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With recent technology disruptions and online booking agents, the short-term rental market is now a major global tourism player. Airbnb, one of these online platforms, has surpassed Marriott International (the leading hotel chain in the world according to Smith Travel Research) in the number of rentable rooms across the globe. These properties largely operate in the dark without collecting tax (Gross Receipts Tax and Lodgers’ Tax) or complying with public safety regulations and licensing.
Is this happening in New Mexico? YES!
In Janurary 2017, New Mexico Hospitality Association commissioned an independent census of the short-term rental market in New Mexico. This includes rental properties that are intended to be rented to consumers for less than 30 days.
Statewide Initial Findings:
*Revenue projections based on an Airbnb national average 40% occupancy rate and 50% compliance. National average occupancy rate estimate provided by Smith Travel Research (STR).
1. Need for Parity
Due to potentially avoiding Gross Receipts Tax and Lodgers’ Tax, some of these properties can have a 12% - 15% competitive advantage over traditional lodging establishments, depending on the GRT and Lodgers’ Tax rate of the community. Even though many of these short-term rentals do not collect and contribute to Lodgers’ Tax, they are benefiting from contributions to Lodgers’ Tax from others that pays for marketing
2. Need for Unified Enforcement Definition
Exemption G of the “Exemptions” section of the Lodgers’ Tax Statute (3-38-16) is a tax loophole for these short-term rental properties. Properties with less than three rooms are exempt from the Lodgers’ Tax Statute, but the definition of a ‘room’ is applied differently across counties and municipalities around the state.
3. Need for Statewide Solution
Removing Exemption G from the”Exemptions” section of the Lodgers’ Tax Statute (3-38-16) will formalize all short-term rental properties, streamline local enforcement efforts, and create a level playing field for the entire lodging community.
The 2017 Legislative Session will feature several policy issues of great concern to NMHA and the hospitality and tourism industry. Below is a list of the Bills, Memorials and Resolutions currently active in the legislative process we are tracking:
House Bill 266 - Short-Term Rental Occupancy Tax
Senate Bill 254 - Short-Term Rental Occupancy Tax
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