MN cabin, vacation property owners could see tax hike

mxskeeter wrote:

Many times you can tell when it’s a business. When you look up a property on VRBO or ABNB many times the owner has a line that says “See/check out all my other properties”. Some owners have several rentals. I say tax them.

The last (about 10 years ago) I knew if you rented a property out over 14 days a year you had to report the income to the IRS. That may have changed.

Bingo
No matter how long it was rented you need to collect sales/use tax.
All the records exist and if the states and the irs dug in there would be massive amounts of tax fraud cases.

biggill wrote:

Now I don’t know much about renting out property but just like any other business, I’d be willing there are other federal tax breaks for doing so. Especially if you are being hit so hard on property tax. I’d be willing to bet that $15k mentioned earlier is not nearly what is netted by big brother in the end.

Like any other business, there are both federal and state write offs for aspects of the business. However…

Simply put, you can’t be taking advantage of the tax benefits and NOT be paying your tax obligations. That would be like my business writing off equipment and deducting expenses, but NOT collecting and paying in sales tax.

Cabin owners who rent out have been having it both ways. You can bet most of them are deducting and depreciating the #### out of everything they can and then some. They can’t have it both ways. They need to abide by the rules of every other commercial lodging businesses in the area has to abide by or stop taking the deductions and benefits on the other side of the ledger.

And by the way, I wonder if all these ABNB / VRBO are collecting the required sales and lodging taxes? I mean, I don’t really wonder because I know the answer…

Grouse

Perhaps if “Leveling the Playing Field” is the goal as stated, maybe they should look at reducing taxes on hotels. Charging everyone should spread the cost over more taxpayers lowering the cost for everyone….

-J.

Jon Jordan wrote:

Perhaps if “Leveling the Playing Field” is the goal as stated, maybe they should look at reducing taxes on hotels. Charging everyone should spread the cost over more taxpayers lowering the cost for everyone….

-J.

You should be a stand up comic

It’s extremely rare for the government to say “Oh look….we have too much money!”

The state has already collected $1.5 billion more than needed or planned to spend. Where does it end?

-J.

Jon Jordan wrote:

The state has already collected $1.5 billion more than needed or planned to spend. Where does it end?

-J.

It doesn’t

And we’ll never get that money back.

Reminds me of South Park….

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Jon Jordan wrote:

Perhaps if “Leveling the Playing Field” is the goal as stated, maybe they should look at reducing taxes on hotels. Charging everyone should spread the cost over more taxpayers lowering the cost for everyone….

But Jon, the public doesn’t want to “spread the cost”. They want the “rich”, and preferably the rich who don’t live around here to pay for everything. That’s why non-homestead and lakeshore taxes are higher than regular property taxes to begin with. Soak the rich cabin owners.

Haven’t you ever stayed anywhere and looked at the bill to see a 10-20% hotel tax charged on TOP of local sales tax? Or the airport fee/taxes of $50 a day tacked on to the rental car bill? These “tourist taxes” are wildly popular because they sock “rich tourists”, not poor, hardworking local residents.

Also, in public perception, all business owners are rich. So you won’t get any traction for proposing a tax break for hotel owners in order to spread the tax burden to the poor, downtrodden local residents.

Everybody’s looking for places they can tax somebody who can’t complain and preferably can’t even vote. Have you seen what Congress just did with the law around inheriting 401k and similar accounts? It’s a back door death tax, but since most people have no idea if or how much they might inherit from a relative, they have no idea that it even will impact them, much less how badly. The perfect stealth tax increase, almost nobody complained even though millions of people will now be hammered with this new tax.

Grouse

I know we would still have the house my dad built on Lake Vermilion if the county didn’t start gouging us in taxes. Bought for $33k in the mid 80s when hardly anyone went there. He tore it down and built a modest cabin. Pretty soon taxes went from almost nothing to $6k/year.

B-man wrote:

And we’ll never get that money back.

Elect the right people and you could. Ventura ran on the promise and did it once elected.

-J.

If you make $1 the government will figure out a way to tax you $1.50 on that $1.

What worries me is that these cabins are being rented out without users knowing if they are safe. Water, elect, plumbing things should meet codes for renting. Are the owners paying extra for insurance to cover what partners destroy? I think this is good and should make for safer rentals.

Taxation without representation?

Or

Double dipping?

Factually, probably both.

I don’t really have a dog in this fight, but I do have a sour taste on the folks calling things “their retreat”.

You own property, your retreat is your slice of land and your cabin. The entire lake and all of its inhabitants are not required to share your opinions.

Nobody wants raucous neighbors, but you are supporting additional taxes because of what you believe “up north” should be and not based on what these tax rules are.

I encourage all folks involved on any side of any dispute to look at both sides and keep an open mind.

Carry on.

basseyes wrote:

Taxation without representation?

Or

Double dipping?

Factually, probably both.

Are you suggesting that people get to vote more than once? Or suggesting non-residents get to vote?

Update on the story from WCCO

MINNEAPOLIS (WCCO) — The potential for a big spike in property taxes has Minnesota cabin owners who rent their properties calling on lawmakers to step in.

WCCO first told you about the tax classification change last week, meant to level the playing field in crowded rental market. Now, Liz Collin has spoken with Minnesota Sen. Tom Bakk, who is in the middle of the controversy that he hopes will be sorted out at the State Capitol.

Bakk says he’s been getting an earful on a tax classification change, a move that targets short-term cabin rentals on Airbnb, Vrbo, or through property management companies.

“It’s not an easy fix,” Bakk said. “We understand when you lower someone’s taxes it raises someone else’s.”

Collin reported last week what the change would mean for one cabin in Lutsen, as an example. The two-bedroom with current taxes of $5,800 would skyrocket to a $17,000 property tax bill if it shifts to the commercial property classification.

Jim Wherley is a resort owner in Richville who represents the Community of Minnesota Resorts. With 125 members across the state, the nonprofit believes a change is long overdue.

“We don’t mind the competition but we do mind they’re not held on a level playing field,” Wherley said.

From property taxes to Department of Health regulations, Wherley says income generating rentals should answer to the state.

However, in some cases Bakk has heard of assessors interpreting primary use differently, which he sees as the biggest problem. It’s why he thinks a new category could be created, which resort owners also support.

“It could be a new classification, somewhere between residential or seasonal, recreational and commercial,” Wherley said.

Striving for consistent tax policy before peak season arrives again.