Private room rentals under 30 days are subject to PA’s 6% Hotel Occupancy Tax

Any Pennsylvania home owner who rents out an extra room or rooms on a short term basis either privately or through an online site like Airbnb is subject to Pennsylvania’s 6 percent Hotel Occupancy Tax. (See 61 Pa. Code § 38 et seq.). Under Pennsylvania law, the hotel occupancy tax applies when renting out a property – including a house, room, or apartment – to a guest for periods of less than 30 days. In addition to hotels, the tax applies to rentals of rooms, apartments and houses arranged through online or third-party brokers such as Airbnb. The tax rate is the same as the sales tax, 6 percent. The Pennsylvania Department Of Revenue will also collect an addition 1 percent local hotel tax in Allegheny and Philadelphia counties which is remitted to those counties. Some counties impose an additional tax collected by the county treasurer.

Some home sharing or third party brokers like Airbnb voluntarily collect and remit the Pennsylvania hotel occupancy tax on behalf of hosts. In June of this year, Airbnb agreed to collect Pennsylvania’s 6 percent hotel occupancy tax and remit proceeds to the state, beginning July 1. “This agreement allows the state of Pennsylvania to harness the economic impact of home sharing while also making it easier for Airbnb hosts – the vast majority of whom are middle-class people sharing their own home – to comply with state tax laws,” said Josh Meltzer, Airbnb regional director of public policy.

Last July, a law took effect in Philadelphia legalizing short-term rentals through Airbnb and other entities, such as Craigslist. As of July 15, the City began collecting an 8.5 percent occupancy tax, paid by renters staying in homes. The City generated additional tax revenue of $1.2 million through June of 2016.  The State believes that the 6 percent tax will add at least another million tax revenue annually.

The hotel industry pushed for the tax measure as an equalizer with the short term room renters. Taxpayers should check with the company to determine who is responsible for collecting and remitting the state and/or local tax.

If the individual tax payer pays the tax he must register to collect the tax before collecting the tax. Taxpayers must register with the Department of Revenue for a Sales, Use, and Hotel Occupancy Tax License using Form PA-100. For assistance completing the form, call 717-787-1064. After registering and obtaining a Sales, Use, and Hotel Occupancy Tax license and account number, taxpayers must file returns and remit the tax electronically using e-TIDES, the department’s online system for business taxes.

Hotel occupancy taxes are separate from income earned from renting short-term lodging. Income from short term lodging should be reported on the Pennsylvania Personal Income Tax Schedule C – Profit or Loss from Business or Profession. Income from property rentals for 30 days or more which are not subject to the hotel occupancy tax should be reported using Schedules E, Rents and Royalty Income (Loss).

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