The new release states that all surcharges will be taxed and that rent taxability should be based on pricing preferences instead. However, there is no way to modify surcharges in the pricing preferences to not include taxes. This isn't fair as not all surcharges should be taxed.
For example, the cleaning fee we charge is not money I am making. I charge exactly what my cleaner charges and simply pass the money along to her. It is then her responsibility to pay a tax on the income she made. As it is now, I am actually losing money on the cleaning fee because the taxes in my state reduce that cleaning fee by 13%. I cannot simply increase my cleaning fee by 13% b/c then my customers will just be paying MORE taxes on THAT (and percentages don't work that way as we all learned from the recent Airbnb increase-- I would have to increase the cleaning fee by 15% to actually get the right amount).
I don't claim the cleaning fee as revenue on my taxes therefore should not pay a tax for it.
Hi Shannon,
I completely understand why this feels unfair at first glance. It seems like you’re being taxed on money you don’t actually keep, but in reality, you aren’t losing anything in this transaction when the cleaning fee is marked as taxable.
And I do want to start by saying I am not a Tax Expert by any means, so certainly double-check with a tax accountant in your state.
However, as far as I know, Under New York State tax law, any amount a guest is required to pay in order to stay, including a cleaning fee, is considered part of the “charge for occupancy.” That means it must be included in the total taxable amount for the booking, just like rent.
You’re not paying the tax out of your own pocket when you have the surcharge marked as Taxable, you’re collecting it from the guest and then remitting it to the state. For example, if your cleaning fee is $100 and the New York sales tax rate is 4%, the guest would pay $104. You would pass $100 to your cleaner and remit $4 to the state. You’re not out any money; you’re just acting as the collector of that tax.
The important thing to remember is that your cleaner’s tax obligations are separate. They’ll pay income tax on what they earn from you, but that has nothing to do with the sales tax that applies to the guest’s purchase of the short-term stay.
And it makes sense when you think about it. If the state were to say that cleaning fees weren’t part of the taxable total, many rental owners could lower the nightly rate and raise the cleaning fee instead, effectively avoiding a portion of the sales tax. That’s why New York includes the entire amount the guest is required to pay: rent, cleaning, or otherwise, as part of the taxable base.
You can still show the cleaning fee separately for transparency, but for compliance, it should remain taxable when it’s a required part of the stay.
Here is a link to the New York State Tax code as it partains to Short Term Rentals: https://www.tax.ny.gov/pubs_and_bulls/publications/sales/short-term-rental.htm
All that being said, I am not the Tax police. lol I just mention this as I would hate for you to get audited and face some sort of fine for not collecting the tax on the cleaning fee. You can set the cleaning fee any way you want. And no new feature is needed to do so. Let me show you quickly how you can set the taxability of a cleaning fee:
Understanding the Taxability of Cleaning Fees in New York - Watch Video
