Home-sharing service Airbnb has been involved with several cities in negotiations over taxes and it has wrapped up the negotiation today with at least one major city: Los Angeles. According to a report, the service has agreed with L.A. city officials to start collecting lodging taxes from hosts that rent out their entire place or just a room using Airbnb. This taxation opens up a new source of revenue for the city which could very well run into millions of dollars every year.
The city mandates that hosts who either rent a room or their entire place pay the same kind of lodging taxes that hotels have to pay. Tax officials in the city have faced trouble tracking down hosts and making them pay, so now Airbnb is going to do it for them.
This deal takes effect next month. What will happen is that Airbnb users will have to pay the entire tax upfront when they are confirming the booking. Airbnb will simply collect the tax amount from them and hand it over to the city.
Planning officials are quick to point out that despite this deal between Airbnb and the city, it doesn’t mean that short-term rentals are legalized in L.A. It remains illegal to rent a home for under 30 days in most of Los Angeles but owing to the popularity of services like Airbnb, the city is considering new law that is going to legalize and regulate these short-term rentals.