When integrating to Airbnb, it is important to note that depending on where the Property Manager is located, Airbnb may not remit taxes in that region. Only in areas that Airbnb has made agreements with governments or is required by law to collect and remit local taxes on behalf of hosts, Airbnb calculates these taxes and collects them from guests at the time of booking. If not, it is the Property Manager's responsibility to collect the tax from the guest and remit it to the state or county.
Before continuing this article, please keep in mind, CiiRUS Inc. are not tax specialists and highly recommend advising with local tax authorities to validate the best practice on remitting taxes for Airbnb bookings based on your location. CiiRUS is not responsible or liable for the taxes that the Property Manager must collect and remit from Airbnb.
In what areas is occupancy tax collection and remittance by Airbnb available?
Please click here to verify which taxes Airbnb are collecting for your tax region. If your county is listed, then Airbnb does collect and remit the taxes, if not, the Property Manager is responsible for collecting the tax.
For example, in the State of Florida, Airbnb collects and remits the Sales Tax, but depending on the county, may not collect the Tourist Development Tax. Again, if the county is not listed on the page, Airbnb does not collect the tax.
If Airbnb collects BOTH taxes for your region, no further action is needed. If Airbnb does not remit any tax or only one tax for your region, continue reading the rest of this article to learn how to configure the taxes in CiiRUS.
Configure the Tax in CiiRUS
After verifying which taxes Airbnb collects, it is important to set the correct configuration in CiiRUS.
To do so, go to:
- Channel Manager
Scroll to the right in the table to locate the tax columns:
Using 'Florida - Osceola County' as an example:
Tax 1: Sales Tax
Tax 2: Tourist Development Tax
For Osceola County, Airbnb does not remit the tourist tax, therefore, the Property Manager is responsible for collecting it from the guest.
Within the Airbnb Channel Manager, for properties in Osceola County, check the box within the "Tax 2 Remitted by MC" column. This means, Tax 1 (Sales) is collected by Airbnb and Tax 2 (Tourist) is collected by the Property Manager. Enabling this checkbox is how the system knows to apply the tax amount within the Total Booking Summary so the Property Manager knows how much they have to remit.
Please note, even with this setting enabled, Airbnb do not currently itemize the taxes to the guest. The Property Manager will either need to bump up the rates or collect the tax post-booking from the guest. CiiRUS is working with Airbnb to make updates to the API that will allow Airbnb to itemize the taxes collected by the Property Manager. Click here to see the development road-map for more information.
How to Collect the Tax from the Guest
Since Airbnb does not itemize the tax amounts that the Property Manager must collect, there are two options to collect it from the guest:
- Bundle the rental rate and tax by bumping up the rates in CiiRUS by the tax amount using the Multiplication Factor
- The recommended option is to collect the tax post-booking via the Airbnb Resolution Center
Bump up the Rates
In CiiRUS, use the Multiplication Factor to bump up the rates by the tax amount. For example, if the tourist tax is 6%, mark-up the rates by an extra 6% to cover the taxes. The tax will be bundled in with the rental rate and is not itemized separatly to the guest. This will increase the base rental amount by 6% so the Property Manager is not paying out of pocket for the taxes.
When the booking lands in CiiRUS:
- Calculate 6% of the base rental amount
- Deduct this amount from the base rental amount field
- Add a new cart extra to the booking called "Airbnb Tourist Tax" and enter this amount as a negative number to subtract it from the booking total, essentially removing the tax from the base rental
- Generate a cart extra report or finanical report to see the total tourist tax collected each month. This is the amount to remit to the county
Another option instead of creating a cart extra is to override the grand total of the booking, making it match your actual Airbnb payout. This way, the booking financials will auto-recalculate based on the payout amount. This will adjust the MC commission and amount due to the owner to be based on the payout amount rather than the grand total that the guest paid to Airbnb. The taxes will recalculate based on the actual amount the Property Manager received in their bank account. Again, we highly recommend checking with you local tax authorities to verify and validate the methods above.
The recommended way to collect taxes is via the Airbnb Resolution Center. This means that post-booking, Airbnb will reach back out to the guest to collect the additional payment for taxes. So that the guest is informed prior to booking, the Property Manager can add a brief explanation to their terms and conditions or property description as follows:
"READ BEFORE BOOKING - Upon booking, you will receive a separate request via Airbnb resolution center for [Tourist Tax.] [Osceola] County requires us to collect tax on the rent from every reservation. This feature is not currently supported on Airbnb. The tax percentage associated with your stay will be X%."
To access the Resolution Center, please click here.
The request for taxes can be done prior to the guest arrival to ensure that payment has been made. Once the guest submits the payment to Airbnb, the Property Manager will receive a second payout from Airbnb.
This option means there is no messing around with the amounts in the Reservation Folio. Everything will balance once the Property Manager receives the tax amount back from Airbnb.
Apply Airbnb Payout to the Reservation Folio
Typically, Airbnb pays out the Property Manager the money due to them by the arrival date of the booking. This is typically a wire sent directly to the Property Manager's bank account. Once the money is received, it can be applied to the booking in CiiRUS to show that full payment has been made.
To do so, open the Reservation Folio from the Reservations List:
Click on the "Payments" tab and add the Airbnb payout amount. Follow the same steps to apply the tax amount payment once received from Airbnb.