Lexington homeowners made $3.1 million renting their homes and apartments on Airbnb in 2017, a more than 70 percent increase from the $1.8 million Fayette County hosts earned in 2016, according to information released by the short-term rental giant last week.
Airbnb has tax collection agreements with the state, counties and with cities such as Lexington and Louisville. The state agreement that took effect Oct. 1 has generated more than $700,000 from a 7 percent state tax in the first six months, Airbnb announced last week. The city of Lexington’s agreement took effect Feb. 1 and it’s too early to say how much the 8.5 percent Fayette County hotel and motel tax on Airbnb stays has generated.
But the city of Lexington now wants other short-term rental companies such as HomeAway and VRBO, both owned by Expedia, to collect and remit the 8.5 percent in hotel taxes on stays. That 8.5 percent tax on hotel and motel stays in Fayette County and funds VisitLex, the tourism bureau. A portion of that tax will pay off debt for a more than $230 million renovation and expansion of the Lexington Convention Center. Brick-and-mortar hotels and motels have also long argued that web-based home sharing had an unfair advantage because the stays were cheaper without the state and local taxes tacked on to the bill.
“Our goal is to get them in an agreement as soon as possible,” said Rusty Cook, the city’s director of revenue. “I have reached out to other areas to see what they are doing with them and plan to do the same with the state.”
Email requests for comment from HomeAway and VRBO were not returned. But according to their websites, the web-based companies have tax remittance agreements with several jurisdictions including the state of Idaho, Washington D.C., Puerto Rico and Los Angeles.
A search for Lexington homes on HomeAway and VRBO found more than 160 properties available for short-term rentals. According to Airbnb data, May is the busiest month for home and apartment rentals in Fayette County. Keeneland, the Kentucky Derby, the University of Kentucky and high school graduations often fill hotel rooms, sending people to home-sharing sites to find a place to stay.
A spokeswoman for the Kentucky Finance and Administration Cabinet, which oversees state tax collections, did not return an email or phone calls about whether the state was pursuing tax agreements with HomeAway and other home-sharing websites.
Home-sharing has boomed in popularity in Kentucky over the past 18 months, data released by Airbnb shows. In total, Kentucky Airbnb hosts earned $19.2 million in supplemental income last year and welcomed 166,000 guests. That’s nearly double the $10.2 million Kentucky hosts earned in 2016. In Lexington, 26,630 guests stayed in Fayette County properties in 2017, a dramatic jump from 1,500 guest stays in 2016.
But new apps and websites for home sharing are also entering the market. It can be frustrating for tax collectors like Cook. Most websites don’t list an exact address for the home or apartment, making it difficult to find the homeowner and collect the tax for the stay. Many of the websites also have limited company contact information, making it tricky for taxing authorities to even contact a company.
“I wish we could be further along with VRBO and HomeAway but it is so hard to find an actual contact with these groups. But my team is determined to make it work just like we did with Airbnb,” Cook said.