Effective January 1, 2025, any short-term rental agreement signed after that date will be subject to a State Rental Tax of 4.5% of the rent (other fees are not taxed). This tax will be in addition to any local municipality tax on rentals, and it also gives the county the ability to impose a rental tax of up to 3%.
The new law also requires an "Accommodations Intermediary" with a licensing fee of $25, which our company will be taking care of. Similar to the existing taxes of most municipalities, the tax will be paid by the Guest, collected by us as the Rental Company, and paid by us to the State.
So the tax does not affect you directly as the owner, but it does make each rental a little more expensive for the Guests. We will have to see what effect this will have for next season. A short-term rental is defined as a stay of 31 days or less.
Here are some examples of how the new tax will affect rentals in different localities:
- Bethany Beach: 7% local plus 4.5% state = total tax of 11.5%
- Dewey Beach: 3% local plus 4.5% state = 7.5%
- Lewes: 5% local plus 4.5% state = 9.5%
- Ocean View: 5% local plus 4.5% state = 9.5%
- Rehoboth Beach: 7% local plus 4.5% state = 11.5%
- If Sussex County imposes a 3% tax, in addition to the 4.5% state tax = 7.5% (for properties in unincorporated areas)
We do owe a great deal of gratitude to our own Lewes Rental Manager, Adriane Gallagher, as she has been involved in a task force through our affiliation with the Delaware Association of REALTORS. This group has been in discussions with legislators for several years on this topic, and was able to get the tax reduced significantly from the 8% they were originally seeking, among other concessions.
