Online vacation rentals are pulling in a significant amount of business in the region, according to data from Airbnb.
At the same time, however, the county and state are struggling to figure out how to make sure such rentals pay their fair share of lodging taxes, which proponents say are vital to funding tourism promotion and other economic stimulus programs.
Airbnb is a website that allows property owners to rent unused space directly to renters. According a release from the company, roughly 11,000 property owners used the site to rent to 406,000 total patrons in 2016, with $51 million in total transactions.
For Cumberland County, approximately 2,000 guest bookings brought in $175,000. OF those, 650 bookings and $47,000 of revenue were Carlisle Borough, according to data provided by Airbnb.
“That’s actually a little higher than I would’ve thought,” said Shireen Farr, COO of the Cumberland Area Economic Development Corporation (CAEDC). “It’s a good thing because they do give us additional rooms when the market is tight…we just have to get our arms around the tax consequences and safety consequences.”
Pennsylvania’s hotel tax law allows the state, and select county governments, to levy a fee on accommodations that are provided for less than 30 days. The state hotel tax rate is currently 6 percent, and Cumberland County’s is 3 percent. The county’s hotel tax is used to fund tourism promotion and business advertising through CAEDC.
But the tax only gets collected if the business is a known entity. Brick-and-mortar hotels, motels, and bed-and-breakfasts are registered as part of their occupancy permitting, but accommodations being run out of private homes can easily skirt by the tax system.
During a discussion earlier this year, County Treasurer John Gross said he had registered over a dozen delinquent properties, and was trying to track down many more.
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Meanwhile, the PA Department of Revenue announced earlier this month that it had collected an additional $1.5 million in lodging taxes over the past year through outreach and a streamlined tax sign-up system.
Further, while there are many online brokerages for short-term rentals, Airbnb is almost certainly the largest. After a long period of negotiation, the state came to an agreement with the company last year to have property owner begin remitting sales tax through the site.
Airbnb had previously maintained that, as a broker, it was providing a service to property owners and not selling rentals in its own right, and thus only the property owners were legally responsible for remitting taxes.
Cumberland County and CAEDC are currently running an outreach program of their own to try to get more short-term rental owners to remit taxes. The is budgeted to collect $1.92 million in hotel taxes in 2017, most of which is funneled to CAEDC.
“We as an agency are looking to do some targeted mailings at areas where we believe there are homes or rooms being rented unregistered [for taxes],” Farr said.
Municipal officials have also met to discuss the additional matter of zoning and safety – whether or not short-term rentals are allowed in certain zoning districts, and how to regulate them for fire and other hazards.
“We’ve been sharing recommendations on how the different towns might deal with codes and zoning ordinance issues,” Farr said.