They’ve done it!
The City of Los Angeles and vacation rental site Airbnb agreed on a new framework for taxation Monday after 18 months of negotiations. As usual, consumers will be footing the bill for this one.
Like hotels, Airbnb will collect a 14 percent lodging tax from its hosts and then pass it on to the city. That removes the responsibility from the hosts themselves, who are currently required to fork over the cash but often fail to do so.
The deal is expected to generate $5.8 million in revenue—far less than the $20 million previously estimated by the company. The money will be used to help the homeless, the city said.
While the agreement works out the revenue issue, it does not fully address some of the other concerns about Airbnb such as its effect on housing and rental supplies. Those issues will be dealt with later, city officials said.
In fact, short-term rentals aren’t even legalized under the deal. But as long as they exist, the city wants to make sure it’s getting a slice of the pie.
“There is going to be a lot of debate about how this industry is regulated,” said City Administrative Officer Miguel Santana. “We just want to make sure that while that conversation is taking place, the city is not missing out on millions of dollars in revenue.”
The agreement is good for three years and begins on Aug. 1.
Read more about the new agreement here.