Rent-by-owner units to be licensed for tax purposes
• Business licenses will be required for owners renting their units more than 14 nights per year.
• Owners renting their units must pay sales tax on all rental income.
• Owners with more than two units will need business licenses.
• Lodging taxes fund the Vail Commission on Special Events.
VAIL — Vail homeowners who rent their units to paying guests will soon have to buy a business license from the town.
The Vail Town Council will soon debate an ordinance putting a handful of new requirements on rent-by-owner units. Those rentals have become popular in the last few years due to the success of websites including AirBnB and VRBO.com.
In the summer of 2014, a group of Vail lodging managers asked the council to regulate those Internet rentals. The initial proposal called for regular inspections and imposed safety requirements. That proposal was quickly shot down by the council.
Can’t Escape Taxes
On the other hand, lodging is the town’s largest source of sales tax revenue, and town officials want to ensure everyone who’s renting a unit pays those taxes. That became a draft regulation that would require owners renting their units to post their sales tax license numbers on their Internet ads.
A new proposal will add a requirement for people renting their units to obtain a town business license. That requirement would apply immediately to people who rent more than two units. For those with a single unit, business license requirement would apply to those who rent their units more than 14 days per year. Federal taxes are imposed on people who rent their homes for more than 14 days.
“It’s a matter of equity,” Vail Racquet Club General Manager Matt Ivy told the council. “If it’s fair for one segment of the community to have a business license, everyone should.”
Ivy added that town lodging taxes currently pay for the Vail Commission on Special Events. More owners paying those taxes would enable the town to promote more events.
And there are a lot of rent-by-owner units available in Vail right now. Ivy said a recent search of just one site showed a total of 427 units available. Council member Dale Bugby, owner of Vail Resort Rentals, said he’s aware of some owners who rent their units for 50 or more nights a year.
“If you’re renting you’re renting (a unit) more than 14 days a year, that’s clearly a business,” council member Dave Chapin said. “If we’re making a guy running a consulting business from his home pay (for a business license), this is only fair.”