Airbnb Municipal Taxes within the New York City Tri-State Area
Running a short-term rental apartment is not completely a walk in the park, especially when taxes are considered. If you own an Airbnb rental home in the New York City Tri-State Area (New Jersey and Connecticut), then you are expected to pay Municipal taxes.
The Tri-state area is a bustling, metropolitan region, so short-term rental taxes in this area differ slightly from other states. In this article, we will be sharing all you need to know about Municipal taxes for your short-term rental properties in the New York City Tri-state area.
New York City Municipal and Local Taxes
Airbnb hosts in New York City, are expected to pay a ‘hotel room occupancy tax’. This is a substantial amount that cannot be overlooked, so it is usually added to your client’s cost of stay. The hotel room occupancy tax currently stands at 5.8% of the rate you charge for your Airbnb hosting. An additional $2 flat fee will be added per day if your property rooms cost over $40 per night.
Another important tax you must pay as a short-term rental owner in New York is the MCTD (Metropolitan Commuter Transportation District) tax and the state sales tax. The state sales tax is 4% of what you charge for your Airbnb and the MCTD tax is 0.375%.
New Jersey Municipal and Local Taxes for Airbnb Hosts
In New Jersey, Airbnb hosts are required to remit a municipal occupancy tax of 1% to 3% depending on the property’s locality and a state sales tax of 6.625%. Taxing in these areas is not so straightforward, so it’s advisable to consult a tax professional to walk you through the journey.
Connecticut Municipal and Local Taxes for Airbnb Hosts
In Connecticut, Airbnb hosts are expected to pay a ‘room occupancy tax’ of 15% of the amount you are charging your guests. This 15% covers the 6% sales tax and the rate is one of the highest in the Tri-State area.
Schedule E and Schedule C Forms
Apart from your local and municipal Airbnb host taxes, you are also supposed to remit federal taxes. If you provide additional services like cleaning, transportation, breakfast, and hotel pick-ups for your Airbnb guests, the IRS may require you to file Schedule C. If you do not offer any services in addition to your rental, you will be expected to file Schedule E.
Non-compliance with these state-specific and Federal tax expectations can lead to serious tax penalties. You can be heavily fined and audited by the IRS. So, seek a tax professional for solid advice and reliable guidance.
References
https://states.aarp.org/new-york/state-taxes-guide
https://www.nyc.gov/site/finance/business/business-hotel-room-occupancy-tax.page