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Ruling Affirmed: Tax Exemption for Ohio Property Rented on Airbnb Properly Denied
The Ohio Board of Tax Appeals has ruled that the Tax Commissioner appropriately denied a real property tax exemption on a portion of a property that the owner rents out on Airbnb.
The facts of this appeal are quite interesting when looked at collectively. The property in question is a nature center, and as described in the appeal:
The subject property consists of a dwelling and approximately five acres of land. Appellant uses the property for educational programs, hiking, nature study, and other purposes open to the public. All such programs are provided to the public without regard to the ability to pay. However, appellant also rents out a portion of the main floor on Airbnb. The meeting space rate is $35 for two hours. Overnight rates are $100 per night and $150 per night on weekends.
The Tax Commissioner actually granted the tax exemption for the entirety of the property with a small exclusion for the portion of the main floor that is used for Airbnb rentals, which is quite fair considering, as the Board of Appeals cited, the law is clear that renting property to another for a fee is generally a commercial use. This is regardless of the ultimate use of the proceeds. Therefore, the taxpayer argument used for the appeal that the income is used to fund the other exempt activities conducted on the property is a moot point.
All in all, this appeal was nearly destined to be denied as the appellant did not request a hearing which meant the review would be limited to the evidence in the statutory transcript. Given the basis of the appeal was inadequate to begin with, the likelihood of success without evidence presented at a hearing was miniscule.
Tips for the Taxpayer
Organizations that operate in primarily tax-exempt industries can easily fail to foresee the taxable results of actions or changes they make that may seem inconsequential to them. Further, those appealing tax rulings often fail to realize what is needed to win them and would be better of consulting a tax professional or not filing an appeal at all. Read more on property tax appeals here.
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Contributor: Jordan Perri
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