Tax Consequences of Renting Your Vacation Home

home vacation rental tax rules

Did you know that if you rent out your lake house or an extra room in your New Hampshire home, you are legally required to pay the state a 9% meals and room (M&R) tax? Fail to do so, and you’ll be subjected to some hefty fines. In this month’s TSLNH blog, we discuss the latest vacation home rental tax rules in New Hampshire.

Over the past several years, a growing number of New Hampshire residents are making extra income by renting rooms and property through Airbnb, an online short-term rental brokering service that serves customers worldwide. According to an October 20 Union Leader article, over 150,00 guests booked rentals in the state through Airbnb this past year, up 87% over last year. This represented just under $20 million collected by Airbnb’s 2,600 New Hampshire hosts.

Effective Nov. 1, Airbnb to Collect 9% M&R Tax

Starting November 1, if you’re renting through Airbnb, you don’t need to worry about collecting taxes, as the broker will do it for you. The New Hampshire Department of Revenue Administration (DRA) recently announced that, effective November 1, Airbnb will collect the state’s 9% M&R tax when a short-term rental is booked online. Airbnb will have a New Hampshire M&R Tax license, and maintain responsibility for filing monthly returns, and collecting and remitting all M&R taxes due to the Department of Revenue Administration.

Your Responsibility as an Airbnb Host

While Airbnb hosts are no longer responsible for collecting and remitting M&R taxes to the state, you are responsible for maintaining the books and records relating to any rental transactions for three years.

What About Short-Term Rentals Booked Prior to Nov. 1?

If you made money booking sleeping accommodations prior to November 1 (through Airbnb or any other method), you are required to register and obtain a New Hampshire M&R Tax license, file monthly returns, and collect and remit any M&R Taxes due to the Department of Revenue Administration.

Contact the Department of Revenue Administration to discuss your options for coming into compliance with their  vacation home rental tax rules. Visit their website to learn more about their Voluntary Disclosure Program.

vacation home rental tax rules

What if You’re Not Renting through Airbnb?

When it comes to calculating and remitting your M&R taxes, renting your property through Airbnb makes things easy. If you’re not booking through Airbnb you need to be manage your M&R taxes on your own, including:

  • Obtaining a state M&R Tax license.
  • Filing monthly returns.
  • Collecting and remitting M&R Taxes due to the DRA.
  • Keeping records on all booking transactions for three years.

Complying with NH’s Vacation Home Rental Tax Rules

If you rent out your vacation home or other space on a short-term basis and need more information about New Hampshire’s M&R Tax, including how to obtain a tax license and stay in compliance, contact the professionals at Tax Services of Londonderry.

Personal Tax Assistance in New Hampshire

Dealing with taxes can be overwhelming, but there’s no need to feel like you need to go at it alone. Let the experienced professionals at TSLNH help you make sense of New Hampshire’s vacation home rental tax rules. Contact us today.

 

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