Loudoun County supervisors are moving toward changes to the tax charged on overnight stays at hotels, bed and breakfasts and Airbnb rentals to require all hosts to pay the tax.
The transitional occupancy tax is a tax on the cost of short-term overnight stays, up to 29 consecutive days. Currently, Loudoun charges the tax only on accommodations that can accommodate at least four people at a time.
The proposed changes follow a recommendation from Visit Loudoun and the Loudoun County Bed & Breakfast Guild, which have long argued that the tax should be levied on all stays. Based on research commissioned by Visit Loudoun, a county staff report notes that expanding the tax to include rentals below the four-person threshold is expected to yield at least $180,000 per year. The staff report also notes that the change may address industry complaints about price disparity.
In fiscal year 2019, the tax brought in $6.4 million in tax revenue.
The Transitory Occupancy Tax is levied at 8% of the price of the stay. Of that eight cents on the dollar, two go to the county’s general fund, three to the temporary restricted-use occupancy tax fund to promote tourism, and three to the state for the Northern Virginia Transportation District.
Of the funds from the Restricted Use Temporary Occupancy Tax Fund, 75% goes to Visit Loudoun as part of their agreement with the county. The rest goes to grants; in July, supervisors approved grants of $99,500, including $25,000 to support Lovettsville’s Oktoberfest, Middleburg Film Festival, and the City of Middleburg’s Mille Miglia Rally, as well as smaller grants for supporting the non-profit Chhandayan Diwali Festival, the Sweet Jazz Festival and The Celebration of Freedom at One Family Brewing.
The temporary occupancy tax is in addition to the 6% state sales and use tax. One cent of this tax goes to the county.
On October 18, supervisors voted unanimously to send the proposed changes to a public hearing, the next step before final approval.
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