Collecting the right taxes is a separate obligation from your STR permit. This guide explains the three main tax types affecting short-term rental operators and how to register for each.
Many short-term rental hosts obtain their permit successfully but run into trouble on the tax side — either because they weren't aware taxes needed to be registered separately, or because they assumed their booking platform handled everything automatically. This guide clarifies all three main tax types that affect STR operators.
Transient Occupancy Tax — called TOT in California, lodging tax in Tennessee, hotel-motel tax in Nashville, and Tourist Development Tax (TDT) in Florida — is a local tax on short-term lodging charged to guests. Rates typically range from 5% to 15% of rental income. It is collected from guests at booking and remitted to the county or city tax authority on a monthly or quarterly basis.
Most major booking platforms (Airbnb, VRBO) now collect and remit TOT/TDT automatically in many jurisdictions. However, "automatic remittance" is not universal — it depends on whether the platform has a specific tax collection agreement with your county. Always verify your specific county's situation with the platform AND the local tax office.
Many states apply sales tax to short-term rental income. Tennessee charges 7% state sales tax plus up to 2.75% local sales tax on lodging. Florida charges 6% state sales tax. California does not apply sales tax to residential lodging. Airbnb and VRBO collect state sales tax automatically in most states where it applies.
STR income is reportable as rental or business income on your federal and state tax returns. The 14-day rule (Schedule A vs. Schedule E treatment) and personal use day calculations significantly affect your tax position. Consult a CPA familiar with STR taxation — this is beyond the scope of an informational permit guide.
Registration is separate from your STR permit and typically free. The registration process: contact your county tax collector or assessor's office, request a Transient Occupancy Tax (or equivalent) registration form, complete it with your property details and banking information for remittance, and receive your tax registration number. Some counties have online registration portals.
Even if your platform remits taxes automatically, you should still register — it establishes your compliance record and ensures you receive any notices about rate changes.
This guide is for informational purposes only. Requirements vary by jurisdiction and change frequently. Always verify with your local planning office before acting.