To configure taxes, you first need to collect full details of all the relevant tax requirements information.
💡 Recommendation
Remit taxes yourself if at all possible. If you have the choice for the channel to remit taxes on your behalf or for you to remit taxes yourself (like in the case of Airbnb, where they allow custom taxes in your area), then choose to remit all the taxes yourself.
This can seem like more work, but it actually ends up with less work—you have to remit taxes for bookings from other channels anyway, and come audit time, you'll have to combine and document both. So, doing all bookings the same will simplify matters.
Once you've collected information on which taxes are due, you can configure them in OwnerRez. It is important to configure each taxing authority separately -- for example, create one 7% State tax and a separate 3% City tax. Don't create a combined 10% City and State tax. If you combine them, you won't be able to separately apply criteria to them like whether different channels remit the tax. Even if both taxes are treated the same now, this may change in the future.
- Create Taxes
- Scenarios
- Tax remitted for all bookings
- Tax remitted for some properties and not others
- Tax for stays under 30 nights and not for longer stays
- Channel Integrations
- Changing channels that a tax is collected for (like when you go Vrbo channel integrated or Airbnb custom taxes)
- Tax for Initial Night/s of a Booking Only
- Tax Surcharges and Discounts
- Cancelled Bookings
- Changing tax rates
- Registration information
- Pricing Preferences
- Taxes and Channel Bridge
- How do taxes create booking charges?
- Non-taxable Rent
Create Taxes
Navigate to Settings > Pricing > Taxes > + Create Tax.
Select the Tax Type from the Type dropdown list (e.g., Hotel Tax, Lodging Tax, Room Tax, Sales Tax, Tourism Assessment/Fee, Tourist Tax, Transient Occupancy Tax (TOT), VAT/GST).
Enter text in the Description field and determine how the tax is calculated (e.g., Per Guest, Per Night, Per Night and Guest, Per Stay, Percent).
Determine whether you want your tax calculated on the guest's arrival or the initial booking date. Depending on your selection in the Calculated field, the rate will be either a percentage (if you chose Percent) or a flat amount if you selected Per Guest, Per Night, Per Night and Guest, or Per Stay.
Enter the rate in the Rate field. In the Channels section, select the listing channels you want to include: All Channels, specific channels (One of), or exclude channels (Everything but).
In the Criteria section, you can select which properties this tax applies to, the applicable nights, either the entire booking or the first number of nights of the booking, the maximum number of nights this tax applies to, and, if applicable, the date this tax expires. You can also set whether this tax applies to canceled bookings by turning on or off the Applies to Canceled Bookings
Booking.com (BDC) does not support limiting taxes to a maximum number of nights. If your guest was overcharged due to taxes, hosts of BDC guests may need to manually change charges and refund guests who were charged additional taxes.
If you are using OwnerRez's Property Management premium feature, the Expense section will appear.
The Display Options section lets you configure how the tax line is ordered in the charges grid in the Position field, and make the tax Active or Inactive by turning it on or off.
Edit or Delete Taxes
Edit or delete existing taxes by clicking on the right kebab menu and selecting either Edit or Delete.
Disable or Enable Taxes
Enable or disable existing taxes by toggling the lower Enabled/Disabled setting on or off.
Filter Taxes
To filter taxes, click the Filter button. The Properties and Enabled dropdown lists will appear, allowing you to filter your taxes. To close the tax filter, click the Filter button again.
Scenarios
Tax remitted for all bookings
This is the simplest scenario -- just set a tax name and amount. By default, the system applies the tax to all properties. Navigate to Settings > Pricing > Taxes > + Create Tax.
Tax remitted for some properties and not others
If your properties are in different areas, they'll often have different taxes. Maybe the state tax is applicable to all properties, but one local tax is only applicable to some properties, and other local taxes are applicable to other properties.
Configure the Criteria > Properties section to select the properties you want the tax applied to.
Tax for stays under 30 nights and not for longer stays
Some areas have tax due only for short-term stays and not for longer stays. To define what "long term" means, set the Max Nights setting under the Criteria section. Anything over that number of nights will not have the tax applied.
Channel Integrations
Airbnb
If Airbnb supports custom taxes in your area, you can configure them in OwnerRez. For more information, see the Registration Information section and our Airbnb Taxes support article.
For taxes that are both collected and remitted by Airbnb, those taxes won't be included in the charges at all, so it won't matter if PM or owner is set as the party that remits them.
In general, you should set that the PM or owner will remit taxes based on what is supposed to happen with your direct bookings, and ignore Airbnb's tax handling.
Booking.com
When you are connected to Booking.com (BDC) via OwnerRez's channel integration, your taxes are combined and pushed to BDC as a single tax.
For more information, see the Taxes section in our Booking.com Rates and Fees support article.
If you are connected to BDC via iCal, you'll need to contact BDC support to have your taxes configured.
Vrbo
When you connect to the Vrbo channel integration, you become the Merchant of Record. Vrbo requires this of all channel integrated hosts. This means that you are entirely in control of those Vrbo booking financials, which include collecting and remitting taxes on your own behalf.
Users need to include Vrbo in the listing sites that their taxes apply to in order for those taxes to be passed to guests on their Vrbo bookings.
Vrbo no longer collects and remits any taxes automatically, on your behalf.
As a Vrbo integrated host, you will both collect and subsequently, remit to the proper jurisdiction, any taxes collected.
To configure channel taxes, navigate to Settings > Pricing > Taxes > +Create Tax > Channels.
iCal-connected using Channel Bridge
Depending on the location of your property, Vrbo will collect and remit all, some (or even no) taxes, of iCal-connected properties that regularly use the Channel Bridge process.
OR recommends not solely relying on Vrbo to collect and remit necessary taxes and that users should always collect full details of all the relevant tax requirements information to make informed tax decisions.
Changing channels that a tax is collected for (like when you go Vrbo channel integrated or Airbnb custom taxes)
If the tax applicability per channel changes over time, you can set effective dates with different Applicability settings in the Channel section. For example, if you start with Vrbo remitting the taxes but later go channel-integrated, you'd have the first applicability: "Everything but Vrbo." And then later on the channel integration date, you'd have another applicability for All Channels.
Edit your existing tax by clicking on the right kebab menu and selecting Edit > Channels > + Add Future Channel Change.
On the Add Future Channel Change pop-up, enter whether this change is from the beginning or starting on a specific date. If starting on a specific date, select the Effective Date and the channels for which a tax is collected.
The Channel History opens and displays when the caret is clicked, and closes when the caret is clicked again.
Tax for Initial Night/s of a Booking Only
In some jurisdictions, sales tax applies only to the first night/s of bookings, particularly for mid-term bookings, thereby reducing tax obligations. You can configure your taxes to only apply to the first night/s of bookings by navigating to Settings > Pricing > Taxes > and selecting the affected configured tax or + Create Tax > Criteria > Applicable Nights, selecting the First button, and entering the number of nights.
For direct bookings, adding an Applicable Nights value ensures the tax applies only to rent, not surcharges (e.g., cleaning fees) or discounts (e.g., last-minute discounts). Users should also note that Airbnb uses average nightly rates rather than actual nightly rates when calculating nightly tax.
Vrbo, as well as many other listing channels, does not support taxes being applied to the initial number of nights.
Tax Surcharges and Discounts
Municipalities' policies on how hosts handle taxes for surcharges and discounts can vary. OwnerRez recommends that users consult their tax authorities so that they can configure their surcharges and discounts correctly.
Surcharges
Users configure their surcharge taxes by navigating to Settings > Pricing > Surcharges > either a specific surcharge or Create Surcharge > Is Taxable. The default selection is Yes, that the surcharge is taxable.
OwnerRez user-set non-taxable surcharges will work for direct bookings; however, be warned that most channel-integrated listing sites, such as Airbnb and Vrbo, have some subtle limitations for non-taxable surcharges.
Non-taxable surcharges can be passed to Airbnb and Vrbo. However, that taxability setting is per surcharge Category on those channels. So, if you have multiple surcharges in a single category, they should all be either non-taxable or taxable. If any one surcharge is taxable, the entire category will be on Airbnb and Vrbo.
Discounts
Users configure their discount taxes by navigating to Settings > Pricing > Discounts > either a specific discount or Create Discount > Is Taxable. The default selection is Yes, that the discount is taxable.
Cancelled Bookings
Municipalities' policies on how hosts handle canceled booking sales taxes can vary. Some may require full or partial refunds, while others may have specific policies mandating the remittance of the full tax amount regardless of the canceled booking.
Only you, the user, can know your sales tax situation for booking cancellations, but OwnerRez offers new flexibility in how sales tax is handled in such cases.
Users can apply canceled booking criteria to their individual sales taxes by navigating to Settings > Taxes > your Taxes > Criteria > Canceled Bookings, then selecting Still applies or Does not apply. The default is Applies to Canceled Bookings.
Special note: Taxes can only be removed for bookings where OwnerRez manages the charges, such as direct and Vrbo bookings.
Changing tax rates
If tax rates change over time, you can add a new effective date and rate in the Rate section. For direct bookings and via the Vrbo channel integration, those effective arrival dates will be respected. For Airbnb, there are no applicable criteria, so the tax will be updated on their site when the effective date is reached.
Edit your existing tax by clicking on the right kebab menu and selecting Edit > Channels > + Add Future Rate Change.
On the Add Future Rate Change pop-up, enter whether this change is from the beginning or starting on a specific date. If starting on a specific date, enter the new tax Rate and select the Effective Date for which a tax is collected.
The Rate History opens and displays when the caret is clicked, and closes when the caret is clicked again.
Changes to tax rates will apply only to new bookings as they come in. They do not retroactively apply to any bookings that already exist, even if their dates of applicability would otherwise require it.
- For direct and some channel-integrated bookings, you can manually edit the Charges to include the new tax and (if necessary) collect an additional payment, but you should communicate with the guest first before hitting them with an unexpected charge.
- For channel bookings where the channel collects payment from the guest, particularly Airbnb, the only way to collect additional taxes is through the channel's Resolution Center or equivalent.
- Airbnb does not support future tax rate changes. This means that bookings placed prior to the date of the tax change will continue to be charged the current (old) tax rate until the date of the tax rate change — even if the arrival occurs after the changed tax rate.
Registration information
When Airbnb is selected in the Taxes > Channels section, the Airbnb Passthrough Taxes section (if required) appears dynamically, allowing you to enter your Business Tax ID (EIN) and the property's tax jurisdiction Registration Numbers for each property when you click on the associated buttons. Each tax has a section for Registration information.
Airbnb may not require registration information for specific taxes or jurisdictions. But if it is required and no Business Tax ID or Registration Number is provided, you may encounter errors in your Airbnb channel integration.
Not sure if Airbnb collects taxes on your behalf? See Airbnb's Help Center article, Areas where tax collection and remittance by Airbnb is available.
Even if you're not using Airbnb or don't need a special Airbnb setup for this tax, it can be a convenient place for you to store information about your various tax accounts.
Taxes and Channel Bridge
When you import or update bookings using Channel Bridge, OwnerRez will populate any taxes remitted by the channel in the lower Guest Channel Fees grid of the Charges tab for the booking -- this shows the amounts paid by the guest to the channel directly.
If any taxes were remitted by you (Vrbo calls these "partner tax", Airbnb "passthrough tax"), those taxes will be populated on the upper grid on the charges tab of the booking, which shows charges between you and the guest.
Note that neither Vrbo nor Airbnb provides a tax breakdown for the taxes remitted by you -- only a total. So Channel Bridge will break down that total based on the taxes effective in OwnerRez for that channel. If a tax is remitted by the channel, not you, make sure to configure that tax to not be applicable to the channel -- meaning that it doesn't pass through to you.
For example, if Vrbo is remitting state tax and you're remitting local tax, you'd set the state tax channel criteria to "everything but Vrbo". Note that if you switch to the Vrbo channel integration, Vrbo will pass through all taxes to you to remit, even if they used to remit some of them for non-channel integrated bookings. In that case, you'd end up with an "everything but Vrbo" applicability period from the beginning until the Channel Change cutover date, and then Vrbo would be included thereafter.
How do taxes create booking charges?
Once you've got taxes configured correctly, they'll be applied to bookings that come in after the configuration is complete. Depending on the channel, this may be done a bit differently, so here's how it all breaks down:
- Direct Bookings - For quotes created in OwnerRez, whether direct booking or sourced from an inquiry on a different channel but reserved in OwnerRez, charges are created automatically based on the taxes configured in OwnerRez and applicable for the channel as of the booking dates.
- Vrbo channel integrated bookings - For these bookings, Vrbo will send the tax item and amount for each configured tax and charges will be created on the booking accordingly.
- Other channel integrations (Airbnb, Booking.com) - For these channels, the channel doesn't send an identifier we can match to the tax configuration in OwnerRez. Instead, we split up the total taxes sent by the channel to be remitted by you based on the tax configuration in OwnerRez -- see below.
Taxes remitted by the channel will be populated on the Guest Channel Fees section of the Charges tab. - Channel Bridge Bookings (both Airbnb and Vrbo) - For channel bridge, we can access information about taxes remitted by the channel. Those will be populated on the Guest Channel Fees section of the Charges tab.
For any taxes you remit, neither channel sends an identifier we can match to the tax configuration in OwnerRez. Instead, we split up the total taxes sent by the channel based on the tax configuration in OwnerRez -- see below.
Tax calculation logic for total tax matching
For channels that send tax total only or don't send matchable identifiers, we use the following steps:
- Total up all taxes sent by the channel
- Run a quote for the booking dates in OwnerRez and capture the effective taxes and amounts.
- Deduct any flat taxes configured in OwnerRez from the channel total taxes and create those charges on the booking.
- If there are percentage taxes, split the channel total tax by the ratio of the percentages configured in OwnerRez and create charges accordingly.
For example if you have a 15% tax A and a 5% tax B, then tax A would get 75% of the taxes sent by the channel while tax B would get 25% of the taxes sent by the channel. - If there is a remainder but no percentage taxes are effective, that amount is stored in a generic "Channel name tax" charge.
Non-Taxable Rent
There are a handful of jurisdictions where Rent is not taxable; only Surcharges are. If your property is in one of these locations... lucky you! Go to Settings > Pricing Preferences > Rent Taxability and select Non-Taxable.
Changing the Rent Taxability setting will apply to both direct and channel-integrated bookings. It is highly unlikely you will need to use this checkbox, no matter how tempting it might seem. Only do this on the advice of a suitable legal or accounting professional in your jurisdiction.