Our urban escape
Escape Guesthouse LLC
Dear guests and potential visitors,
Today I wanted to write about the controversial topic of hotel and sales tax, which seems to be the main
point of concern when we learn more about the legality of groups or individuals using the AirBnB service.
While AirBnB may be an excellent option for travelers as our world continues to globalize, touting a “mi
casa es su casa” type of openness, the local laws in many cities, and in our case, New York City, may
as prime travel destinations, hosts an estimated 51 million tourists every year, leading to much of New
York City’s wealth and international mystique. In 2011, total visitor spending was estimated to have been
over $34 billion. New Yorker wages generated by NYC tourism was estimated to have been over $18
billion. There are approximately 324,605 tourism-related jobs in NYC and this continues to grow and
change over time. Visitor spending generates $8.7 billion in taxes, and as a result of traveling and tourism,
each NYC household is estimated to have benefited by an average of $1,350 in tax savings. The source of
these taxes comes from sales and hotel taxes imposed lawfully by hotels upon their guests. The hotel then
must pay into sales and hotel tax annually. A hotel is defined by the New York State Department of Taxation
and Finance as a “hotel,” “motel,” “inn,” “bed and breakfast,” “guest house,” “ski lodge,” “apartment hotel,”
and certain “bungalows,” “condos,” “cottages,” or “cabins.”
Hotel operators hosting guests in any of these types of accommodations are required by law to collect
sales tax on the room rate unless the charge is less than $2 per day. In New York City, in addition to the
NYC sales tax, there is also a tax called the “hotel unit fee.” This fee is $1.50 per room per day and is not
taxable itself (ie, it is a charge outside of what is taxable by the NYC sales tax). No sales tax is required of
hotel guests who come to be known as permanent residents. This means that the guest must stay for at
least 90 nights in a row. The local sales tax still applies until a guest has stayed for a minimum of 180
nights in a row. Once a guest has stayed long enough to be exempt of state and local taxes they may also
receive a credit from the hotel or a refund of the tax already paid. The guest does not need to be in the
same room of the hotel for the time period to reach tax exemption, but they must stay in that hotel or motel
or B&B for the 90/180 day duration.
Tax exemption may also occur if a guest is allowed to stay at the accommodation for free. If a hotel does
not receive cash for a guest’s stay, then there is no tax due on the value of the stay.
Sources and related reading: http://www.tax.ny.
Please send all comments to [email protected] - we would love to hear what you think on this