How do I handle occupancy taxes for vacation rentals?
New Mexico vacation rental operators deal with multiple layers of occupancy tax. The state charges lodgers’ tax at 5% on gross receipts from rooms and most cities and counties add their own local tax. Santa Fe has additional lodgers’ tax that pushes the combined rate higher. You collect these taxes from guests, track them separately from rental income, and remit them to the appropriate authorities on schedule.
Register with the New Mexico Taxation and Revenue Department before accepting guests. You’ll also need to register with your city or county for local lodgers’ tax. These registrations give you the filing accounts you need. Operating unregistered creates liability that grows over time and gets expensive to fix.
Platforms like Airbnb and VRBO complicate the picture. Airbnb collects and remits New Mexico state lodgers’ tax in most cases, but local tax coverage varies by municipality. Some cities have tax collection agreements with platforms, others don’t. VRBO handles taxes differently than Airbnb. You need to verify exactly what each platform collects so you don’t double-pay or underpay. Log into your platform account and review their tax collection settings for your property’s location.
Direct bookings require you to handle everything yourself. Add the applicable tax rates to your booking total, itemize them clearly for guests, and set that money aside immediately. Don’t mix it with your operating funds.
In your accounting system, track collected occupancy taxes as a liability rather than income. This money belongs to the taxing authority until you remit it. When you file and pay, the payment reduces the liability. Vacation rental bookkeeping done right keeps tax money clearly separated from rental income so you always know what you owe.
Filing frequency depends on your tax liability. New Mexico allows monthly, quarterly, or annual filing. Higher revenue typically means more frequent filing. Late payments trigger penalties and interest, so calendar your deadlines.
Keep records for each booking showing dates, gross rental amount, taxes collected, and which portion the platform handled versus what you collected directly. Virtual bookkeepers in New Mexico who work with short-term rentals can set up tracking that makes this straightforward rather than a monthly headache.
If you’re managing multiple properties or mixing platform bookings with direct reservations, the reconciliation gets complicated quickly. Getting the accounting structure right from the start saves significant time and prevents expensive surprises at tax time.
Santa Fe's Small Business Bookkeeper
The Next Step:
A Quick Conversation
Tell us about your business and what you're dealing with. We'll listen, ask a few questions, and give you a straightforward quote.
More Questions
How do I track equipment costs across multiple job sites?
Track equipment hours or days on each job site, then allocate depreciation, fuel, and maintenance costs proportionally. Set up your accounting software to assign these allocated costs to specific jobs.
Read answerWhat bookkeeping mistakes do trucking companies make?
Trucking companies most commonly fail to track IFTA data properly, don't know their cost per mile, and mix personal and business expenses. These mistakes lead to compliance problems, lost money, and tax headaches.
Read answerWhat chart of accounts should a trucking company use?
A trucking company chart of accounts should separate fixed costs from variable costs and track expenses in ways that let you calculate cost per mile. Generic setups don't give you useful information about where money actually goes.
Read answerShould I have a separate bank account for each rental property?
Not necessarily. If all your properties are in one LLC or your personal name, a single operating account with proper bookkeeping can track each property separately. But if properties are in different LLCs, you need to keep the accounts separate to maintain legal protection.
Read answerShould I use cash or accrual accounting for trucking?
Most small trucking companies use cash basis accounting. It's simpler and shows your actual cash position. Accrual makes more sense when you have significant receivables outstanding or need accurate period-by-period profitability.
Read answerHow do I separate gallery sales from secondary market purchases?
Set up separate income and cost of goods sold accounts for each revenue stream. Consignment sales and secondary market purchases have different accounting treatment because of how you acquire the work and what you owe when it sells.
Read answer
