The Short Answer

Lodging tax you collect from guests is not income. In Stessa, record it as a transfer-style entry outside your income and expense categories, so it never touches the P&L, and track the balance until you remit it to the tax authority. Only record it at all when the platform does not collect and remit for you.

When do I need to record lodging tax myself?

Start by checking who remits the tax, because it decides everything. In many markets, Airbnb and VRBO collect occupancy tax from the guest and send it straight to the state or county. That money never lands in your payout, so there is nothing to record. Your books can ignore it.

You need this article when the tax passes through you: direct bookings, platforms that collect the tax but pay it out to you to remit, or jurisdictions where the platform does not participate in tax collection. In those cases, the guest paid the tax, you are holding it, and the state expects it from you on a filing schedule.

As of this writing, platform tax handling varies by state and even by county, and it changes. Check your platform’s tax settings and your local filing requirement rather than assuming.

Why isn’t it income?

Because it was never your money. A guest pays $1,000 for the stay and $80 in lodging tax. Your revenue is $1,000. The $80 is a liability, money you owe the tax authority, that happens to sit in your bank account until the filing date.

Book the $80 as income and two things go wrong. Your revenue is overstated, which distorts every per-night and per-property metric you use. And at filing time, the payment to the state gets booked as an expense to force the books to balance, which quietly misstates both sides of your P&L all year.

“If the money is on its way to the state, it should never appear on your profit and loss. Not as income on the way in, not as an expense on the way out.”

How do I set it up in Stessa?

Stessa is single-entry and does not have a true liability register, so the goal is to keep the tax out of the income and expense categories entirely:

  1. Split the deposit. When a payout containing guest-collected tax lands, split the transaction. Assign the stay revenue and cleaning fee to their income categories as usual.
  2. Assign the tax portion to a transfer-type category. Use a category that Stessa treats as a transfer, so it is excluded from income. Naming it something like “Taxes to Remit” keeps it identifiable at a glance.
  3. Track the running balance outside the P&L. A simple ledger, even a spreadsheet column, that adds each collection and subtracts each remittance. The balance at any moment is what you owe the state.
Watch Out

Do not use an expense category as a workaround

Categorizing collected tax as a negative expense, or the remittance payment as a tax expense, makes the P&L look balanced while misstating revenue and expenses. The transfer treatment is the only version where your P&L tells the truth.

How do I record the payment to the state?

When you file and pay, the payment is the other half of the same transfer. Assign it to the same transfer-type category, which brings your tracked balance back toward zero. It is not an expense, for the same reason the collection was not income.

If the payment does not match the collected balance for the period, that difference is worth chasing before it compounds: a missed split, a platform that started or stopped collecting mid-period, or a rate change.

The Bottom Line

Guest-collected lodging tax is a pass-through. When the platform remits it, do nothing. When you remit it, keep it off the P&L with transfer-type entries and track the balance you are holding. Your revenue stays honest and filing becomes a lookup instead of a scramble.

How the tax is ultimately reported on your return is a question for your CPA. The bookkeeping treatment above is what makes that conversation easy.

Frequently asked questions

Is lodging tax collected from guests taxable income?

Not when it is a true pass-through you are required to remit. It is money held for the tax authority, which is why it belongs outside your income categories. How your specific situation is reported on the return is a question for your CPA; clean transfer-style books make that answer easy to produce.

What if Airbnb already remits the tax for my area?

Then the tax never reaches your bank account and there is nothing to record. Your payout already excludes it. Verify in the platform’s tax settings which jurisdictions it covers for your listings, and re-check periodically, because coverage changes as platforms add agreements with states and counties.

How do I know how much lodging tax I owe right now?

Keep a running balance: every collected tax amount adds to it, every remittance subtracts. If you use a consistent transfer-type category in Stessa, filtering on that category for the period gives you the number. If you cannot produce that balance in under a minute, the tax is being booked wrong.

TL

Tom Latuga

Founder, Real Cents Organized

Tom is a real estate investor, Intuit Trained Bookkeeper, and founder of Real Cents Organized. He helps landlords and real estate investors across the United States transform messy books into tax-ready clarity.

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