Bye Bye Air BnB…maybe ?

As it has in cities that include San Francisco; Portland, and Newark AirBnB has signed an agreement with Los Angeles to collect and remit lodging taxes on behalf of its hosts.

The tax collection, at a rate of 14 %, is set to begin in August. The agreement also allows the city to audit the tax payments and to go after hosts for previous tax liabilities.images

LA Times reported that city officials hope the agreement will generate tax revenues of at least $5 million annually, BUT they do not want the agreement to be misinterpreted as legalization of short-term rentals.

In Los Angeles, many of AirBnB’s current listings would be considered illegal because of the city’s zoning laws regarding short-term rentals. In most areas of the city, it is illegal to rent out a home for less than 30 days. Hosts who are renting out their homes on AirBnB and other platforms are required to pay lodging taxes, but the city has had difficulty collecting the taxes, which is another reason why officials said they agreed to this deal with AirBnB. money bags

These city tax agreements are at the core of AirBnB’s strategy for legalization in various jurisdictions around the world.

The move by Los Angeles city officials to agree to a voluntary collection agreement with AirBnB comes when the city is considering new legislation to regulate the types of short-term rentals offered by platforms such as AirBnB, HomeAway, and FlipKey.

The new law would legalize short-term rentals for residents for up to 90 days per year, but it requires platforms like AirBnB to provide the city with information about the hosts, their addresses, and the number of days they have rented their homes and for how much.

Property landlords also have to register with the city, and rent-controlled or designated affordable housing would be exempt from participating in short-term rentals. Hosts who fail to comply with the law would also be fined, as would websites that display listings that violate the new law. Sites that don’t provide data to the city would likewise be fined.

UnknownThis legislation awaits approval from the Los Angeles City Council, but given how it is structured, it’s debatable whether it would survive legal review by the courts.  AirBnB and other short-term rental platforms can argue that they are not responsible for what is advertised on their sites or what their users do on their sites.

Other cities in Southern California have taken much more restrictive approaches to short-term rentals. Santa Monica has essentially banned short-term rentals, and Anaheim in Orange County, is set to ban them as well.

In an interesting coincidence –  Los Angeles will be the site of AirBnB’s annual convention for its host community, AirBnB Open, in November.


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