Sales Tax on Rent: Short-Term Stays, Commercial Space, Equipment

Is rent subject to sales tax?

Sometimes. Each state decides, and the answer turns on what you rent and for how long. This guide uses Texas, New York, Florida and Montana as worked examples because their revenue departments publish the rules. Your state may differ, and your city may add a tax of its own. A tax on short stays goes by many names: lodging, hotel, occupancy, transient rental or bed tax. Here it is called lodging tax, and the owner or host who rents out the place is the operator.

A case is not simple when:

• you rent in more than one state or city, each with its own tax and filing office
• guests book both through a booking site and directly with you
• a lease bundles space with parking, storage, equipment or services
• you hold a notice about months you did not collect

Gather before you decide: a list of properties or items with state and city, the average stay or lease length, where each booking came from, rent by month, and any notice.

Not in these four states? Ask your state revenue department four things: is rent on this kind of property taxed, is there a separate lodging tax, how long must a guest stay before it stops, and does a booking site collect. Then ask your city and county. If you rent in several states, expect different answers for each property.

Is there sales tax on a short-term rental or vacation home?

Generally yes in Texas, New York, Florida and Montana: a short stay in a house, condo, apartment or room is taxed as lodging, and the owner or a booking site collects. Small-stay exceptions exist, such as New York's rate floor and its 3-day rule for owners who rent their own property. Lodging tax comes in layers, state first and then county or city, and the layers can go to different offices.

Fees can be part of the taxed price. New York says cleaning, service, host and pet fees may be taxable as part of the charge for occupancy. New York requires the guest's bill to show the taxes and any New York City unit fee separately, and Florida requires sales tax to be separately stated.

New York excuses an owner who rents out only their own property for a total of 3 days or less in a calendar year and uses no booking service (TB-ST-331).

How long must a guest stay before the tax stops?

Each state sets its own cutoff: 30 days in Texas and Montana, 90 days in New York (180 days for New York City's local sales tax) and six months in Florida. In New York and Montana the days are consecutive for one guest, and Texas counts the right to occupy with no break in payment; Florida turns on the length of the written rental agreement. A year-long stay is past all four cutoffs, but a written lease does not always skip the early days: New York collects until the guest reaches 90 days, and Texas has the written-notice rule below. In these rules a "permanent resident" is a guest who has stayed past the cutoff; it has nothing to do with immigration status.

Prepaid long stays are a trap. In New York, even a guest who has a written long-stay agreement and pays in full before arrival is taxed until reaching 90 days: the operator must collect the tax on that payment and may credit or refund it once the guest reaches 90 days; if it does not, the guest can apply to the State (Tax Department FAQ). A business that rents the room for its own staff or clients can qualify if it pays for at least 90 days (TB-ST-331). Texas says a hotel is liable for the tax if a guest fails to stay 30 consecutive days, so some operators collect first and refund later (Comptroller FAQ).

Who collects when a booking site takes the booking?

It depends on the state, and a booking site never covers the bookings you take yourself. The four states handle booking sites differently.

• Texas: A platform that has agreed to collect and remit the state hotel tax does so, and an owner who rents only through such a platform does not collect the state tax. An owner who rents through their own website, or through a platform that has not agreed to collect, collects and remits the tax. The Comptroller tells owners to check with the city and county about local hotel tax either way.
• New York: A booking service must register, collect and remit the tax on the short-term rentals it facilitates. An operator is not responsible for those sales only if it holds the service's Form ST-155 certificate or a public agreement saying the service collects. Sales the operator makes without a booking service are the operator's to collect.
• Montana: Short-term rental marketplaces and online hosting platforms must register, collect, report and pay on the sales they facilitate. The owner still pays on sales made outside a platform.
• Florida: The Department's sales tax page does not say a booking site collects tax on stays, so confirm with the site or the Department before relying on it, and keep the site's tax report. A management company can register for an owner on Form DR-1C, but the form's owner agreement says the owner is ultimately liable for the sales tax due.
• If a property manager or co-host runs your listing, ask in writing whether it registers and files in your name or its own. Texas says property management companies and online travel companies may also be responsible for collecting.

Whether you still register and file when a site collects everything is set by each state: ask the tax office, and see filing sales tax returns for zero returns.

Keep the proof that a site collected. Texas tells owners audited on platform bookings to get the platform's transaction history. New York relieves an operator only when the certificate or agreement exists, the operator and service are not affiliated, and the operator gave the service correct information.

Is rent on commercial space taxed?

Not by sales tax in New York, and not in Florida for rental periods starting October 1, 2025 or later. Other states differ: Arizona, for one, may tax it, and Florida's repeal does not carry over to them.

• New York: The Tax Department lists sales or rentals of real property among transactions not subject to sales tax. A separate New York City commercial rent tax exists, run by the city (Publication 848).
• Florida: The state sales tax on rent or license fees for real property, such as office, retail, warehouse and self-storage space, was repealed effective October 1, 2025 (enrolled bill, Section 37). No state sales tax or county surtax applies to rent for periods beginning on or after that date.
• Montana: The Department of Revenue says the state has no general sales tax, so no state sales tax applies to commercial rent there. Montana taxes lodging separately, as above.
• Texas: The sales tax applies to sales of taxable items, meaning tangible personal property and listed services, and rent for real property is neither. Motor vehicle parking and storage services are on the list, so a bundled charge can be taxed.
• Arizona: The Department of Revenue says commercial leases of real property are subject to county and city transaction privilege taxes, but only five counties (Coconino, Gila, Maricopa, Pima and Pinal) levy the county tax and some cities do not tax commercial leases. Look up the property's address.

Florida still taxes rent for periods through September 2025, even when it is paid later, at the rate in effect for the period (the Department's example uses 2% for August 2025 rent) plus any county surtax. It also still taxes transient rentals, parking or storage spaces for motor vehicles, boat docking or storage, and aircraft tie-down or storage (TIP 25A01-04). A Florida tenant who paid tax on rent that was not taxable must get the refund from the landlord, not from the Department. A landlord whose account reported only commercial rent still files returns through September 2025, even with no tax due, and claims back tax it refunded to a tenant on Form DR-26S.

Read the lease for bundled items. A space for vehicles, or a lease that adds equipment or services, can be taxed even when the office or shop rent is not. New York, for example, taxes certain parking, garaging or storage services for motor vehicles.

Is there sales tax on renting equipment, tools, instruments or vehicles?

Usually yes where a state taxes goods: Texas, New York and Florida each treat a rental or lease of goods as a taxable sale. The tax is on the rental charge, and the owner who rents the item out collects it.

• Texas: The state imposes 6.25% on retail sales, leases and rentals of most goods, and local taxes can be added. Rented motor vehicles have their own Comptroller tax on gross rental receipts: 10% for contracts of 1 to 30 days and 6.25% for 31 to 180 days. Ask the Comptroller which tax applies to your vehicle.
• New York: The term "sale" includes rentals, leases and licenses to use tangible personal property, such as machinery, tools, computers and motor vehicles. A renter who claims an exemption must give a completed exemption document within 90 days of delivery, or the owner collects the tax. The owner must accept the certificate in good faith and with ordinary care, and is liable for the tax if it knew the use was not exempt (TB-ST-240).
• Florida: A business renting or leasing personal property, such as vehicles, machinery or equipment, must register to collect sales tax. The Department's annual resale certificate lets a registered business buy or rent property tax free when it will be re-rented.

Vehicle rentals can carry their own tax. Montana charges 4% on base rental charges for the rental vehicles it lists, such as cars, light trucks and boats, rented for fewer than 30 days without a driver; motor homes and golf carts are not on its list. New York adds a state-only special tax of 6% on passenger cars rented for less than one year, plus a special supplemental tax of 6% on all passenger car rentals, both on top of sales tax (rates bulletin).

Equipment you bought for the rental business without paying tax raises a different question, use tax: see use tax on business purchases. For exemption documents from renters, see exemption certificates from customers.

Where do I register, what do I collect and when do I file?

If the tax applies to you, you register before the first taxable booking or rental, in each state and often with each city or county. The tax is then collected as its own line on the bill and filed by the state's due date.

In Texas, renting out equipment instead needs a sales and use tax permit, and rented motor vehicles fall under the gross rental receipts tax above. Where you must collect at all is a separate test, covered in when you must collect sales tax. Filing frequency, zero returns and missed returns are in filing sales tax returns.

How do I record rental tax in my books?

Record the tax you collect in a liability account while you hold it, separate from rent: it is owed to the state or city until you remit it. Florida warns filers not to include tax collected in gross sales, because doing so raises the tax due and brings a bill.

1. Open a payable account for each tax and place, such as state hotel tax payable and city hotel tax payable.
2. On a direct booking or rental, record the rent as income and the tax in the matching payable account, as two lines on one sale.
3. On a booking-site booking, follow booking payouts in the books, and keep the site's tax report as proof it collected.
4. At each filing, the payable balance for the period should equal the tax on the return, and the payment clears it. A discount or allowance for filing on time (Texas 1%, Florida up to $30 per location, Montana 5% of the lodging sales tax) is its own line, not a change to the payable.
5. Record penalties and interest in their own accounts, not in the payable account.
6. Keep exemption documents with the monthly reconciliation.

For federal income tax, the IRS separates taxes imposed on the buyer, which are not your income, from taxes imposed on you as the seller, which are part of gross receipts. Which one a state or city lodging tax is depends on that place's law, so confirm it before treating every tax the same way. The income tax side is in rental property taxes.

What if a platform or state notice says I owed tax on past rentals?

Check the response date on the notice first, then sort out three things: which property or item and which months, who was responsible for collecting on those bookings, and whether the state taxed that period at all.

• Who was responsible: If a platform collected, get its records for the account. Texas points to the platform's transaction history in an audit, and New York relief depends on the certificate or agreement and on correct information from the operator.
• Whether the period is taxed: New York's sales tax on short-term rental units applies to payments made on and after March 1, 2025, so check whether the rent in the notice was paid before that date. Florida's repeal covers commercial rent for periods starting October 1, 2025 or later. Rent for earlier periods remains taxable, and the Department says the repeal does not cancel penalty and interest already owed on late returns (TIP 25A01-04).
• What waiting costs: In Texas, a hotel tax report filed late carries a $50 penalty, tax paid 1 to 30 days late adds 5%, and tax paid over 30 days late adds 10%. Interest starts 61 days after the due date (Comptroller).
• Guests already billed: Whether you can bill guests for tax you did not collect is its own question, covered in invoices sent without sales tax.

For months you rented without collecting, see catching up on uncollected sales tax. For a state audit or information request, see sales tax audit. People behind a business can owe the tax too. In New York, certain owners, officers, directors, employees, partners and members can be personally liable (Publication 750); in Texas, so can an officer, manager, director, employee or partner who controls collecting or paying and willfully fails to remit (Tax Code 111.016). Both states can assess at any time if no return was filed; see filing sales tax returns. Several months, several properties, or a booking site's records that do not match your books are the cases to bring to a professional before you reply.

Example

These examples use US dollars and round numbers.

Weekend rentals in Austin

A homeowner rents her Austin house on weekends and takes guests through her own website: US$2,400 a month in total. Texas hotel occupancy tax of 6% applies to those stays, US$144 a month, plus any city or county hotel tax, which goes to the city or county. She files the state report by the 20th of the next month. If US$900 of the month came through a booking site that has agreed to collect Texas state hotel tax, her own report covers the other US$1,500, so US$90. In her books the direct bookings are cash US$1,590, rental income US$1,500 and hotel tax payable US$90. Assuming the US$900 is rent before the site's fee, she books it as rental income and the site's fee as an expense, per booking payouts in the books, and keeps the site's tax report. Paying the US$90 (before any filing discount) clears the payable.

Camera rentals in Brooklyn

A Brooklyn business rents camera gear to film crews and takes in US$40,000 a year, delivered in New York. New York treats a rental of goods as a sale, so the rental charges are generally taxable at the state and local rate. A registered film producer using the gear directly and predominantly to produce a film for sale can rent it exempt with Form ST-121. The business can skip the tax only if it gets the completed certificate within 90 days of delivery, accepts it in good faith, and keeps it with its rental records. Other customers pay the tax.

A shop and a condo in Florida

A Florida landlord leases a shop for US$3,000 a month and rents a furnished condo in two-month stays for US$4,000 each. Shop rent for October 2025 occupancy is outside the sales tax. Shop rent for September 2025 occupancy stays taxable, at the 2% the Department uses in its August 2025 example (US$60), plus any county surtax, even if the tenant pays it in November. The condo stays are transient rentals of six months or less: sales tax and county surtax go to the Department of Revenue, and the county's transient rental tax goes to the county or the Department, depending on the county.

Different for you?

• You rent in more than one state or city, or a booking site or state letter asks about tax you never collected: each property has its own tax, registration and filing office, and past months need their own plan. A response date on a notice does not move while you sort this out, so start early. Get bookkeeping help to record each place's tax separately and tie your books to what was collected and filed.
• You rented without collecting in past months: follow catching up on uncollected sales tax and get bookkeeping help with the months.
• You are not sure you must collect in a state at all: use when you must collect sales tax.
• Your property is in Montana: read the Montana guide for the lodging tax in detail.
• You want the income tax on the rent: see rental property taxes, and Schedule C or Schedule E for short-term rentals.
• Your property is in Canada: see GST/HST on commercial property or residential property.