Bend Expands Transient Room Tax Audit to Include Vacation Rentals

The City of Bend is conducting an independent audit of Transient Room Tax (TRT) collection. TRT is the tax paid when someone stays at a hotel, motel or rental property in Bend. This year, the audit will be expanded to include vacation rental properties that are not registered with the City in an effort to increase awareness and compliance with the TRT code.

These types of rental properties are typically advertised on websites like VRBO, Craigslist and AirBnB.  Currently, 189 vacation rental properties are registered with the City and are collecting and remitting TRT taxes.

The City has contracted with an independent firm, MuniServices, specializing in tax compliance audits for local governments, to perform a compliance audit and establish a comprehensive list of vacation rentals currently out of compliance with the TRT code. The audit is scheduled to take place through August. Following this initial audit, the City will continue efforts to enforce TRT compliance amongst rental properties.

If you own a vacation rental and are currently not registered or unaware of the City’s TRT code, please visit bendoregon.gov/roomtax.

Renting Your Vacation Home

A vacation home can be a house, apartment, condominium, mobile home or boat. If you own a vacation home that you rent to others, you generally must report the rental income on your federal income tax return. But you may not have to report that income if the rental period is short.

In most cases, you can deduct expenses of renting your property. Your deduction may be limited if you also use the home as a residence.

Here are some tips from the IRS about this type of rental property.

• You usually report rental income and deductible rental expenses on Schedule E, Supplemental Income and Loss.

You may also be subject to paying Net Investment Income Tax on your rental income.

• If you personally use your property and sometimes rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. The number of days used for each purpose determines how to divide your costs.

Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.

• If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received. For more about this rule, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).

• If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income.

Get Publication 527 for more details on this topic. It is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).