10 Benefits of Short-Term Rental Tax Revenue for Local Governments and Their Communities

Short-term rentals (STRs) have taken on somewhat of a controversial reputation in recent years, with residents and government leaders alike discussing the short- and long-term impacts on their communities. During these conversations, community members are also exploring the benefits of short-term rental tax revenue.

One major benefit that often comes up is the significant tax revenue short-term rentals generate, which can be reinvested back into the community for the greater good. If your agency is exploring the impacts of STRs, here are ten ways tax revenue from short-term rentals can benefit the community in the long term:

1. Revitalizing Community Centers

One of the benefits of tax revenue from short-term rentals is being able to fund the construction or improvement of community centers. These centers are great gathering places for residents and can bring communities together by hosting a variety of activities, including educational programs, fitness classes for all ages, and other community events.

2. Going Greener With Environmental Conservation

Tax revenue from STRs can be allocated to initiatives focused on environmental conservation. For instance, funds can be used for trash cleanup programs, protecting natural habitats, or promoting sustainable practices within the community. The City of Aspen plans to use roughly 30% of its anticipated $9.1 million in STR tax revenue to fund environmental-protection initiatives and maintain water infrastructure.

3. Building Playgrounds and Park Enhancements

The revenue collected from STRs can contribute to the development and maintenance of playgrounds and parks, similar to the all-accessible playground built in Aiken, South Carolina. These spaces provide recreational opportunities for families of all needs and help foster a sense of community by bringing people together in shared outdoor spaces.

4. Saying Hello to Visitor Centers

Investing in visitor centers can enhance tourism infrastructure and attract more visitors to the community. Tax revenue from STRs can be used to create welcoming spaces that offer information about local attractions, events, and accommodations; thereby promoting economic growth and supporting local businesses.

5. Increasing Lifeguards and Beach Safety

Coastal communities that rely on STRs can utilize tax revenue to hire and train lifeguards, supporting the safety of residents and visitors enjoying the beach. Leaders in Brevard County, a popular Florida tourist destination, are looking to use short-term rental tax revenue to hire more lifeguards and increase water safety.

6. Investing in Major Infrastructure Upgrades

By collecting taxes from STRs, local governments can invest in critical infrastructure projects that benefit the entire community. This includes improving roads, bridges, public transportation, and utilities, ultimately enhancing the livability and functionality of the area.

7. Sparking Creativity With Arts and Culture

Tax revenue from STRs can be used to support arts and cultural programs that enrich the community. The City of Austin has been in talks with the City Council to start tapping into millions in uncollected STR tax revenue to fund its Music and Art Commissions and its local creative community.

8. Chalking Up Educational Initiatives

Investing in education is paramount to a community’s long-term success. Tax revenue from STRs can be channeled into educational initiatives, such as providing scholarships, supporting after-school programs, or upgrading school facilities and resources.

9. Focusing on Public Safety

Tax revenue from STRs can contribute to public safety efforts. It can be used toward hiring additional officers, improving emergency response systems, or investing in crime prevention initiatives, so residents and visitors feel more secure within the community.

10. Helping Build Affordable Housing

With the housing crisis affecting millions of Americans, some towns are looking to use STR revenue to help fund more affordable housing developments. The Martha’s Vineyard Commission on affordable housing recently met to discuss how to utilize its millions of STR tax revenue to make housing more affordable for year-round residents.

Accurate and efficient tax collection plays a crucial role in maximizing the benefits of tax revenue from short-term rentals. By embracing the positive impacts of STRs, local governments can increase their revenue collection capabilities, enabling them to allocate more funds toward initiatives that enhance the community’s overall well-being.

Utilizing a dynamic and trusted short-term rental solution will help your agency streamline the collection process, minimize errors on tax forms, and maximize the amount of revenue available for community improvements.