Short-Term Rentals (3 of 4)
In the previous blog post, we reviewed the tax and regulatory climate for short-term rental operations in Massachusetts. New Hampshire has some of the same requirements, but has made strides in reducing the complexity for the operator.
New Hampshire has some of the same requirements as Massachusetts but has made strides in reducing the complexity for the operator.
First, a little history: Before the laws caught up to the trend of the short-term rental market, an operator was technically required to register and collect Meals and Rooms / Rentals tax (M&R) and remit monthly to the state. These requirements were similar to a hotel’s filing obligations. Many operators didn’t have experience or knowledge of this requirement and were not compliant. Eventually, the State started enforcing the laws on the books and charging operators taxes and penalties for the unfiled returns. This often simply required the state auditors to search the listing sites for rooms available in New Hampshire and cross-referencing this with the registrations filed with the state. This enforcement led to many operators having to deal with these audits and starting to prepare the monthly returns to remain compliant.
In response to this, Airbnb reached an agreement with New Hampshire to obtain the M&R tax license and collect, remit, and file the returns monthly for any booking through Airbnb. Therefore, if you only book rooms through Airbnb, everything is being taken care of on the back end as far as the State of NH is concerned. The NH M&R rate is 9%. Also, make sure to contact your local municipality, as many have started regulating and possibly taxing short-term rental operations.
What if I’m already registered?
If you had been filing M&R returns for nights booked on Airbnb prior to the change on November 1, 2017, you can now surrender your license if you will only book nights through Airbnb in the future. This can be done by filing a final M&R return Form DP-14 as well as a DRA Form CD-100 to surrender license number.
What if I’m out of compliance?
For nights booked prior to November 1, 2017, or nights booked through services other than Airbnb after that date, the best option is the NH Voluntary Disclosure Program. Under this program, the host comes forward to disclose the amount of tax that is delinquent in a written agreement and has 30 days to report and pay the taxes due. In return, the state will waive penalties (but not interest) on the tax due. This can only be done if the state has not yet sent you notice of noncompliance, so it’s important to get ahead on this point.
The VDA can be done by the operator or through a representative (accountant). Ask us for more information on the VDA.
What if I manage the rental myself or through a listing agent other than Airbnb?
For listings outside of Airbnb, please do some research and be aware of the requirements. You will need to register for an M&R tax license number, post it on your listing and in your short-term rental, and will need to file monthly returns, even if no tax is owed.
Also be aware of the 185-day rule for long-term rentals. Tax is supposed to be collected on long-term rentals until 185 days have passed, at which point the tax should be refunded to the patron and the operator should apply for a credit from the State towards their future M&R returns.
That said, overall, NH still lives up to its reputation of being a business-friendly state, with an eye on reducing the burden of compliance where possible.
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