Vacation-home rental tax bill tabled for a year

RICHMOND

A bill that would specify that private homes rented to vacationers are subject to sales , hotel and professional license taxes was tabled for the year in the Senate Local Government Committee on Tuesday, to the delight of property owners who would be affected.

The proposal was introduced by Sen. Emmett Hanger Jr., R-Augusta, in response to concerns raised by constituents whose residences on the grounds of a ski resort are next to homes that are rented out by their owners.

But a real estate broker in South Hampton Roads and some property owners said the bill, SB471, would be devastating for the owners of homes that are

rented to summer vacationers.

“This would destroy us,” said Betsy Atkinson, co-owner of Virginia Beach’s Sandbridge Realty. “This is probably the worst thing I’ve ever heard of.”

The Sandbridge community in southern Virginia Beach has about 1,200 homes. Of those, about 700 are rented at various times of the year, Atkinson said.

Under Hanger’s proposal, any home that is regularly rented would be liable for sales tax, transient occupancy tax and local business license tax.

Atkinson’s company is one of two that handle the bulk of Sandbridge rentals. Her biggest fear was that ambiguous wording in the bill could have prohibited owners from renting out their homes .

At Tuesday’s hearing, Hanger presented an amendment to clear up that confusion.

“That was intended to make clear that we wouldn’t be doing anything that restricts their ability in a residential area,” he said of the amendment, calling the original language “a little bit far-reaching.”

Despite that amendment, the committee voted unanimously to table the bill until next year .

“All I wanted to do was to clarify the definition of short-term rental,” Hanger said. “Once we clarified it, the local governments would be able to impose those taxes, and that’s a fairness issue.”

Hanger said his bill would let localities apply taxes similar to those paid by hotels, time-share units and bed-and-breakfast establishments to private homes that are rented.

Requiring small property owners to pay those taxes takes away the little advantage they have to compete, Alexandria resident Koo Yuen said at the hearing.

“The vacation home should be given the edge,” said Yuen, who owns a home in Virginia Beach and another in Williamsburg that he rents.

“You should not complicate the operation of the vacation-home owner,” he added.

“Virginia is not a 12-month season. We need the income because we only rent for three months.”

Atkinson estimated that 90 to 95 percent of vacation rental homes in Hampton Roads are handled by management companies, and said state sales tax and local lodging tax are paid on those homes.

Sandbridge homes also are subject to a sand replenishment tax, Atkinson said.

Julian Walker, (804) 697-1564, julian.walker@pilotonline.com