Three shades of gray for taxes and Airbnb – Washington Examiner

Renu Zaretsky for the Tax Policy Center: My family did Airbnb last month. We rented a nice cottage in northern Michigan. The price was right, and it was comfortable … except for the ants. There weren’t a lot, but enough that I emailed the home owner/host. She never responded, but we dealt with it. After all, our expectations weren’t as high as if it were a hotel. Our host was sharing her home, and we had a friendly, casual relationship.

Or did we? When does sharing for a fee morph into something more formal? That, of course, got me thinking about taxes. And how the space between home sharing and providing lodging services sits in at least three shades of gray.

About those taxes: There are at least three interesting issues — sales and occupancy taxes, property taxes and income taxes.

In many jurisdictions, hosts must collect occupancy taxes from their renters. We owed Michigan’s 6 percent use tax on our rental fee, which our host was to collect. But, like about 1/3 of hosts in Michigan, she didn’t, leaving it to us to report our online transaction and pay the state. …

Then, there is a matter of property taxes. Many jurisdictions have homestead exemptions that reduce taxes for owner-occupied homes. Were we vacationing in our host’s home, or in what is effectively a commercial rental property? The local county has lots of rules about whether our host would be eligible for a exemption of up to $1,800. Does she qualify? It is hard for us to know and probably difficult for jurisdictions to check.

Finally, there is the matter of income taxes… The general test: How many days per year does our host rent her home?

If the answer is fewer than 14 days, she generally gets to enjoy

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