Airbnb and City of Louisville Reach Tax Collection Agreement

Airbnb and City of Louisville Reach Tax Collection Agreement

A press release was sent out by the City of Louisville this morning announcing they have reached an agreement with Airbnb to collect and remit the 8.5% hospitality/bed tax on every guest reservation made through Airbnb. Under Airbnb’s current agreement with the state, taxes are added to reservations at checkout and paid by the guest. Airbnb remits to the State on the host’s behalf. 
 
The agreement with the City is expected to go into effect April 1st. Additional details will be made available as they are known. It is advised that everyone continue with current tax collection and remittance practice until further notified. And remember, this applies only to Airbnb reservations. No agreements are in place with other platforms (VRBO, Expedia, etc.) or direct placement guests. 
 
 
Here is the full release form the City of Louisville: 
 

Louisville Metro and Airbnb announced today the finalization of an agreement that will allow the company to collect and remit taxes on behalf of its hosts in Louisville and Jefferson County. Effective April 1, Airbnb will automatically collect and remit the Louisville Transient Room Tax (8.5%) for taxable bookings. The agreement allows Louisville to fully benefit from people visiting and staying longer through home sharing.

Collecting and remitting hotel taxes can be complicated, as the rules were designed for traditional hospitality providers and large hotel corporations with teams of lawyers and accountants.

That’s why Airbnb has begun partnering with governments throughout the world to collect and remit taxes, making the process seamless and easy for hosts to pay their fair share while contributing new revenue for local governments. These agreements are particularly impactful for a city like Louisville, where some homeowners may only be hosting visitors during a handful of large events such as the Kentucky Derby, and therefore are less likely to be aware of the applicable taxes associated with short-term rentals.

“I am delighted to see that the city has settled on an agreement with Airbnb. We have leisure and convention travelers requesting the option of an Airbnb. We have a growing number of Airbnb Hosts in Louisville – this will put them on the same playing field as our other accommodations in paying the transient room tax,” said Karen Williams, President & CEO of the Louisville Convention Bureau.

“We are always looking for opportunities to better serve taxpayers,” said Louisville Metro Revenue Commission Director Angela Dunn. “This agreement advances that goal by streamlining the local tax process for hosts.”

This marks Airbnb’s third tax agreement in Kentucky. In September 2017, the company announced a statewide tax agreement with the Kentucky Department of Revenue that authorized the company to collect and remit the state sales tax on all Kentucky Airbnb bookings (including in Louisville Metro). And earlier this year, Airbnb and Lexington announced an agreement authorizing Airbnb to collect and remit Lexington’s local room tax.

“We believe this agreement will unlock significant new revenue for Louisville Convention Bureau moving forward, and we’re so thrilled to have finalized it well prior to the Derby,” said Laura Spanjian, policy director for Airbnb. “With clear, fair rules to regulate home sharing and now a tax agreement to bring in new revenue, Louisville has emerged as a national model for how cities can capitalize from the sharing economy.”

The agreement comes at a time of dynamic home sharing growth in the Greater Louisville area. In 2017, Louisville-area Airbnb hosts earned $10 million in supplemental income while welcoming over 78,000 guest arrivals to the city.

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Louisville Short Term Rental Zoning Win

Louisville Short Term Rental Zoning Win

Short Term Rental Zoning

The Louisville Planning Commission awarded a major win for short term rental zoning in Louisville, KY today. In a unanimous vote of 7-0, the Planning Commission voted to recommend no changes or restrictions to current residential short term rental zoning requirements for non-owner occupied properties. This comes on the heels of a vote by Metro Council in December to not impose a moratorium on new non-owner occupied short-term rentals.

On 12/18/18 Metro Council tasked the Planning Commission with reviewing the current short-term rental zoning ordinance and making recommendations for changes or improvements. Public comment was gathered in August and September 2018, through the City’s website, and testimony was heard by the Planning Commission at two public meetings.

Today’s Vote

Today’s vote considered three options: Option 1 – Prohibit all non-owner occupied short-term rentals in residential zoning, Option 2 – Prohibit non-owner occupied short-term rentals in single-family residential zoning, Option 3 – continue to allow non-owner occupied short-term rentals in all residential zoning. Not being discussed tonight were owner-occupied properties and commercially zoned properties.

The second item for discussion was whether the Planning Commission should recommend limiting the total number of occupants in an STR to 10. This, too, was voted down siting occupancy limitations within the existing ordinance (two times the number of bedrooms plus 4), as well as the Board of Zoning Adjustments (BOZA) ability to restrict the number of occupants below the current standard based on the individual merits of a property. BOZA is the governing body who currently oversees the issuance of all conditional use permits (CUPs) for non-owner occupied STRs.

Additional Short Term Rental Zoning Recommendations

Additional regulations for STRs that were created by the Planning Commission, and recommended to Metro Council for consideration are:

  • An increase in the annual registration fee for all STRs from $25 to $100
  • Display a copy of the registration on the property in a visible location.
  • Contact information for the property owner and Management Company or host be sent by certified mail to tier 1 neighbors.
  • A requirement for the inspection of the property by the Fire Marshall or a licensed home inspector.

In addition to these recommendations, the Planning Commission unanimously passed a motion suggesting Metro Council consider a funding source for the operational expenses associated with enforcing current STR laws. Both side of the topic fully agree that the primary issue is enforcement of existing laws and adding additional legislation is not the solution.

Tonight was the second public meeting where additional public testimony was heard and the Zoning Commission was prepared to make a vote.

The first public meeting was held in early December where the audience was heavily in support of short-term rentals and opposed to any zoning restrictions. The Planning Commission requested a continuance following that hearing in order to further explore the topic and related law so an informed decision could be made. Tonight’s second public meeting was held in a moderately filled auditorium in the Old Jail Building. Twenty-three people spoke – twenty were in favor of short-term rentals without any zoning restrictions, one party was neutral, and only two were opposed.

Next Steps

Tonight’s recommendations will be passed to Metro Council, where it will be handed to the subcommittee on zoning and annexation for review and further discussion. Following that one of three things will happen: 1) Nothing, 2) They will vote to pass the recommendations as-is to Metro Council for a full vote, or 3) They will recommend certain parts to Metro Council and/or add additional elements to the recommendation for a full vote.

Short-term rentals are properties that are rented out for a period of 29 days or less. In Louisville, they can be single family or duplex residences, some condominiums, and almost all commercially zoned property meeting certain location criteria. Neighborhood groups, primarily in the Highlands and Cherokee Triangle Areas, have voiced concern over the number of non-owner occupied short-term rental properties that have become available in a short period of time.

Jonathan Klunk, CEO of short-term rental management company Key Source Properties weighed in, “Tonight’s vote was an informed vote by a fair and knowledgeable group of people who want what’s best for this city. I applaud them for being able to see short-term rentals on their merits and how vital they have become to our city. Hearing from the individual, responsible hosts is an important ingredient to having a well-rounded view on the matter.  We hope the city will appropriate the necessary funds to enforce existing laws and create common sense ordinances for controlled growth of short-term rentals throughout the city.”

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Airbnb and City of Louisville Reach Tax Collection Agreement

Airbnb and City of Louisville Reach Tax Collection Agreement

A press release was sent out by the City of Louisville this morning announcing they have reached an agreement with Airbnb to collect and remit the 8.5% hospitality/bed tax on every guest reservation made through Airbnb. Under Airbnb’s current agreement with the state, taxes are added to reservations at checkout and paid by the guest. Airbnb remits to the State on the host’s behalf. 
 
The agreement with the City is expected to go into effect April 1st. Additional details will be made available as they are known. It is advised that everyone continue with current tax collection and remittance practice until further notified. And remember, this applies only to Airbnb reservations. No agreements are in place with other platforms (VRBO, Expedia, etc.) or direct placement guests. 
 
 
Here is the full release form the City of Louisville: 
 

Louisville Metro and Airbnb announced today the finalization of an agreement that will allow the company to collect and remit taxes on behalf of its hosts in Louisville and Jefferson County. Effective April 1, Airbnb will automatically collect and remit the Louisville Transient Room Tax (8.5%) for taxable bookings. The agreement allows Louisville to fully benefit from people visiting and staying longer through home sharing.

Collecting and remitting hotel taxes can be complicated, as the rules were designed for traditional hospitality providers and large hotel corporations with teams of lawyers and accountants.

That’s why Airbnb has begun partnering with governments throughout the world to collect and remit taxes, making the process seamless and easy for hosts to pay their fair share while contributing new revenue for local governments. These agreements are particularly impactful for a city like Louisville, where some homeowners may only be hosting visitors during a handful of large events such as the Kentucky Derby, and therefore are less likely to be aware of the applicable taxes associated with short-term rentals.

“I am delighted to see that the city has settled on an agreement with Airbnb. We have leisure and convention travelers requesting the option of an Airbnb. We have a growing number of Airbnb Hosts in Louisville – this will put them on the same playing field as our other accommodations in paying the transient room tax,” said Karen Williams, President & CEO of the Louisville Convention Bureau.

“We are always looking for opportunities to better serve taxpayers,” said Louisville Metro Revenue Commission Director Angela Dunn. “This agreement advances that goal by streamlining the local tax process for hosts.”

This marks Airbnb’s third tax agreement in Kentucky. In September 2017, the company announced a statewide tax agreement with the Kentucky Department of Revenue that authorized the company to collect and remit the state sales tax on all Kentucky Airbnb bookings (including in Louisville Metro). And earlier this year, Airbnb and Lexington announced an agreement authorizing Airbnb to collect and remit Lexington’s local room tax.

“We believe this agreement will unlock significant new revenue for Louisville Convention Bureau moving forward, and we’re so thrilled to have finalized it well prior to the Derby,” said Laura Spanjian, policy director for Airbnb. “With clear, fair rules to regulate home sharing and now a tax agreement to bring in new revenue, Louisville has emerged as a national model for how cities can capitalize from the sharing economy.”

The agreement comes at a time of dynamic home sharing growth in the Greater Louisville area. In 2017, Louisville-area Airbnb hosts earned $10 million in supplemental income while welcoming over 78,000 guest arrivals to the city.

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Setting Up A Short Term Rental In Louisville KY

Setting Up A Short Term Rental In Louisville KY

Navigating the short-term rental legal process

Setting up a short-term rental listing in Louisville, KY is not as difficult as you would think. Many parts of the country are plagued by heavy regulation that can increase the barriers-to-entry for newcomers and those unfamiliar with the process. Louisville’s short-term rental climate is very accepting, as long as your property fits the guidelines and you follow the proper legal requirements.
 
A short-term rental is defined as a rental that is 29 consecutive days OR LESS.  Rentals of thirty (30) days or more are not short-term rentals, by law, and therefore not governed by short-term rental laws or zoning requirements. Tax obligations are due to both the state of Kentucky and City of Louisville for all short term rentals, and are as follows:

State of Kentucky:
Sales Tax: 6%
Transient Tax: 1%

City of Louisville:
Hotel or Bed Tax: 8.5%

Not all properties can be short term rentals

Property types that qualify for short-term rentals in Louisville, KY:
 
Single Family Residence
Duplex
Condominium*
Commercial Building**
 
*Condominium owners must have written permission from the association board. Residentially zoned condominiums must be owner occupied. Commercially zoned condominiums do not have an owner occupied requirement.

**Commercial Buildings must be zoned C-R, C-N, C-1, C-2 or C-3 and the property meets the following criteria: 1) within 200 feet of a TARC route, 2) within .75 miles of a public park, 3) within one mile of a National Register District or local Preservation District. 
 
Property types that DO NOT qualify for short-term rentals in Louisville, KY:
 
Multi-family Dwellings (3 or more units under a single roof)
 
You can have more than three listings on a single plot or land (example: The main house is a duplex and the back yard has a carriage house), but not under the same roof.
 
Commercial buildings can also have more than three (3) short-term rental units.

Short Term Rentals in Louisville Condos

All Condos must have a CUP, regardless of owner-occupancy.

Any condo within any R zone:

1) Requires a CUP
2) Must be primary residence of owner
3) Must have written confirmation of permission from condo association

Registration and Permitting –

If the property you are looking to rent is your primary residence, you are only required to register with Louisville Metro Planning and Design Services ANNUALLY, pay $25, and register with Louisville Metro Revenue Commission for payment of occupancy tax.

If the property you are looking to rent is NOT your primary residence, or is in the TNZD (traditional neighborhood zoning district), you must apply for and obtain a conditional use permit (CUP) from Louisville Metro Government in order to legally operate a short-term rental.

Additional short term rental rules to follow…

Other Rules:

  • Obtain a CUP (if necessary)
  • Register annually with Louisville Metro Planning and Design Services
  • Remit 8.5% Occupancy Tax to Louisville Metro Revenue Commission
  • Remit 6% sales tax and 1% transient tax to the State of Kentucky
  • Meet smoke detector requirements
  • Post an evacuation plan
  • Do not serve or sell food or alcohol
  • Do not post outdoor signage as advertisement
  • Occupancy limitations are 2X the number of bedrooms, plus four (4)
  • Failure to register is the equivalent of operating without a permit
  • STR regulations do not supersede lease agreements, homeowner’s association bylaws, covenants, deed restrictions, or any other agreement, law or regulation that prohibits subletting or use of your dwelling as a short-term rental. 
  • The following cities that retain independent zoning authority have not adopted a zoning ordinance specifically allowing short term rentals: Anchorage, Douglass Hills, Graymoor-Devondale, Hurstbourne, Indian Hills, Jeffersontown, Lyndon, Middletown, Prospect, Shively, St. Matthews and St. Regis Park. Therefore, check regulation before beginning the STR process in these areas.

Helpful links:

Applications

1. Short Term Rental Annual Registration Application Form (In Person or Mail Submittal Option)
2. Short Term Rental Annual Registration Application Form (Online Submittal Option) 
3. Short Term Rental CUP Pre-Application
4. Short Term Rental CUP Formal Application

Helpful Links

How to register your short term rental 
LOJIC map to find your property’s zoning
Frequently Asked Questions
Metro Council Short Term Rental Ordinance Amending Metro Code (Title XI, Chapter 115.515–115.521)
Metro Council Short Term Rental Ordinances Amending Land Development Code
Smoke Detector Requirements (Title IX, Chapter 94.02)
Map of Metro Council Zoning Authority Area
Process for Conditional Use Permit approval
Louisville Metro Revenue Commission

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