Full-time, part-time rental owners have more toolsAugust 19, 2014 @ 9:11 am
The vacation rental industry continues to thrive. More and more owners are renting out their homes, be they in-city residences or second-home retreats.
They are finding that more families prefer homes to hotel rooms and more young travelers can afford to rent a sofa rather than a suite.
Helpful tools that enable vacation owners to run their businesses more efficiently also are on the rise. For example, HotSpot Tax Service specializes in gathering and paying city, county and state taxes for homes throughout the country.
"My brother and I bought a three-bedroom condo in Vail in 1999 and decided to rent it out to defray the costs," said HotSpot founder and partner Rob Stephens. "While exploring ways to best execute scheduling and cleaning, we discovered three different tax forms that needed to be registered and paid."
That discovery really provided the basis for a business model. HotSpot now charges a one-time set-up fee of $49.95 and monthly ($6) or quarterly ($11) filing fees and a $19.95 annual fee per property. Its six basic services:
- Obtain any required business or tax licenses based on location
If an owner has not collected these taxes in the past or just purchased a property, HotSpot obtains the proper registration and license from the appropriate tax jurisdictions.
- Notification of the exact tax rate needed to charge renters
Based on the legal address of your vacation property, the company determines the applicable tax jurisdictions, tax rate and filing frequency. It also keeps owners informed of any tax rate or rule changes.
- Reporting reminders
The system tracks taxes that are due and automatically sends an email when it is time to report rental activity and file tax returns.
- File monthly/quarterly tax returns and remits payments on an owner's behalf
Customized software computes and collects the taxes due directly from an owner's bank account. The company files tax returns electronically or prepares and files the tax return forms and remits payment of the taxes on the owner's behalf.
Retains copies of all tax returns filed. A history of all reported revenue, tax payments and tax calculations are posted to a personal account.
Handles any correspondence with the tax jurisdictions. If an owner receives a letter, notice or any correspondence from a tax jurisdiction, HotSpot provides a response.
Another new vacation property service created by Stephens is RentPayment.com, which molded its electronic-payment program developed for apartments and commercial properties to fit the vacation rental industry.
RentPayment allows owners to accept credit/debit cards and electronic checks, as well as convert paper checks to electronic payments. The group options his company has set up with rental sites like HomeAway (parent of VRBO) are far less expensive than if an owner were to go it alone.
"For about $130 a year, we take care of all tax issues," Stephens said. "It offers owners some peace of mind and also is a tax-deductible business expense."
Another new vacation property service is San Francisco-based Yapstone, the parent company of RentPayment.com.
"What blows owners away is that we can get them better rates and fees on their credit cards than they can get anywhere else," said Matthew Golis, Yapstone's chief executive. "There's no set-up fee, no monthly fees . . . it's a fully operational expense platform with an electronic check option. The vacation rental industry has been incredibly fragmented and what we offer no single owner could really do by himself."
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