On February 4, New Mexico Governor Michelle Lujan Grisham signed Senate Bill 106 into law, closing the tax loophole that had allowed property owners to avoid paying Lodgers Tax on revenue generated by short-term rental of their properties. The bill, which was very similar to legislation drafted during the 2017 session, passed both the House and Senate with overwhelming support.
Local hoteliers have contended it is unfair that websites (such as VRBO or Airbnb) allow owners to book short-term or vacation rentals of their properties without having to charge the same taxes as companies that book hotel and motel rooms. The revenue generated by the Lodgers Tax is used to promote tourism in local communities.
Airbnb had already reached agreements with several municipalities to collect the tax, but many popular communities in the state were left out, and administering the agreements was difficult prior to the new law. As Airbnb has grown in popularity, with the loss of potential revenue growing each year, both municipalities and legislators were ready to â€œlevel the playing fieldâ€ for hotels and increase community resources.
The law goes into effect beginning January 1, 2020.
Questions about how the new law may impact you? Please contact James Ortiz in our State and Local Tax Department at 505-998-3468 / JOrtiz@redw.com.