Arlington’s recently adopted rules regulating Airbnb-style short-term rentals in the county are beginning to funnel some cash into the government’s coffers.
“We have established 67 business-tax accounts” as of late August, Commissioner of Revenue Ingrid Morroy told the Sun Gazette. Those accounts tee up property owners to pay business-license fees, personal-property taxes and transient-occupancy taxes related to using homes for short-term rentals.
Through July, just under $18,000 had been assessed via the 7.25-percent transient-occupancy tax, which is split between the local and state governments, with another $780 via the business-license tax, Morroy said. (While the county commissioner of revenue dues the assessing, the treasurer does the collecting.)
As of late August, the county government has issued 101 permits allowing homeowners to rent out a portion of their homes to paying customers on a short-term basis. Not all of those who have obtained permits are necessarily planning to rent out space in the immediate future, and they are not required to apply for business-tax accounts until they are ready to do so.
Morroy said those who are renting out their homes should check in with her office and set up accounts for paying taxes, instead of trying to skirt the law.
“The sharing economy is growing, and we want to make sure that taxes are assessed fairly and equitably across the board,” she said.
County Board members last December approved rules regulating short-term rentals, which they acknowledged have been going on – technically illegally, if not particularly surreptitiously – for years.
How much might the county government stand to gain? Morroy said the answer remains something of a shot in the dark, although she estimated it could range anywhere from $250,000 to $1.5 million annually once all operators are registered.
“It is challenging to estimate potential revenue for this type of business, as nightly rates and percentage of utilization differ between rented spaces,” she said. “Most providers do not rent continuously, but only sporadically.”
The General Assembly in 2016 passed legislation prohibiting localities from collecting taxes on homestead rentals, but the measure was vetoed by Gov. McAuliffe. In the 2017 legislative session, localities successfully lobbied for no handcuffs being placed on them.
The Arlington Chamber of Commerce’s membership found itself split on the issue of short-term rentals, and took no formal position when it was being discussed last year by the County Board. The Arlington County Civic Federation launched an extensive questionnaire, which drew more than 600 responses and helped county officials fine-tune the proposal that ultimately was adopted.
Last year, Arlington officials estimated there were about 1,600 property owners offering their homes as short-term rentals in the county, even though there were no county ordinances that permitted them to do so.
Morroy, who is an elected constitutional officer, said despite an initial learning curve, most people have found it fairly easily to file these taxes online. “We encourage that – customers can always call my office at (703) 228-3060 if they need our assistance in setting up an online account profile,” she said.
The County Board’s action to legitimize short-stay rentals did not take away the rights of condominium associations and homeowners associations to impose their own requirements, including a prohibition on short-term rental of units, if they choose.
Full details on taxes and fees associated with short-term homestead rentals can be found on the Web site at https://taxes.arlingtonva.us/accessory-homestay-rentals/.