Navigating Occupancy Tax Requirements for Vacation Rental Owners in Ulster County Hudson Valley
Are you a short-term rental investor or second homeowner with properties in the Hudson Valley in Ulster County, NY? If so, it's important to be aware of the occupancy tax requirements in the county. As a short term rental owner, you are responsible for collecting and remitting occupancy tax to the county, even if you use online marketplaces like Airbnb to manage your rentals. In this blog post, we'll outline everything you need to know about occupancy tax in Ulster County and how to ensure you're in compliance with the regulations.
What is Occupancy Tax?
Occupancy tax, also known as a transient occupancy tax or a lodging tax, is a tax levied by local governments on the rental of accommodations, including hotels, motels, and short term rentals. The purpose of this tax is to generate revenue for local governments, which can be used to fund Hudson Valley tourism and promote economic growth.
In Ulster County, NY, the occupancy tax rate is currently set at 2%, but this is set to increase to 4% shortly. This means that short term rental investors in Ulster County will soon be required to collect and remit a higher tax rate on their rental income.
Who is Responsible for Collecting and Paying Occupancy Tax?
Short term rental hosts are responsible for collecting and paying occupancy tax to the county. This means that if you own a short term rental property in Ulster County, you are required to register with the county to collect occupancy tax and then collect the tax from your guests.
It's worth noting that some online marketplaces, such as Airbnb, collect and remit occupancy tax on behalf of their hosts in Ulster County. However, even if your chosen marketplace app collects and remits occupancy tax on your behalf, you are still required to file quarterly occupancy tax returns with the county to claim these taxes remitted by your guests. This is important to keep in mind to avoid penalties or issues with the county in the future.
How is Occupancy Tax Calculated?
Calculating occupancy tax is a relatively simple process. In Ulster County, the current occupancy tax rate is 2% of the rental amount charged to guests. However, as mentioned earlier, this rate will soon increase to 4%. For example, if you charge a guest $100 per night for your short term rental property, you would be required to collect $2 in occupancy tax per night under the current rate, and $4 under the new rate.
It's important to note that not all short term rentals are subject to occupancy tax in Ulster County. According to the county's regulations, if the rental period is less than 30 days, the occupancy tax must be collected and remitted. However, if the rental period is more than 30 days, the property owner is not required to collect occupancy tax, since this is not considered a hotel/motel use.
Consequences of Not Paying Occupancy Tax
Not collecting and paying occupancy tax can have serious consequences for short term rental investors in Ulster County. The county has the authority to audit short term rental hosts to ensure that they are complying with the occupancy tax regulations. If a host is found to be non-compliant, they may be subject to penalties and fines, which can be significant. For example, in 2019, a short term rental investor in Ulster County was fined $5,000 for failing to register with the county and collect occupancy tax.
How to Register for Occupancy Sales Tax
To register for occupancy sales tax in Ulster County, owners must complete an application with the county's Department of Finance. The application can be downloaded from the county's website, and it requires basic information about the property owner and the rental property.
Once the application is completed, it can be submitted to the Department of Finance along with the required fee. The fee for registering for occupancy tax is currently $100, but this is subject to change, so it's important to check the county's website for the most up-to-date information.
After registering, short term rental hosts will receive a certificate of authority from the county, which must be displayed in the rental property. This certificate confirms that the host is authorized to collect occupancy tax from guests.
Filing Quarterly Occupancy Tax Returns
In addition to registering for occupancy tax, short term rental hosts in Ulster County must file quarterly occupancy tax returns with the county. These returns must be filed even if occupancy tax is collected and remitted by a third-party platform or online marketplace.
To file a quarterly occupancy tax return, short term rental hosts must complete a form provided by the county and submit it via email to the Department of Finance. The form requires hosts to report the total rental income received during the quarter and the total occupancy tax collected and remitted to the county.
While occupancy tax requirements can seem like a burden for short term rental hosts in Ulster County, it's important to remember that these taxes can actually benefit the local community. Occupancy taxes are often used to fund important public services like infrastructure improvements, public safety, and tourism marketing efforts. In addition, occupancy taxes can be seen as an incentive for local governments to permit short term rentals to prosper, as these rentals can generate significant revenue for the local economy. So, while complying with occupancy tax regulations may require some effort on the part of short term rental hosts, it's important to recognize that these taxes can have a positive impact on the community as a whole.
Haus specializes in assisting Hudson Valley homeowners calculate and file required occupancy tax returns as part of our Full-Service Hudson Valley Airbnb Management services. Reach out to learn more about how we can turbocharge your performance while reducing headaches.
