SUSSEX COUNTY, Del. -- The Sussex County Association of Realtors is strongly opposing House Bill 168, which proposes hiking the tax on short-term rentals in Delaware.
The bill requires every short-term listing service to obtain an occupational license and pay an annual licensing fee of $25.00. That's in addition to an 8% tax rate for hotels, motels, tourist homes, or short-term rentals.
According to The Sussex County Association of Realtors President Allison Stine, 90% of short-term rentals are located in Sussex County. She says the bill poses a significant threat to the local economy, homeowners, vacationers, and the workforce.
One goal of the bill is to create a level playing field for hotels, motels and short-term rentals by making the same tax apply to all entities. However, municipalities are already collecting a tax of up to 6% in some areas on short-term rentals.
"The lodging industry pays a hotel tax which is capped at eleven percent," says Stine. "So if you were to rent a hotel room in Rehoboth Beach, the State collects their eight percent lodging tax and the Town of Rehoboth Beach collects their remaining three, capped at eleven. This iteration of the bill has no cap."
Broker and rental manager for the Lewes Rental Department of Berkshire Hathaway Home Services Adriane Gallagher specializes in short-term rentals.
"The bill would definitely limit the number of people who are able to afford vacation rentals in our area," says Gallagher. "It would burden the owners who are then unable to continue to rent to people and potentially keep their second home. It also has a much broader effect on our area as far as restauranteurs, small business owners, people that rent out linens to these customers, people that clean the houses for these rental properties. All the businesses. People that rent out kayaks. If there's no vacationers here, you're out of business."
The bill is designed so that a portion of the revenue generated from the tax collection will go toward beach replenishment and the tourism industry in Sussex County. However, realtors don't believe it's enough. The rest of the money will go to the State and New Castle County.
"While that sounds good, the truth is, only 12 percent of that is going toward beach replenishment," says Delaware Association of Realtors President Chrissy Steele. "The beach is what brings people to the area. If we want to protect and promote tourism, that money needs to be spent in Sussex County."
The Sussex County Association of Realtors is urging Delaware homeowners to contact their local legislator and defend short-term rentals against the bill via this call to action website.