All Forum Posts by: Collin Hays

 Precisely.  The auditor doesn't care what someone else's opinion is.  He's determined to find blood where there is none. 

It's interesting that when the subject is an audit, the usual contributors in this forum are as quiet as a church mouse.  ;)

It's been rough.  We are very small PM.  I have a bookkeeper that works for me maybe 8 hours per week.  On the other side of the table is the auditor, who asks for report after report, multiple years, months within those years, and sliced and diced all sorts of different ways.  It has been stressful exhausting I'm not going to lie.  

One bump in the road is exactly how sales are defined.  To us, a sale isn't a sale until the guest departs.  All of those monies are held in escrow and are not booked as revenue until departure.  Sales are very different to payments.  It's easy to view payments as revenues, but payments are merely deposits for future stays.  So in a given year, you could have say $500,000 in completed sales, but you've collected $650,000, and that's what the credit card companies 1099 you for.  Yet a lot of that $650,000 isn't completed stays in the current year - it's deposits for future stays.  Yet the tax authority has those 1099s and says "Hey wait a minute...you're undereporting...prove to us that you are not."  So you send an excel file with all of the reservations but then, do they even trust that file.  

That's just one basic problem that we are trying to clarify.  Then you have the whole VRBO traveler fee deal.  Who is collecting and paying tax on that item?   It's certainly not me!  I never even see those dollars.

The problem is, it seems that auditors contact you with the automatic bent that you have underpaid and are determined to find it.  They ask you for data, then they don't trust the data that you send.  It's like the burden is on you to prove that you have not underpaid. 

I just called VRBO and they confirmed that they remit taxes on the "traveler service fee".  So I am guessing that they remit to the state of TN a big check every month.  ;)

We are currently in a sales tax audit with the state of TN. The auditor is stating that it is my responsibility, as STR owner, to pay tax on the service fee that VRBO charges guests. How could that be possible? This is a fee separate and apart from the transaction between me and the customer - I never even see the fee. Thoughts on this?

 both

Prices have skyrocketed everywhere. It’s suddenly become in vogue to own your own vacation rental.  But valuations of homes are being made based on 2021 rents.  That’s a problem, because 2021 is an aberration.

Like all investment bubbles, this one will pop.  Like all bubbles, there is always “but this time it’s different” crowd.  It is different, until it isn’t.  

So whether you’re looking at Gatlinburg or Lake Tahoe or Key West, tread carefully.

Short term profit versus long-term income. You just have to do the math and consider what is best for your situation.  Yes, you are going to sell high, but you’ll be buying high, too.  Or, at least higher than a year ago. In a year, prices could be higher or lower than today.  Anyone who says they know for sure is lying.

 No, but I did stay at a Holiday Inn Express last night.  

It's difficult to advise without actual numbers. Loan amount, home value currently, home value post renovation, STR projected rent before and after, how much disposable income you have, projected LTR rent before and after renovation.

So there’s about 9 critical pieces of info that are needed to give you any meaningful advice, and probably a few other details.