Vacation Rentals by Owner - more taxes coming?
In a bid to raise revenue for Hilton Head Island, the town is looking at implementing a change to the way vacation rentals by owner are taxed.
Fearing that around three quarters of a million dollars each year is being lost through non-payment of hospitality taxes from individual owners, the Town of Hilton Head is proposing to make all owners apply for business licenses first.
The changes have definitely been in the works, with pressure coming from some of the local Hilton Head vacation rental management companies. Whilst they pay the 10% tax on each unit, an owner renting directly often does not, even though the law requires it.
With the rise of internet bookings and sites such as VRBO.com this is a growing problem for both the Town of Hilton Head, and the vacation rental management companies who complain they are not able to compete on an even playing field.
Rental owners however insist that they are already overtaxed, as they pay a 6% property tax on each unit, compared with the 4% rate for local residents.