from short-term rentals.

“It seems like [Airbnb] has grown significantly here just in the last year,” he said, but added he didn’t think such companies have had a significant impact on hotels’ bottom line in the Pittsburgh area.

Tax issues aside, being an Airbnb host can be a great source of income as well as of headaches, according to Jonathan Danial. Overall, Mr. Danial said he has had great experiences with the guests at his Observatory Hill home, but he said he was feeling a little burned out, especially since he’s gone from renting just a room to renting out the entire house.

“I feel like I’m constantly busy,” Mr. Danial said. He goes all out for guests, making sure they have bottled water, turndown service and homemade banana bread. In the past year, he’s had more than 150 reservations. He’s thinking about putting the house up for sale in the spring and getting out of the short-term rental marketplace altogether.

He said whenever a large event comes to town, like next year’s U.S. Open golf tournament in Oakmont, a lot more people sign up as Airbnb hosts, to the point where the market gets almost oversaturated.

Still, for those looking to earn an additional $100 a week, short-term rentals are not a bad idea, he said. Airbnb offers a lot of advice about how and what to charge guests.

Mr. Danial, who has an accountant handle all tax matters related to his rental, said he would advise anyone considering renting out a property on a short-term rental site to rely on professional help.

“I think people who get into it might not know what they’re getting into. They just think they’ll make a little extra money renting out a room,’ he said. “But it’s a lot of work if you’re really working to make it a source of income.”