T.O.T. – ALL Vacation Rental Owners Need to Know

335ed1_d276eede1f154ae4ba391f6d2511658bThis week the property owners and management companies who have vacation rental permits in the city of Rancho Mirage were sent an email regarding T.O.T. (transient occupancy tax).  Besides the deadlines for tax submission, the email also reminded owners of the consequences of tax fraud which some owners may not realize they are doing right now.

Long term vacation rentals are generally understood to be rentals of one month or longer.  There may be variances in each city’s definition of the length of these rentals; for some cities it is twenty-eight nights, some thirty and others thirty-one.  You should know that booking a reservation for a one month stay to avoid T.O.T. or to satisfy your HOA (home owners association) rules on length of renter stays, is consider fraud and a felony.  In other words, if you receive an inquiry for a week, three nights, or even one night short of the minimum nights required by your city as a long term rental, and you are audited, you could be charged with fraud.  Depending on the views of your city’s officials on vacation rentals, there could be fines or more serious consequences.

This is widely practiced, but in owner’s defense … it is usually not aimed at saving the tenants the cost of tax, but more to accommodate the owner’s need or desire to only take long term, or monthly rentals.  Most cities do not require a vacation rental permit for properties that solely take long term rentals, but all should know, whether permitted or not … renting your property for one month to tenants staying less than what the city considers a long term stay, could come back to haunt you.

Cities have full rights to the names and contact information on each and every one of your tenants.  If you are audited, as more and more cities are now doing, you could be charged with fraud and a felony.  Likewise, a tenant could be charged with the same if they book your property as a long term with the intent of avoiding T.O.T.

Picture:  http://www.thetamarine.net/#!audits/c1n2c

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