Short-term-rental group urges homestead tax relief for owner-occupied hosts

Julie Marks, founder and executive director of the Vermont Short Term Rental Alliance, told the legislative committee on May 7 that short-term vacation rentals produce significant tax revenue and local jobs and urged lawmakers to change property-tax treatment for owner-occupied homes that host guests.

"Vacation rental activity is taxed higher than hotels at a minimum of 12% at the meals and rooms tax rate," Marks said, and she cited the industry estimate that those rentals translate to "roughly between 50 and $60,000,000 to the state's budget every year." Marks said her nonprofit represents more than 320 homeowners and property managers who together list about 4,000 vacation rentals in Vermont and that the activity supports about 6,000 local jobs.

Marks told the committee she and her members are largely owner-occupants — "the average owner owns 1.9 properties" — and that many hosts rely on rental income to remain in their homes or to pay for college costs for family members. For that reason, she argued the committee should "remove that split classification and make a homestead a 100% homestead," saying that would encourage residents to share space, increase affordability for homesteaders and avoid double taxation on the same dwelling.

Senator Chitman, who asked questions after Marks testimony, said she agreed that owner-occupied ADUs should not be treated the same as non-owner-occupied, commercial short-term rentals. "I agree that homesteads that declared homesteads... who have an ADU and use it for STRs, I wouldn't want them to be treated... as a second home and getting a higher tax rate," she said.

Marks said she was not proposing relief for non-owner-occupied, commercially run short-term rentals; she framed her request as targeted tax relief for homesteaders who host guests to help offset property-tax burdens.

The committee did not take final action on the property-classification language during this session; members said the testimony will be considered when the committee reaches the applicable section of the bill and that staff will carry Marks's input forward.