Schaumburg is the latest Illinois community to enter into an agreement with Airbnb that will allow the village to begin receiving taxes from the online vacation rental giant.
Starting Thursday, an 8 percent hotel and motel tax will be added to the cost of Airbnb rentals in the village, according to the home-sharing business and Schaumburg officials.
News of the agreement comes nearly a year after the village board approved an ordinance to make it clear that short-term vacation rental properties advertised on sites like Airbnb and Vacation Rentals by Owner are subject the same tax as local hotels and motels.
Schaumburg officials were prompted to consider village-wide regulations of such rentals after learning about an elaborate furnished treehouse in town advertised for rent on Airbnb.
Schaumburg resident Dan Alexander has used Airbnb to rent out his treehouse — which includes a fireplace, air-conditioning, WiFi and cable TV — to travelers since 2013.
Airbnb and similar online platforms match up travelers with property owners who rent out rooms or entire homes.
Alexander said he encouraged village officials to hammer out a tax remittance agreement with Airbnb because financial transactions between hosts and renters are all handled through the online platform. Without the agreement, hosts would have to collect and remit the tax to the village themselves, which Alexander said “doesn’t work with the Airbnb scenario where we don’t exchange money.”
Airbnb spokesman Ben Breit said the agreement ensures the village will recoup 100 percent of the taxes they’re owed from company bookings.
“I think an important thing to keep in mind when considering Airbnb hosts is the vast majority are not professional vacation rental people,” he said. “They’re just regular folks sharing a room. … (The agreement) just makes it easy for everyone.”
Though the village passed the ordinance requiring Airbnb hosts to pay the tax, Lisa Happ, Schaumburg’s finance director, said it took some effort to just to reach the appropriate company representatives to begin negotiations.
She said village officials finally began talks with the company this spring and the taxation agreement was finalized over the course of a few weeks. Happ said she’s not sure how much the village can expect to receive in tax revenue from Airbnb because “we don’t have any estimates as far as how often the listings are actually being rented.”
The agreement is not retroactive, meaning the village won’t receive any taxes from bookings prior to June 1, Breit said.
There are about 15 Schaumburg homeowners currently renting rooms or entire houses, including Alexander’s treehouse, on the platform, Breit said, adding the number has grown over the past couple of years.
The company has similar agreements with other Illinois municipalities, including Oak Park and Chicago, though the Chicago ordinance, which both regulates and taxes home-sharing rentals, was delayed by lawsuits and continues to face legal challenges.
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Travelers booking Airbnb stays in Chicago are subject to a 4.5 percent hotel accommodation tax and a 4 percent shared housing surcharge. Oak Park officials approved a 4 percent tax on Airbnb rentals last fall. According to the company’s website, some listings in Cook County are also subject to a 1 percent county tax.
Breit said the tax agreements vary depending on the state. In Illinois, he said, hotel and motel occupancy taxes are typically assessed by individual municipalities and “we don’t have the resources to reach out to everyone.”
“What we try to do is make it known far and wide this is important to us that we want to help our hosts pay their fair share and help local governments collect what they’re owed,” Breit said.
While Alexander thinks Schaumburg’s 8 percent tax “is a little high,” he said he’s happy to contribute to the village’s finances so long as he’s not the only Airbnb host paying it. He’s still renting out his treehouse on Airbnb, and it’s frequently booked for stays, he said, so he hopes the new tax won’t hurt business.
“Hopefully, it won’t have too big of an effect,” he said. “But the village wants their cut, and they’re going to get it.”
Lee V. Gaines is a freelance reporter.