Fayette County

Listing your house on Airbnb? You may owe Lexington hotel taxes, fees

Lexington-Fayette Government Center.
Lexington-Fayette Government Center.

This month there are more than 375 Lexington homes and apartments for rent on popular websites such as Airbnb and HomeAway.

But only 17 of those listings are paying Fayette County hotel and motel taxes, Lexington city officials said Tuesday.

City officials and VisitLEX, Fayette County tourism’s group, have been working for more than 18 months to educate those that list property on the increasingly popular short-term rental websites that they need the appropriate licenses and must pay taxes.

But compliance has been tricky, the numbers show.

Now the city and state are trying to get those websites to automatically add the tax to either Lexington listings or all Kentucky listings.

Rusty Cook, director of revenue for the city of Lexington, said in addition to paying hotel and motel taxes, short-term rentals must also pay a $100 fee and get a certificate of occupancy.

Finding people who are renting homes or rooms on short-term rental websites are often hard to catch, Cook told the Urban County Council Budget, Finance and Economic Development Committee. The rental address is not provided until a credit card is entered, Cook said. The city can’t afford to do that. The websites used to show the outside of the home or apartment, which made it easier for revenue officials to find. Now, the websites typically only show the inside of homes.

“It’s a bit like trying to find a needle in a hay stack,” Cook said.

The city has sent 191 letters to those they can find, he said. Fifty-six are licensed but have not reported any short-term rentals. Approximately 116 have failed to respond to letters inquiring about whether they are renting property on the short-term rental websites. Only 17 are remitting hotel and motel tax. The local hotel tax of a little more than 9 percent is split between VisitLex and the Lexington Center Corporation, which oversees Rupp Arena, the convention center and the Lexington Opera House.

Since 2015, the amount of taxes paid by short-term rentals totaled $35,352.

Mary Quinn Ramer, the president of VisitLEX, said Louisville was successful in getting Airbnb to automatically collect the local hotel and motel taxes.

Ramer said she had been working with Airbnb to collect the taxes on Fayette County listings. She had made headway but then officials with Airbnb abruptly stopped talking to VisitLEX.

Ramer said Florida was successful in having Airbnb collect hotel taxes on all of its listings statewide.

Ramer said she is working with the Kentucky Travel Industry Association and other state groups including the Kentucky Department of Revenue to work with Airbnb for a statewide collection option.

Ramer said they have been told that Airbnb has hired someone at the state-level to work on the issue. They are hoping those stalled discussions with the short-term rental giant will continue.

A spokesman for Airbnb said they were not aware of a lobbyist being hired in Kentucky but pledged to work with cities to address the tax and licensing issues.

“We proactively seek agreements with municipalities worldwide that would allow us to collect and remit taxes on behalf of our hosts. We would love nothing more than to secure such a deal with Lexington,” said Ben Breit, a spokesman for Airbnb.

Cook said they are focusing on education and compliance right now. They are working on a primer for those who want to operate short-term rentals explaining the tax obligations that will be posted on VisitLEX and the city’s websites. Meanwhile, they will continue to put pressure on Airbnb and similar websites to automatically collect the hotel tax.

Beth Musgrave: 859-231-3205, @HLCityhall