Short Term Rental Taxes on Longer Term Stays

How “short” is a short term rental? 

Short term rentals (STRs) are generally considered to be stays less than 30 days long, though this can vary slightly by locality. In New Orleans, a short term rental is defined, in part, as “the use and enjoyment of a [d]welling [u]nit, or any portion thereof, by guests for a period of less than thirty consecutive days.” This time limit is important because it helps to differentiate short term rentals from more traditional, standard rentals. As all STR owners and operators know, these properties are subject to many, many rules and regulations—including different standards for taxation. STRs usually have to pay a higher rate of taxes than other similar businesses and far more taxes than a traditional rental.  

What happens if you own a STR and rent it out to someone for 30 days or more? 

Even though you own a short term rental and may have listed it for rent on a STR website like Airbnb or VRBO, if you are renting to the same person for a stay of 30 consecutive days or more, this is not a short term rental. In New Orleans (and many other places around the country), a 30 day long rental is not taxed at the same rates—or it should not be!

Short Term Rental Taxes in New Orleans

STR occupancy taxes are usually collected by the booking platform. When someone books a stay, you (as the host) can see exactly how much occupancy tax is being collected and, with a little digging, which taxes are being collected. In New Orleans, for example, Airbnb states that it collects an accommodations tax, general sales and use tax, hotel daily fee, and short term rental tax. Their website provides a bit more information for rentals within New Orleans: 

• New Orleans Sales Tax: 5% of the listing price including any cleaning fee for reservations 59 nights and shorter. 
• New Orleans Hotel Occupancy Privilege Tax: $0.50 per night. 
• STR Occupancy Fee: Nightly fee based on listing type for reservations 29 nights and shorter. 
• STR Equalization Occupancy Tax: 6.75% of the listing price including any cleaning fee for reservations 29 nights and shorter based on listing type.

The City of New Orleans, in its outdated STR Handbook, also provides some information about the taxes to be collected (these have been reordered to match the ordering above): 

• City Sales Tax: 5% 
• Occupancy Privilege: (1-299 rooms): $0.50 per night (300+ rooms): $1.00 per night
• Residential STR Occupancy Fee: $5 per night rented –or— Commercial STR Occupancy Fee: $12 per night rented 
• STR Equalization Occupancy Tax: 6.75% 

So why are 30 plus day stays still being taxed? 

Some of these taxes clearly only apply to short term stays, that is, reservations of 29 days or less. However, this doesn’t mean that stays of more than 30 days are charged zero tax. Rather, Airbnb is still charging sales tax for stays up to 60 days long. 

So, why is Airbnb collecting sales tax for reservations of 30 days or longer? The answer may be in the Louisiana Revised Statutes concerning Sales Tax. These laws explain who owes sales tax when. Generally, hotel guests must pay sales tax on the total of their hotel stay. 

But, is your STR a “hotel” for the purpose of collecting sales tax from your reservations?

In general, the answer is yes. RS 47:301 Sales Tax: Definitions defines hotel as “any establishment or person engaged in the business of furnishing sleeping rooms, cottages, or cabins to transient guests, where such establishment consists of sleeping rooms, cottages, or cabins.” RS 47:301(6)(a). This language is repeated in Orleans Parish Code of Ordinances Sec. 150-441. This clearly includes most if not all STRs. 

But, what about if you are renting your STR out for 30 days or more? 

This gets tricky: Under the Louisiana Revised Statutes, “For purposes of this Chapter, hotel shall not mean or include any establishment or person leasing apartments or single family dwelling on a month-to-month basis.” RS 47:301(6)(a)(iii). Again, Orleans Code of Ordinances Sec. 150-441 repeats this language. 

However, Orleans Parish Form 8010-STR tax form claims that “Short Term Rental Sales Tax applies only to charges made to transient guests. Whether a guest is transient or permanent must be determined on a case by case basis using the following definitions: 

Transient guest: one who pays for the room by the day or by the week

Permanent guest: one who has a contract and pays for the room by the month and resides in the establishment for at least sixty (60) consecutive calendar days.” The City provides no support for this definition. 

What does this all mean for me?

This means that even though a booking of more than 30 days does not qualify as a short term rental, the City of New Orleans believes that your guest still has to pay a short term rental sales tax—which is why Airbnb collects taxes in this way. Though remember, sales tax is collected directly from your guest and paid to the City—it isn’t money taken from your payout. 

Have you been over-taxed? 

The Stow Firm is currently investigating the legitimacy of this interpretation of the tax laws as well as other discrepancies about how STRs are being taxed. If you believe that you have been over-taxed as a STR host or guest, please contact our office to discuss your case—you probably aren’t alone.