Denver taxes

[Emily66]

Does anyone know what you need to do as a host to make sure you're charging all taxes as well as paying all taxes needed? 

don't want to end up owing the IRS all my money come April 2017.

Thank you!

[Kristina83]

I am licensed and I do have an airbnb of my own as well.  But as a cohost I am confused about what to pay and what to tell people who are new to hosting as I help them navigate the process.  I am not going to ask people who book with me to pay additional separate fees. It's an uneccessary hardship and I don't mind over paying by just taking it out of my income. In fact, when I explain to new hosts that are potentionally going to hire me to manage their home while they travel that the city and airbnb haven't figured it out; that they have to request the money each time (because airbnb doesn't allow cohosts to request money from guests) they say forget it, I will just pay the tax out of my profits. It's unfortunate really.  We just list a little higher and hope that we keep a good occupancy rate. 

I can put a blurb in my listing that says I will be paying it on their behalf or that it will be coming out of the total that they are paying.  That way they are aware that they are paying it (one of the requirements from the city).  As far as cohosting goes, I don't think the responsibility can fall to the owner for 10.75% on the total amount of the booking. He can't write off the cleaning fees that are paid to me because he was never paid them in the first place.  Airbnb allocates them to me along with my percentage of the booking so he doesn't have record of that stuff.  So unfortunately I charge a higher percentage to make up for the tax. And I don't care much because I'm making good money ( and helping others make good money while they are away) and truely enjoy doing it.

I hope they get this stuff figured out soon for all parties involved; hosts, cohosts and travelers.   It's such a pain!!!

[Tyler29]

Hey @Kristina83 the owner needs to pay the taxes, not you.  Your 15% is an operating expense they can deduct on their income taxes but your management fee is part of the gross revenue.  The owner would have to pay this portion of the tax regardless if you managed or not.  Its tricky in Denver because the city will not allow Airbnb to remit on behalf of hosts so technically the guest is supposed to pay the tax on top of your commission.  Hope that makes sense! 

[Joe264]

Call Airbnb 

415-800-5959

and tell them about the Short Term Rental meeting happening next week.

Tuesday November 28th, 2017 from 4:00pm - 5:30pm
Wellington Webb Building
201 W Colfax Ave.
Conference Rooms 4.F.6 and 4.G.2

I encourgae everyone who is reading this to call Airbnb and tell them about the meeting and ask that a representative from Airbnb come to the meeting. Let's ALL both parties in the room together so that they both can hear first hand how much impact they are having on us hosts and to avoid He said / She said and finger pointing.

These are 2 of the Cities committee members:

kevin.flynn@denvergov.org

marybeth.susman@denvergov.org

If you can't attend the meeting simply email them and ask:

"Will you have an update on the promised lodging tax collection that the City said would be in place this year?"

3,000+ listings in Denver

x an average of  $25,000 of bookings per year.

= $75 million dollars x 10.75 = that we are responsible for collecting = $7,500,000 in lodging taxes. 

(I think it would be fair to say half the hosts are taking that from their gross revenues versus collecting it through the Resolution Center to either #1 avoid dealing with the issue with the host #2 remain competitive and continue to book.

They've positioned us unfairly against one another and over $3,500,000 is unfairly taken out of our revenues.

Let's make a big push to get this issue resolved now.

[Paula-And-Steve0]

Hi Joe, I unfortunately learned about the November 28th meeting too late to attend. Could you clarify for those of us in the Dever STR community what was discussed? I understand that airbnb collects for the State.  Is airbnb still not collecting lodgers tax and remitting it to the city of Denver? If not, did they indicate when they would begin to collect and remit lodgers tax to the city? Thank you for any light you can shed on this topic!

[Pamela61]

Joe, I was out of town during this meeting. Any chance to send a follow-up message to our reps about the Denver taxes? I'd like to support this effort.

Pamela

[Tyler29]

Hi All,

I can't speak for Joe but I was at the STRAC meeting and there is no update on taxes at this time.  They have sent a proposal to Airbnb to allow them to collect taxes on behalf of hosts but they have yet to respond to the proposal.  It sounds like there is still more back and forth to be done and it was "hoped" that there would be resolution within the next 6 months.  

[Ling-and-Chris0]

Does anyone know what the Littleton, CO short term rental rules are?  Do they pay the same 10.75% tax as Denver?  Is there some sort of requirement about having an acre of land?  I have a friend that lives in Littleton and wants to host.

[Josh135]

Hey everyone, I am new to Air BnB and am currently doing my 2017 Lodgers tax due the 20th of January. As I am doing this, I see there is a sections for "other" deductions on the form under line 3e. Is this for things we purchased for the home for guests like ammenities? What about also things like toilet paper, and laundry detergent, cleaning supplies? I have cleaning ladies, but I clean myself at times as well. What about new sheets and blankets and pillows. Does furniture count considering there is wear and tear? Entertainment such as cable, or a monthly service like hulu or netflix? What about our utilities? I feel like if we have to pay 10.75% of what we make, which I feel is absolutely ludicrous considering these are probably for a good amount of us our own personal homes, we should be able to deduct such operating expenses since they want us to conduct ourselves like a hotel. 

Please let me know if you have any thoughts. I just feel like we are definintely getting the short end of the stick on this until AirBnB actually add the fees collected. 

[Krista10]

Call the county- you can’t deduct any of those items.  This tax really isn’t about you; it’s about the renter paying Denver a percentage of the total cost to rent.

[Mimi18]

You can't deduct those things on city/county taxes (except for your cleaning fee as a labor expense) but you may be able to deduct some of those things on your personal income taxes for your business expenses. Deductions for utilities is usally based on the percentage of use for business vs personal. Definitely recommend getting a CPA.

[Jennifer-and-Giovanni0]

I have been hosting since 2008.

I have always deducted on the business for cleaning items, new sheets/towels/house hold items that the guest use.

as well as any entertainment items as well (electronic or board games).

I too feel the stick about Airbnb not collecting the 10.75% taxes and I have called the help line to mention that if there can be only one line item at this time can that line item be the 10.75% and let us host collect the 2.9% sales tax.

[Pamela61]

Josh, I'm late responding, but I think I can help with this. Here are some tips I've (finally) learned:

For "other deductions", put in any cleaning fees you are charging. Not things you buy. You can deduct those on your income tax return when you put in your earnings for airbnb, not here. I think it's important to deduct this here because the cleaning fee will be included in any tax reporting that airbnb does as part of the money you've collected, and may suggest to the City that this is the base price you received, when you actually collected that to pay folks who clean your space.

This is a tax on lodgers, not income tax. That means the lodgers are supposed to pay and we end up (unfortunately) having to collect. So it's a mistake (that I made at first) to see it as income tax. You can't deduct your expenses here. Save those for state and federal taxes later.

Here's another very important point: if you just add the amount you are collecting to your base price, you will be taxed on the tax! So you can't just figure out what 10.75% of your base price is.  You'll end up paying 10.75% of that 10.75%! (My husband does this calculation for me, and has an algebraic formula that I could forward if anyone is interested. It's simple, apparently, but I'm no good at that computation personally. Sad.)

This year, I'm collecting the tax separately. It's a pain, but no guests have complained yet. This is what I do:

1) I make sure I notify them in my listing that I will be collecting it. (of course, no one reads the whole listing, but it needs to be there.)

2) After they reserve, I send a "check-in information" message and tell them again, this time calculating how much they owe, explaining that this is the City tax, not the state tax they've already paid, and apologizing for the inconvenience.

3) Before they leave, I send them ANOTHER message, saying: "Hey, before I forget, how would you like to pay your $______ Lodger's tax? We can do Paypal, Venmo, the Square, cash, or use Airbnb's Resolution Center. What do you prefer?"

So far, only one person has stiffed me. Everyone else paid up graciously.

[Krista10]

Pam, You can't deduct the cleaning fee.  Lodger's tax needs to be paid on the full amount the guest is charged- nightly rate plus cleaning fee.  I recommend you call Denver- they will tell you the same thing. 

[Brandon-And-Robert0]

Hey Krista! Do you remember who you spoke with? I have spoken with the city twice and both times the lady has told me yes that I can deduct the cleaning fees using line 3a.

I just got a notice that they are auditing our tax account me so I am hoping they told me correctly!

[Josh135]

Hey everyone so I just got off the phone with Rebecca Ludeman at Denvers tax collection department. She did explain to me that you can deduct your tax directly from your gross amount by just taking your gross then taking 10.75% from that and putting that total in at the top of your lodgers tax form for gross amount. She however she did confirm that cleaning fee's are not deductable from the lodging tax. She also informed me that since I originally set up my taxes for annually that so long as I pay my taxes by the 20th of this month, even though I did have over 300 in taxes in one month at one point, I will not have to pay any penalties. She told me it had to do with the fact that instead of having to pay alot all at once, they thought it was more convenient for individuals to pay monthly or quarterly.

Hope this helps everyone and if you would like to give Rebecca a call, her phone number is 720-913-9399. She is very friendly and informative.