Transient Occupancy Tax (TOT)

[Karen4122]

Hi!

I wanted to get some advice about if it is better to just have a daily rate that includes the TOT taxes, and pay the TOT out of the daily rate? Or is it better to have a lower daily rate and then a separate TOT under the taxes portion? I can see how it may initially appear better to have a lower daily rate showing and then the separate taxes for TOT added. It's simpler to have the higher daily rate to include TOT taxes. At the end of the day, the guest sees the total payment, including or not including taxes. What do most people do?

[Mike-And-Jane0 · Accepted solution]

@Karen4122 I would go for the separate TOT tax. Primarily because it is law in many states to show pricing this way but also because the Airbnb system compares prices without tax (due to the law) and incorporating the tax will show you at a disadvantage. A secondary reason is that it confirms to ethical guests that you are collecting taxes properly. Thirdly it may have an effect on your 1099-K but I can't confirm this.

[Karen4122]

Thank you! I agree 💯 so I did go ahead and change it last evening. Lowering the rates and making the TOT separate for all the reasons you state. 

We are newer to short term rentals. This is our 2nd year. So we have been learning as we go, but I think we are pretty dialed in now 😊