RIO RANCHO, N.M. — Now that the state of New Mexico has removed all tax exemptions for short-term rentals with Senate Bill 106, many counties are left to trying to find them.
Sandoval County Director of Economic Development Dora Dominguez said there still isn’t any way for the county to retrieve gross receipts tax (GRT) from said rentals.
“We are looking at several possibilities right now that could benefit the municipalities as well as the unincorporated areas of the county,” Dominguez said. “We as a county know that SB 106 goes into law as of Jan. 1 of 2020, so the clock is ticking.”
Dominguez said the county has some data Airbnb provided, indicating there were over 9,000 short-term rentals in the county in 2018.
“This was just on Airbnb’s platform,” she said. “That generated $1.2 million in revenue that comes out to an additional $60,000 in lodger’s tax in the county.”
With the passing of this new law, Dominguez hopes to find out how many short-term rentals are in the county so she and her department can accurately research their income.
The answer for this dilemma may be in a “scrape program” created by an Albuquerque native who now serves various areas that have faced the same dilemma. A scrape program can digitally track a short-term rental back to the platform it was booked from and reveal the amount of income and taxes owed for the property.
John Spuhler, former owner of BEAR Cloud Technologies Inc., which is now a part of Host Compliance, said scrape tech is the best way to go for this situation.
“Trying to find all the short-term rentals in one area is pretty much an impossible task for anybody without using technology,” Spuhler said in a phone interview.
At least 300 cities across the country are using this type of software, he said, to track down all the STRs in their taxable area.
“We can find who owns the property and what their address is, which allows us to provide really good data that cities can use,” he said.
According to Spuhler, rental property listings are spread across hundreds of websites on any given day.
“It’s not just Airbnb anymore; you got VRBO has a big play, as does Home Away, Booking.com and some people still list on Craigslist, so you are looking at many listing sites,” he said. “Oftentimes the same owner is listing on multiple platforms, which has to be consolidated into a usable format.”
Spuhler said listings also come and go due to licensing issues, so a listing may be valid one day but pulled the next.
“How do you know, if you are looking as one person, that this is going on?” he asked. “Our system archives all of that data.”
Spuhler said housing is not static, especially during an event like the Albuquerque International Balloon Fiesta.
“How do you keep up with those listings that just pop up as an individual?” he asked. “It’s impossible because the address label is hidden from the listing, so you have to be able to locate all these different data points, which our technology does so you can find the owners.”
Spuhler said the vast majority of Host Compliance’s customers reach out to them because they recognize how challenging it is to try and keep up with the ever-changing environment of short-term rentals.
“The feedback is, ‘Oh, my gosh, how did we ever do this without you?'” he said. “Some communities say they can do it without us and maybe they can, but at what cost? Are they going to hire three, four or five people? How much is that going to cost?”
Spuhler pointed out the downfall of having agreements like the one Albuquerque has with Airbnb when it comes to collecting taxes.
“If you are only getting the tax agreement from Airbnb, say they represent 50 percent of the inventory, what’s happening to the other inventory is confusing everybody because how these STRs overlap on listing sites,” he said.
Spuhler said one room may be listed on several sites and purchased on a platform other than Airbnb, which does not contribute GRT on the sale.
“It creates a big problem,” he said.
Spuhler said Airbnb makes up nearly 60 percent of the rentals in Sandoval County, leaving 40 percent unlocated.