Sales Tax FAQ's

Do I, as an individual property owner, need to worry about sales tax on my vacation property?

In almost every location sales, lodging and accommodation taxes apply to short- term rental revenue generated on vacation properties. In only a few locations there is an exemption for individual property owners.

What taxes apply to rental income?

It depends on the location. Generally, as a vacation property owner you need to investigate applicable taxes at the state, county and city level. Some tax jurisdictions charge sales tax plus a special lodging or accommodations tax on short-term rentals. Others do not charge sales tax but have special tourist, occupancy or accommodation taxes.

What are these taxes charged on?

In most locations, taxes are charged on total consideration received including, rental income, cleaning fees and any other fees charged.

What is considered a short-term rental?

Again, it varies by location. In some states short-term rentals are defined as less than 28 days in other states less than 180 days. You need to research each taxing jurisdiction for specific rules.

Are there any deductions to this tax?

Generally not. These taxes are charged on revenue and there are no deductions for supplies, housekeeping, maintenance fees, etc.

What if I don't pay these taxes?

We strongly encourage all property owners to comply with these laws. First, you don’t pay these taxes the renter pays them. You, the property owner, collect and remit them to the taxing authorities.

If you do not collect these taxes you are exposed to thousands of dollars of back taxes, penalties and interest. We know of tax auditors that go through the list of vacation rental properties looking for owners not collecting the tax. Just because you didn’t collect the tax, you still are responsible for it. Ignorance or renting your property on the Internet is not an excuse. Penalties are typically 25-50% of the past due amounts, plus interest. Also, audits cover several years, which can result in significant back taxes due.

We know these laws can be confusing and there are potentially severe financial consequences for not complying. That is why we have created HotSpot’s low cost filing solution, which guarantees you never have these problems and never have to hassle with regulations forms and paperwork. We do all the work for you.

Do I get any benefit for collecting these taxes?

Yes. Many jurisdictions provide a discount or rebate of 2-3% of the tax collected to offset the cost of complying with the laws. These discounts are only available to timely filers……another reason to use HotSpot’s tax service.

How do I get started?

Call the state, county and local government where your property is located. Each jurisdiction may have licensing requirements, so first you will need to apply for a license to collect the taxes. We handle all of these issues for you. We charge $49.95 to obtain the licenses and then charge filing fees for each return. The total cost usually works out to about $10 a month.

How often do I have to file these returns?

It depends on the jurisdiction. Most returns are due monthly or quarterly. In many cases, the frequency of the filing is dependant upon how much rental income your property generates each month.

Where do I remit/send the collected taxes?

In some locations, the state collects the taxes for the county and city. In other locations, the state collects the tax for either the county or the city, and the city or county collect its own tax. In some areas, the state, county and city authorities each collect their own tax, resulting in numerous returns that need to be filed.

How much does HotSpot’s Tax Filing Service cost?

Our fees are based on how many returns we file. We charge a $5 to $10 per return fee and an annual $19.95 service fee. In most jurisdictions, we can file all your returns for about $80 to $120 a year. That is $10 or less a month to ensure full compliance to these complicated regulations and ensure you collect your timely filing rebates. The cost is nominal relative to potential penalties for late filing or non-compliance.

How does it work?

Once you sign-up for our service we do everything else. We get you licensed, determine the applicable taxes, tax rates, forms, and filing frequency. Each period we calculate, complete, file the returns and submit payment, which we electronically withdrawn from your account. All we need from you is the revenue for your property for each tax period. We send you emails to collect that information or you may login to our website and input the revenue at your convenience.

Why should I use HotSpot's Tax Filing Service?

Once you sign-up for our service we do everything else. We get you licensed, determine the applicable taxes, tax rates, forms, and filing frequency. Each period we calculate, complete, file the returns and submit payment, which we electronically withdrawn from your account. All we need from you is the revenue for your property for each tax period. We send you emails to collect that information or you may login to our website and input the revenue at your convenience.

• Guaranteed full compliance with ever changing laws in all jurisdictions for a nominal monthly cost ($5-$10).
• Never miss a filing deadline.
• Avoid penalties, interest or worse: back taxes and significant charges for non-compliance.
• Guarantee timely filing collection allowances or rebates……..for many customers this is more than our fees.
• We are the fraction of the cost of a CPA or accountant.
• No more hassling with forms, paperwork, researching rates or filing deadlines.
• No more mailing payments…..we electronically debit your account for the taxes you owe and send you an email receipt for your records.

You always know what taxes you paid—we store all your tax filing history on our website which you may access anytime.

How do I sign-up?

Sign-up online at www.hotspottax.com/registration or call us at 1.877.589.0207 or 303.220.0183. We look forward to hearing from you!