Papal Visit Inspires Expanded Philly Tax on Short-Term Rentals

Posted on Mon, Jul 20, 2015 ©2021 Drucker & Scaccetti


Philadelphians are counting down to the 2015 World Meeting of Families, where Pope Francis will make his first visit to the area. This two-day papal visit will bring a record number of visitors into the city and surrounding areas. The latest estimate exceeds 2,000,000 people!  The preparations are extensive; so much so that new legislation has been introduced that may impact you if you are thinking about renting your home to travelers.

 

As a result of the expected influx of visitors, the hotels in Philadelphia quickly began to fill up when the Pope’s visit was confirmed.  Entrepreneurial home owners and apartment dwellers quickly saw an opportunity to make a little cash.  But not without the City of Brotherly Love asking them to share some of the love (and their cash).

 

Earlier this month, Philadelphia City Council unanimously passed new regulations for short-term rentals.  The new guidelines make the popular service Airbnb legal for residents in the city.  Philadelphia is now the largest city in the country to legalize the service.  Now, this may all sound great, but if you plan on renting out your home during the World Meeting of Families, the Democratic National Convention, or just during that summer getaway, you should be aware of the fine print.

 

Here is a simplified Tax Warrior primer on the regulations:

 

Location:

Previous zoning restrictions have been adjusted.  Residential areas within the city limits that did not previously allow short-term rentals now do.  If you don’t exceed the maximum rental limitations (see below), you’re most likely eligible to rent out a room or your entire home without needing to acquire a license.

 

Limitations:

If you rent out a room or your entire home for less than 180 days per calendar year, and each rental does not exceed 30 days, the City of Philadelphia no longer requires you obtain a license.  The only requirement needed to satisfy Philadelphia compliance would be the remittance of the 8.5% hotel tax imposed on these short-term rentals.  Starting July 15, 2015, the department of revenue will have a website available for your tax paying convenience.  However if you utilize Airbnb to facilitate your rental(s), they can now collect and remit the hotel tax on your behalf.

 

Federal Implications:

When renting out a personal residence, the IRS and Philadelphia have different requirements for determining when the activity becomes a taxable event.  If you rent out your home for 14 days or less in a calendar year, you are not required to report the activity on your individual income tax return.  If your home is rented out for 15 days or more, you are required to report the related net income from the rental on your tax return for that year.

 

There you have it. The papal visit giveth, and the City of Philadelphia taketh! But don’t fret.  The Tax Warriors® at Drucker & Scaccetti are chock full of experienced tax advisors with a focus on real estate and structuring a rental property.  Have you been considering renting your place for the papal visit, the 2016 DNC Convention or any other short-term situation?  Call on us.  For 25 years we have helped clients with virtually every issue involving city taxes.  We are always prepared to help you with this or any tax-related matter.

Topics: rental, Philadelphia, Tax, papal, Francis, World meeting Families, home, Pope

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