Richmond collects $5.6 million related to delinquent taxes from short-term rentals
The city of Richmond says it has collected $5.6 million in payments linked to delinquent taxes from short-term rentals.
The outstanding payments, which include interest and penalties, date back to July 2023, when the City Council passed an ordinance extending a transient occupancy tax that had previously been imposed only on hotels to short-term rentals offered through platforms like Airbnb and VRBO.
The 2023 followed changes in state law that required short-term rental companies to submit local governments information each month on the addresses and receipts of properties being rented out within the jurisdiction.
In a Thursday release, Mayor Danny Avula said he was “proud of the work the Department of Finance has done to not only bring folks into compliance but to make sure the City collects the revenue we’re owed.”
“Every dollar counts, and this is a lot of dollars,” he said.
The Finance Department is estimating that tax payments from short-term rentals will produce roughly $2 million annually going forward.
Prior to 2023, Richmond imposed an 8% tax on any hotel room rented out in the city. On July 1 of that year, all short-term rentals were supposed to begin paying an equivalent amount to the city.
Thursday’s announcement indicates that didn’t happen in at least some situations. The number of accounts that were delinquent wasn’t immediately available, nor was it clear whether the payments came from individual property owners operating short-term rentals or the platforms through which they rented them.
In a memo to the City Council, Richmond Chief Administrative Officer Odie Donald II said that all information related to any city review of taxpayer compliance “is confidential customer information and will not be disclosed.”
While significant, short-term rental revenues received virtually no attention during this year’s budget deliberations and are not included in the fiscal year 2027 budget passed by the City Council Monday.
Short-term rental taxes, known formally as transient occupancy taxes, don’t flow directly to the city’s accounts.
Instead, under a nonbinding agreement first signed in 2000, Richmond pays those taxes to the Greater Richmond Convention Center Authority to help pay off bonds issued for the convention center and cover operating expenses. A separate agreement lays out a formula for how part of those revenues will then be returned to each of the local governments involved in the authority.
In fiscal year 2025, Richmond paid almost $11.5 million in occupancy taxes to the authority and had about $4.4 million of that rebated back.
Brandon Hinton, a Henrico County official who serves as GRCCA’s Finance chair, said Friday that the authority expects to receive about $4.3 million in delinquent tax payments from the city. He told The Richmonder that because the city has already paid its share of GRCCA costs, the authority anticipates it will have that full amount returned to it.
Letitia Shelton, Richmond’s director of finance, said that in addition to the $4.3 million in overdue taxes, the city had collected about $760,000 in interest and penalties and an additional $600,000 in assorted fees.
Contact Reporter Sarah Vogelsong at svogelsong@richmonder.org
