The Impact on Vacation Rentals

What Senate Bill 50 Means to the Vacation Rentals in Kansas
By Jim Prugh, Owner, Lindsborg Vacation Rentals

As a vacation rental owner, I’d like to share how Senate Bill 50 (SB50) affects the vacation rental community in Kansas. I learned that short-term vacation rental owners usually pay sales and transient guest taxes, but not always.

Like many of you, my properties are listed on Airbnb. But the majority of my guests book directly through my business website that employs “property management software” to integrate bookings, dynamic pricing, newsletters and snagging guests’ emails.

If your vacation rentals are just a side hustle, read no further. Stay with Airbnb – they are good, but not as great as guests and hosts believe.

If you run your vacation rental business professionally, please continue.

Until recently, none of my properties fell under the Kansas Department of Revenue (KDOR) Publication 1540. KDOR advised me years ago that my studio apartments and individual homes were not defined as “hotels,” so taxes wouldn’t apply.

Seeking clarification of SB50, KDOR provided a five-page private letter ruling stating:

  • Notice 21-24, Section 1(b)(2) defines a “marketplace facilitator” as an entity that offers “rooms other that hotel rooms.” Taxes take effect when annual sales exceed $100,000.
  • A marketplace facilitator below the $100,000 threshold isn’t required to collect taxes, but the “marketplace seller,” the property owner, is required to do so.
  • Each of my vacation rental properties is offered through my website, so KDOR treats a “marketplace seller” as an “accommodation broker,” collecting taxes for each property with two or more bedrooms.

Based upon KDOR’s letter, guests who book a short-term vacation rental with two or more bedrooms, either through Airbnb or my website, must pay sales and transient guest taxes.

Guests who book a short-term vacation rental property with less than two bedrooms through Airbnb must pay these taxes.

But guests who book a vacation rental property with less than two bedrooms directly through my website do NOT pay these taxes.

Let’s say that you’re operating your vacation rental business offering a studio apartment, a one-bedroom house and a large four-bedroom home with a pool that you own or manage for someone else.

If each property is listed on Airbnb or VRBO, these large companies will collect sales and transient guest taxes.

If each property is also listed on your website, your business will collect the sales and transient guest taxes only for the large four-bedroom home. Taxes are not collected on the studio apartment or one-bedroom house.

Some of you might wonder how to list vacation rental properties on your own website. The simplest step is to go to “Google My Business” and provide a description and photos – Google will create a very rudimentary website, but add search engine optimization.

Or select your own domain address through Namecheap or GoDaddy. Create a simple webpage using WordPress, Wix or Squarespace. Add a catchy, yet accurate, description and photos (hire a professional photographer).

My website is linked to a property management system named OwnerRez. Others use Cloudbeds. There are dozens more out there, so choose wisely.