TN - Gatlinburg/Pigeon Forge/Sevierville STR taxes

[Richard Lee]

We finally have our STR property set up and rolling, listings cranking on Airbnb and VRBO, and on our way towards getting enough 5 star reviews to kick the machine into high gear. Still have some deferred maintenance from prior ownership to deal with, but mostly there. Kudos to those who've helped us get here @Avery Carl  @Rhonda Blue @Luke Carl @parkerborovsky 

Curious on the nitty gritty details re: taxes.... ie how often, to which entities, etc... Now, of course we're capturing everything re: expenses, purchases, lodging income + cleaning + the cuts taken by listing services, the odd paypal charges, etc.

I know that Airbnb collects and remits SOME taxes for a percentage of the STR rental, but I'm not certain it's 100% of the necessary taxes (ie does that include lodging tax, excise tax as well?)... Whereas VRBO doesn't to my knowledge collect anything for you at all.

We have a Tennessee based LLC, business license, registered to pay sales taxes, excise taxes, etc. I thought we were covered... but reading lately how Sevierville itself may have ideas beyond TN-based tax requirements which may require further action.

For those of you veterans in this local market, what are your 'stay out of prison' tax best practices and lessons learned? 

Thanks much,

Rich

[Dave Homyak]

Here is what the taxes are:

AirBnb- They collect the 9.75 sales tax.  This is 7% state and 2.75% local.  You need to collect the 3% local lodging tax.

VRBO- They collect nothing, so you will need to collect 12.75%.

Taxes are paid on nightly rate, as well as cleaning fee.

Sales tax is paid to tntap.tn.gov online.  You need to set this up the month before the tax is due, or you will be on the phone with them for quite a while.   Local lodging tax is paid to Sevierville County with a coupon they send you.

You will get a penalty if you don't do it every month on time.  I found that out the hard way.

The math is a little tricky IMHO, in that the money you get from AirBnb had the tax included, so if you multiply the amount you received by 3%, you are actually paying too much.  You need to divide the total amount received by 1.03, and then multiply that amount by 0.03.  Same with VRBO, but divide by 1.1275.

If you have Excel, I will be happy to email you a spreadsheet that I made that allows you to put in the amounts received from AirBnb and VRBO and what you owe to each entity is listed at the bottom of the sheet.  Just send a PM with your email requesting the cabin income and expense sheet.

The sheet is actually what I use to keep track of not only income, but expenses.  So if you are looking for something like that, again PM with your email.