Bill introduced that would close tax loophole for Airbnb, Vrbo rentals


A bill that would put short -term rentals on the same tax footing as hotels has been introduced.

House Substitute 1 for House Bill 168 was voted out of committee early this year and was placed on the ready list for consideration.

Delaware is one of a dwindling number of states that do not impose a lodging tax on Airbnb, Verbo and other short-term rentals driven by mobile device apps or websites. Apps are also being used by local real estate agents handling short-term rentals.

The lodging industry has argued that the technology creates shadow hotels for owners who own multiple properties, but do not have to pay the lodging tax or undergo inspections.

Opponents note that beach towns already have rental taxes. However, rapid growth in Sussex County has led to properties away from the beach becoming Airbnb and Vrbo sites that do not have to pay lodging taxes. They further argue that the change would add a burden for those renting their properties a few times a year.


They also note that the bulk of the tax goes into the state’s general fund.

The bill has no Republican sponsors or co-sponsors.

The Cape Gazette reported the bill has the support of tourism officials in Sussex County. A portion of the lodging tax is used by local visitors bureau for tourism promotion.

Click here for more details on the legislation.