When Regitze Visby, a tourist visiting San Francisco from Denmark, searched for accommodations for her trip and saw she could stay at one of the famed “painted ladies” on Alamo Square through Airbnb, she took it.
At $135 a night, “it was a good deal,” she says.
But does she know if she’s paying a transient occupancy tax or a hotel tax? “I have no idea,” she says.
Visby would know if she were staying in a hotel. It’s 14 percent per room. Places like Airbnb’s that are like hotels usually don’t bother with it, even though they should.
Property manager Emily Benkert — whose short-term rental business, Guesthop, has grown from five to 50 listings since October — says while she is aware of the hotel room tax, she’s not planning to pay it until she has to.
“I personally have decided to wait until the city was actually enforcing it, and Airbnb was collecting it,” she says.
David Hantman, the head of Global Public Policy for Airbnb, says the company will soon start collecting and paying taxes in a few cities.
“In Portland and San Francisco and New York, we’re looking at pilot projects to help collect and remit these taxes from guests, without the hosts having to worry about all the details,” Hantman says.
The self tax collection is set to start in June — and it could be worth a lot of money. Hantman says in New York alone “it looks like we’d be collecting at least $20 million a year from our guests and providing it directly to the city and state.”
New York is Airbnb’s biggest market. It’s also one of its most challenging. The city does not currently allow brokers like Airbnb to collect taxes. It’s been cracking down on rentals of less than 30 days, which are largely illegal under city code. They’re actually illegal in many of the 35,000 cities in which Airbnb operates, including San Francisco.
“Under current law in San Francisco, law forbids renting residential apartments for less than 30 days to ensure that our housing wouldn’t be used as de facto hotels,” says David Chiu, president of the San Francisco Board of Supervisors. “But we know that the current reality is that these laws are broken every day. The estimates are, in San Francisco, over the past year, we’ve seen over 100,000 incidents.”
Chiu has proposed legislation that would legalize short-term rentals for permanent San Francisco residents. And, he says, it would require “every hosting platform, not just Airbnb, collect and remit all required taxes as well.”
That could get complicated. VRBO, a vacation-rental website, for example, says it can’t collect taxes and has no plans to.
While it all gets sorted out, the companies continue to make fortunes in the tourist trade. Airbnb was recently valued at $10 billion. The cities where they make their money are struggling to figure out how to cash in as well.