A short YouTube guidance by Donna Genie (Campground Accounting) on how to handle sales/hospitality tax for long-term rentals. She explains that long-term stays often become non-taxable after a state-specific threshold (commonly 90 days, but e.g., Alabama is 30 days), recommends collecting tax initially and refunding/crediting it after the stay qualifies, and repeatedly cautions viewers to verify rules with their state/local tax authorities.
Are you confused about sales tax on long term rentals like most people are? Well, I'm going to give you some advice on how to handle long term rental sales tax and hospitality tax. But I'm going to give you a caveat. Every state works a little differently and there are even localities that operate differently. So do not just take this as generic advice and use it. I want you to apply it with the detail of your state and local taxing authorities advice. So here goes. I'm Donna with Campground Accounting and we often run into questions about sales tax being collected on long term renters. What if you don't know if somebody's going to be there long term? Now, long term generally means that you don't have to collect sales tax or hospitality tax, accommodations tax, what, whatever the name is for your particular area. However, you don't know if they're going to be there long term until they're there long term. In most areas this is a 90 day window, but there are different options for different areas. Alabama, for example, is 30 days. So different states have different lengths of time in which you qualify for a long term stay where you may be able to not collect or have your customer, your guest, pay sales tax. So when someone arrives and you think they're going to be long term, but you're not really sure, most states are going to tell you that you should collect sales tax for the first 90 days or whatever the time frame is until you don't have to collect sales tax. And then on that 91st day you can refund the sales tax back to your customer, your guest, and take a credit for it on your next sales tax return. So what this typically looks like, if you're using a reservation system or a point of sale system or somehow that you are tracking your sales tax, is that on day 91 you're going to generate another invoice and that invoice is going to say long term stay is $1,000, whatever the amount is that they've paid you to date, and then credit off the daily rate stay of $1,000 being taxable. So that first item is non taxable, the second item is taxable. That should generate a refund back for the amount of the sales tax to that particular guest. And this is typically how the states want you to report that. Now again, don't take this as 100% advice down a sentence though. Verify how this is treated with your particular state and local taxing authority. If you have questions about sales tax, please drop me a note. I'll be happy to look into it and give you some guidance in a general sense here on a video in the future.
