Thinking of Offering Your Home to Travelers Through Airbnb?

by Brian Kerrigan

Know Your Zoning!

How you can use your home as an Airbnb is determined by how your property is zoned. In order to make sure you comply with city laws, keep the following in mind: 1. By city law, the owner of a single-family property may only rent a room(s) in the home they actually occupy. They may only do this for a total of 180 days per year. No single rental can last longer than 30 days. Single-family properties are zoned RSA-5 (Residential Single Family Attached). To find out the zoning of your property, look it up at www.atlas.phila.gov. 2. If the property is zoned RSA-5, the owner must live in it and meet the requirements listed above to be in compliance with the law. Property owners may not claim the Homeowners Tax Exemption if they do not live in the home. 3. Read and follow all city regulations before you decide to host. For more information, see http://bit.ly/PHL-Limited-Lodging-Regs/

There are plenty of reasons to become an Airbnb host. Maybe you’re an empty nester. Or you just want some extra cash.

Whatever the motivation, your path will necessitate navigating two radically different systems: Philadelphia’s business registration and tax requirements, as well as Airbnb’s smartphone-optimized, online platform.

However quaint your bed and breakfast concept may seem, to the city’s Department of Revenue, as soon as you offer that “room with a view” (or condo or rowhouse), you’re a business. And that means you have to register with the city as such. More specifically, you need a Commercial Activity License–formerly known as the “Business Privilege License.”

Your journey begins with getting a City of Philadelphia Tax Account Number. Even if you operate as a sole proprietorship, your social security number won’t suffice. On the flip side, you don’t need a FEIN (Federal Employer Identification Number) unless you hire employees.

The first step is to obtain a Business Income and Tax Receipts ID number. Every individual, partnership, or corporation doing business in Philadelphia is required to file a Business Income and Receipts Tax Return. Whether or not you earn a profit, you must file–so you need an ID number.

But there’s a prerequisite to that process. You also need to register with the state. This is best done through the Pennsylvania Online Business Entity Registration site, though certain firms will file on your behalf. If a prerequisite to the first step seems confusing, just keep in mind it is a byproduct of the disconnect between the state’s and the city’s requirements as articulated on their respective websites. If you prefer a more linear approach, just do PA registrations first, then attend to the Philadelphia registrations.

There are nominal fees incurred in the process and you should allow at least 6 to 8 weeks for processing. The result will be that you’ll have what you need—a City of Philadelphia Tax Account Number—to obtain the absolutely necessary Commercial Activity License.

To do that, you must use the city’s eCLIPSE system (i.e., Electronic Commercial Licensing, Inspection, and Permit Services Enterprise.) You may find Airbnb’s interface to be much more user-friendly, and posting your rental offering can easily be completed in less than an hour.

One consideration is the existing local competition. With a couple of queries (varying length of stay, time of year, etc.) you’ll see 15 to 20 lodging options right here in Queen Village already. Nightly rates range from $29 to $200+ with bed/ bathroom attributes usually acting as the primary pricepoint driver. Parking is a valued perk.

Posting your offer on Airbnb involves answering a straightforward series of questions resulting in clearly delineated attributes. You determine how often and when your space is available (but make sure you check out the “Know Your Zoning” sidebar for more legal requirements). Lastly, you post a picture or two. With that, you are officially a Queen Village-based small business owner and Airbnb host, all rolled into one.

As a final cautionary note, our close quarters in the city mean that being a good neighbor includes communicating to guests that Queen Village is primarily a residential neighborhood that values safety, quiet, and clean streets. Make sure to check in with neighbors and take seriously any complaints. Happy hosting! ■