This post has been updated to clarify that the tax is paid for by people who stay in an Airbnb listing.
Louisville-Jefferson County Metro Government now has an agreement with the popular home rental site Airbnb that will allow it to collect taxes from residents even if they haven’t signed up for the city’s permit program.
Starting April 1, Airbnb will begin to collect an 8.5 percent transient room tax — a tax that hotel guests pay when staying at a hotel but until now could avoid paying while staying in a listing. The home rental website will automatically start collecting the taxes and remit them to the city on behalf of hosts.
The tax revenue funds the Greater Louisville Convention & Visitors Bureau and projects such as the $207 million renovation of the Kentucky International Convention Center.
“We have leisure and convention travelers requesting the option of an Airbnb. We have a growing number of Airbnb hosts in Louisville — this will put them on the same playing field as our other accommodations in paying the transient room tax,” Karen Williams, president and chief executive of the Greater Louisville Convention & Visitors Bureau, said in a news release.
Last fall, Airbnb signed an agreement with the state of Kentucky to collect and remit state sales tax in cities throughout the state, including Louisville.
The news comes just in time for the city to cash in the most popular housing rental time of the year, the Kentucky Derby.
“We believe this agreement will unlock significant new revenue for Louisville Convention Bureau moving forward, and we’re so thrilled to have finalized it well before the Derby,” Laura Spanjian, policy director for Airbnb, said in the release. “With clear, fair rules to regulate home sharing and now a tax agreement to bring in new revenue, Louisville has emerged as a national model for how cities can capitalize from the sharing economy.”
About a year and a half ago, Louisville leaders passed an ordinance requiring residents who rent their homes on popular sites to pay $25 a year for a permit, as well as pay the transient room tax. However, it has had mixed success as some still rent out their houses without registering with the city.
Now, though, hosts — whether or not they have a permit from the city — will have to remit the taxes.
A spokeswoman with the city said that the data given to the city when Airbnb remits the taxes will not include names of hosts and therefore won’t provide a new avenue for enforcement of the city permitting ordinance. Enforcement efforts will continue, however, she added.
Ben Breit, a spokesman for Airbnb, previously told Insider that Louisville could have reaped $710,000 in tourism tax revenue in 2016.
That year, hosts in the broader Louisville area earned $6.2 million in supplemental income from renting their homes. In 2017, that number rose to $10 million, with more than 78,000 guests.