States To Lose $260 Million In 2016 Taxes From Airbnb

Estimated 2016 Airbnb tax loss to states $260 million, says study

By Bruce Brown October 22, 2016

airbnb tax revenue loss states 51990213 view from the high line in chelsea new york — venemama / 123RF Stock Photo

Those inexpensive stays in Airbnb listings are costly for the state. In the wake of yesterday’s Airbnb setback in New York, a report coming out on Monday projects the 2016 tax losses for states that don’t tax Airbnb home-share rentals. New York Governor Andrew Cuomo signed into law legislation that bans short-term rentals in the state. Had the law not been signed, the study by All the Rooms projected $that 110 million would go uncollected from Airbnb’s biggest market.

The title of the study, 440 Million Reasons to Tax Airbnb Vacation Rentals, reveals the position of the company that ran it, but that doesn’t mean the data is inaccurate. All the Rooms compiled Airbnb live as well as historical state-by-state booking and pricing data to project nationwide occupancy and revenue figures. From that data, the study determined the total municipal and state tax amounts from the rentals if they had been taxed at conventional hotel rates.

Across the country, the total 2016 tax revenue would amount to almost $440 million for Airbnb stays, the report concludes. Of that amount, approximately $117 million will be collected in the 26 states where Airbnb has successfully set up tax arrangements.

A total of $260 million nationwide won’t be collected in the states that have no current taxing arrangements. That number includes $110 million in lost tax revenue in New York, which is now subject to change if Airbnb listings cease in the state. One argument is, however, that if people can’t book Airbnb listings they’ll stay in traditional hotels — and since hotel rates are likely to be higher than Airbnb stays, the tax revenue from hotel stays will be even higher as long as people still make the trips and need lodging.

The study singles out Texas, Massachusetts, and Tennessee for setting maximum vacation rental tax rates for Airbnb stays, which should result in what All The Rooms refers to as “tax windfalls” this year. According to the study, Texas will realize $18.4 million, Massachusetts $16.9 million, and Tennessee $13.7 million.

Airbnb had already planned to fight back in the courts if the law was signed. The proposal passed the legislature in June but wasn’t signed by the governor until yesterday. Airbnb has also said it will take steps to help property owners wishing to list with its service register and comply with regulations. For now, however, New York joins Berlin, Barcelona, and Amsterdam in banning short term rentals.

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