                                 CODE OF VIRGINIA

SHORT-TERM RENTAL PROPERTY; SHORT-TERM RENTAL BUSINESSES (§ 58.1-3510.4)

A. For purposes of this article, &#8220;short-term rental property&#8221; means
all tangible personal property held for rental and owned by a person engaged in
the short-term rental business as defined in subsection B, excluding (i)
trailers as defined in &#xA7; 46.2-100, and (ii) other tangible personal
property required to be licensed or registered with the Department of Motor
Vehicles, Department of Wildlife Resources, or Department of Aviation.
			Short-term rental property shall constitute a classification of
merchants&#8217; capital that is separate from other classifications of
merchants&#8217; capital. For local property taxation purposes, the governing
body of any county, city, or town may tax short-term rental property pursuant to
&#xA7; 58.1-3509 or may impose the tax authorized under &#xA7; 58.1-3510.6, but
not both.

B. A person is engaged in the short-term rental business if:

   1. Not less than 80 percent of the gross rental receipts of such business
   during the preceding year arose from transactions involving the rental of
   short-term rental property, other than heavy equipment property as defined in
   subdivision 2, for periods of 92 consecutive days or less, including all
   extensions and renewals to the same person or a person affiliated with the
   lessee; or

   2. Not less than 60 percent of the gross rental receipts of such business
   during the preceding year arose from transactions involving the rental of
   heavy equipment property for periods of 270 consecutive days or less,
   including all extensions and renewals to the same person or a person
   affiliated with the lessee. For the purposes of this subdivision, &#8220;heavy
   equipment property&#8221; means rental property of an industry that is
   described under code 532412 or 532490 of the 2002 North American Industry
   Classification System as published by the United States Census Bureau,
   excluding office furniture, office equipment, and programmable computer
   equipment and peripherals as defined in &#xA7; 58.1-3503 A 16.

C. For purposes of determining whether a person is engaged in the short-term
rental business as defined in subsection B, (i) a person is
&#8220;affiliated&#8221; with the lessee of rental property if such person is an
officer, director, partner, member, shareholder, parent or subsidiary of the
lessee, or if such person and the lessee have any common ownership interest in
excess of five percent, (ii) any rental to a person affiliated with the lessee
shall be treated as rental receipts but shall not qualify for purposes of the 80
percent requirement of subdivision 1 of subsection B or the 60 percent
requirement of subdivision 2 of subsection B, and (iii) any rental of personal
property which also involves the provision of personal services for the
operation of the personal property rented shall not be treated as gross receipts
from rental, provided however that the delivery and installation of tangible
personal property shall not mean operation for the purposes of this subdivision.

D. A person who has not previously been engaged in the short-term rental
business who applies for a certificate of registration pursuant to &#xA7;
58.1-3510.5 shall be eligible for registration upon his certification that he
anticipates meeting the requirements of a specific subdivision of subsection B,
designated by the applicant at the time of application, during the year for
which registration is sought.

E. In the event that the commissioner of the revenue makes a written
determination that a rental business previously certified as short-term rental
business pursuant to &#xA7; 58.1-3510.5 has failed to meet either of the tests
set forth in subsection B during a preceding tax year, such business shall lose
its certification as a short-term rental business and shall be subject to the
business personal property tax with respect to all rental property for the tax
year in which such certification is lost and any subsequent tax years until such
time as the rental business obtains recertification pursuant to &#xA7;
58.1-3510.5. In the event that a rental business loses its certification as a
short-term rental business pursuant to this subsection, such business shall not
be required to refund to customers daily rental property taxes previously
collected in good faith and shall not be subject to assessment for business
personal property taxes with respect to rental property for tax years preceding
the year in which the certification is lost unless the commissioner makes a
written determination that the business obtained its certification by knowingly
making materially false statements in its application, in which case the
commissioner may assess the taxpayer the amount of the difference between
short-term rental property taxes remitted by such business during the period in
which the taxpayer wrongfully held certification and the business personal
property taxes that would have been due during such period but for the
certification obtained by the making of the materially false statements. Any
such assessment, and any determination not to certify or to decertify a rental
business as a short-term rental business as defined in this subsection, may be
appealed pursuant to the procedures and requirements set forth in &#xA7;
58.1-3983.1 for appeals of local business taxes, which shall apply mutatis
mutandis to such assessments and certification decisions.

F. A rental business that has been decertified pursuant to the provisions of
subsection E shall be eligible for recertification for a subsequent tax year
upon a showing that it has met one of the tests provided in subsection B for at
least ten months of operations during the present tax year.

HISTORY: 2009, cc. 480, 692; 2010, cc. 255, 295; 2020, c. 958.