Philly to Tax Airbnb Rentals

Home rental services like Airbnb have, until recently, been technically illegal in the city of Philadelphia. The popular service hooks up homeowners with short-term renters (so that people can rent an extra bedroom or a vacant apartment, for instance), similar to hotel stays  – but those who use Airbnb and similar services have not had to pay Philadelphia’s 8.5% hotel tax. That is about to change.

Those who rent on Airbnb will have to pay an 8.5% hotel tax.

Yesterday, the City Council voted unanimously (15-0) to institute the hotel tax on home rentals. The bill legitimizes home stays of 30 days or less, but places new restrictions on this kind of service. First of all, owners who rent out their homes for more than 90 days a year must get a rental license. Nobody is allowed to rent out their home for more than 180 days a year. Previously, city law didn’t allow for home rentals in residential neighborhoods. This means that sites like Airbnb were technically operating in something of a black market in Philadelphia.

The Greater Philadelphia Hotel Association had argued that Airbnb operating unregulated and having rentals not pay the hotel tax gave the home rental business an unfair advantage. On the other end of things, Airbnb hosts argue that they do not provide any of the amenities of a full-service hotel and are just trying to make a little extra money. The timing of the measure has seen the city accused of instituting the law as a money grab. With the Pope’s visit happening in September and the city rental market expected to swell, businesses like Airbnb will likely see a brisk trade. Philly has been accused of capitalizing on the rush.