It may seem homeowners have a money tree at their house. It's easy, just rent your house for the weekend and the dollars will shake into your bank account. Better yet, companies like Airbnb can facilitate the process and get landlords timely and secure payments, right? Making money is never so easy. Here are five risks of using Airbnb. In each, you need to decide if an Airbnb host is a residential property landlord or instead a hotel operator, in order to understand your exposure.
- Hotel & Motel Sales Tax: Throughout the east end of Long Island, hotels, motels, inns and bed and breakfast establishments are subject to New York State "sales tax on the room rate or rental charge for hotel occupancy." According to the New York State Department of Taxation and Finance a "room remarketer (such as an Internet travel site) is considered to be a hotel operator and must collect sales tax" on behalf of the hotel, but Airbnb's (i.e., the remarketer) website does not include New York in the areas that it affirms its procedure to collect and remit tax. See airbnb.com/help/article/653. Perhaps the reason that Airbnb doesn't collect this tax is that bungalows (i.e., single-family living) are not taxable where no housekeeping, food or other common hotel services are available. However, hosts (i.e., landlords) would be best served to speak to their accountants before determining whether their rental is subject to sales tax or instead can safely be classified as a bungalow. Landlords need not concern themselves with this tax, but if your property is being operated as a quasi-motel/bed and breakfast, your failure to pay tax could result in you finding yourself on the wrong side of a prosecution for tax fraud.
In the Town of Southampton, rentals for 14 days or less are prohibited. This law applies to the Southampton hamlets of Bridgehampton, East Quogue, Eastport, Flanders, Hampton Bays, North Sea, Northampton, Noyac, Quiogue, Remsenburg, Riverside, Sagaponack, Shinnecock Hills, Speonk, Southampton, Tuckahoe, Water Mill and Westhampton.
In the Town of East Hampton, rentals for 2 weeks or less are prohibited. This law applies to the East Hampton hamlets of Amagansett, East Hampton, North, Montauk, Northwest Harbor, Springs and Wainscott.
In the Town of Southold a pending debate exists as to whether the Town should set a 14-night minimum, but as of the date of the drafting of this article no transient law exists. So, in the Southold hamlets of Cutchogue, East Marion, Fishers Island, Laurel, Mattituck, New Suffolk, Orient, Peconic and Southold there is no transient rental law.
In the Town of Riverhead, rentals for 29 days or less are prohibited. This law applies to the Riverhead hamlets of Aquebogue, Baiting Hollow, Calverton, Jamesport, Laurel, Manorville, Northville, Riverhead and Wading River.
In the Town of Shelter Island, no transient rental law exists but there is a cap on bed and breakfasts in providing rentals for no longer than 14 days, and it can be argued that Airbnb stands for airbed and breakfast so this law may be applicable. So, in Shelter Island Heights and Shelter Island there are questionably no restrictions on transient rentals.
Remember, the Villages of East Hampton, North Haven, Quogue, Sag Harbor, Sagaponack, Southampton, Westhampton Beach and Westhampton Dunes, Greenport and Dering Harbor all can prescribe local transient laws, so if your property is located therein check with your local Village before renting on Airbnb.
Adapted from this Dan's Papers article.