Rent is subject to the short-term rental lodging tax and is defined as the consideration received for occupancy, valued in money, whether received in money or otherwise. Rent does not, however, include the following:
- Municipal taxes, if any;
- Linen rental fees;
- Cleaning fees;
- Insurance fees;
- Security deposits;
- Other add-on fees not usually considered part of the rent; or
- Money received from a month-to-month holdover lease.
A “short-term rental” is defined as a house, duplex, multi-plex, apartment, condominium, houseboat, trailer, or other residential dwelling unit where a tourist or transient guest rents sleeping or living accommodations rented for no more than 31 consecutive nights.
A short-term rental does not include the following:
- Hotels, motels, and tourist homes (subject to a separate hotel, motel, or tourist home Delaware business license);
- Rooms, groups of rooms, or other spaces used for assembly;
- Dormitories or residential facilities of educational or vocation institutions;
- Healthcare facilities licensed by the State;
- Campsites, cabins, or similar facilities in campgrounds;
- Overnight camps for adults or children; or
- A rental arranged directly by the property owner, on a casual and isolated basis where the rent is substantially below market rates and the property is used as a rental for no more than 10 nights in aggregate per calendar year.
The State’s short-term rental tax is due to the Delaware Division of Revenue no later than the 15th day of the month following the month of collection(s) via the State’s online taxpayer portal (tax.delaware.gov), and any tax imposed by a Delaware municipality should be collected and remitted to the municipality.
If the owner of the property uses a third-party rental listing company (e.g., Airbnb, Vrbo, Booking.com, Expedia, Tripadvisor, etc., or a local or similar rental listing company) to book the short-term rental, only the third-party rental listing company is required to collect and remit the appropriate short-term rental accommodations tax. Additionally, the third-party rental listing company that books the short-term rental must be a Delaware licensed accommodations intermediaryand have a Delaware Business License prior to conducting their services.
The owner of a short-term rental property who does not use a third-party intermediary to book short–term rentals is required to collect and remit the appropriate short-term rental tax and must be licensed by the Delaware Division of Revenue (required to obtain a Delaware accommodations intermediary business license).
Additional guidance can be found in the State of Delaware’s Technical Information Memorandum 2024-1.
As always, if you have any questions, please feel free to reach out to one of our professionals.
