Are short-term rentals subject to hotel taxes?

Earlier this year, members of the Pocono Mountains Association of Realtors® reached out to the association because their clients who rented their properties short-term were receiving letters from the Monroe County treasurer stating they owed hotel taxes.

In Pennsylvania, there is a 6 percent Hotel Occupancy Tax imposed upon the rent paid for the occupancy of a room or rooms in a hotel. There may also be a county tax, which varies, for hotels. However, what constitutes a hotel? Are these short-term rentals eligible for the tax?

In a word, yes. According to PAR’s Director of Law and Policy Hank Lerner, short-term rentals do indeed have to pay, based on the definition of a hotel, both county excise and state 6 percent occupancy taxes.

“The basic structure of short-term home rentals fits neatly within these definitions [of hotel]. These are properties advertised to the public for the purpose of providing short-term accommodations for a fee, even if the entire property isn’t rented out or it’s sometimes used by long-term residents/owners. These broad definitions are not an unintended consequence – they’re written with the intent of drawing in as many short term rental options as possible, and contains some catch-all language that shows it’s meant to be broadly interpreted,” said Lerner.

Lerner also pointed out that this tax is intended to be passed along to the consumer, not paid for by the property owner.

With sites like Airbnb rapidly growing in popularity, it is not surprising that this tax issue is coming up.

“A majority of our members’ clients who had short-term rentals were aware of the tax and paying for it, but some were completely unaware,” said Greater Lehigh Valley and Pocono Mountains Associations of Realtors® Government Affairs Director Matthew Marks. “We wanted to bring it to the attention of those who haven’t been paying the tax.”

If you or your client is unsure about the taxes on their short-term property rental, the best thing to do is contact your attorney. If it is determined a hotel tax is necessary, contact your accountant.