If you earn money from a Delaware property, you likely owe one of two state taxes: an 8% lodging tax on short-term stays in hotels, motels, and tourist homes, or the gross receipts tax on long-term rental income. The Delaware rental tax picture turns on how long guests stay and how you book them. Short stays go through the lodging tax, collected from the guest and remitted monthly. Longer leases fall under the gross receipts tax, paid out of the landlord’s own income. Both carry interest for late payment, and the licensing requirements catch independent operators off guard.
The 8% Lodging Tax on Short-Term Stays
Delaware charges 8% of the rent on every occupancy of a room in a covered property.1Justia Law. Delaware Code Title 30 Chapter 61 – Section 6102 The statute, in Title 30, Chapter 61 of the Delaware Code, reaches three types of property: hotels (businesses offering sleeping accommodations and meals with at least six permanent bedrooms), motels (transient lodging with bath facilities, linen service, and parking), and tourist homes (places offering sleeping accommodations with at least five permanent bedrooms but no guest cooking facilities).2Justia Law. Delaware Code Title 30 Chapter 61 – Section 6101 Vacation properties rented through Airbnb or VRBO generally fall within these categories.
“Rent” is defined broadly. It includes all consideration received for the occupancy, in cash, credit, property, or services, with no deductions.2Justia Law. Delaware Code Title 30 Chapter 61 – Section 6101 A mandatory cleaning fee bundled into the price is taxable. A discount reduces the taxable amount to what the guest actually pays. Municipal lodging taxes, however, are excluded from “rent” for state tax purposes, so you don’t pay the 8% on top of a local accommodations tax.3Division of Revenue – State of Delaware. Short-Term Rental FAQs
Who Collects the Lodging Tax
The operator collects the tax from the guest when rent is paid.4Delaware Code Online. Delaware Code Title 30 Chapter 61 – Lodging Tax For traditional hotels and motels, the 8% simply appears on the guest’s bill.
For properties booked through a Delaware-licensed accommodations intermediary — platforms like Airbnb, VRBO, Booking.com, Expedia, or Tripadvisor — the platform collects and remits the tax. If you list only through those platforms, you don’t handle the lodging tax yourself.3Division of Revenue – State of Delaware. Short-Term Rental FAQs
Rent directly to guests without a platform, and the responsibility shifts to you. You must obtain a Delaware accommodations intermediary business license, which costs $25, and collect and remit the tax yourself.3Division of Revenue – State of Delaware. Short-Term Rental FAQs This is where independent operators most commonly fall out of compliance.
Separately, anyone doing business in Delaware needs a general business license from the Division of Revenue. The first-location annual fee is $75, and most licenses expire December 31.5State of Delaware Division of Revenue. Business Licenses FAQs Registration runs through the Delaware One Stop portal.6Delaware One Stop. Register and License Your Business to Operate in Delaware
When Lodging Tax Is Due
The lodging tax is filed monthly. Tax collected during a month is due to the Department of Finance by the fifteenth of the following month.4Delaware Code Online. Delaware Code Title 30 Chapter 61 – Lodging Tax June collections, for example, must be paid by July 15. Payments go through the Division of Revenue’s online taxpayer portal.7State of Delaware. Short-Term Rental Lodging Tax
Keep records of each booking: rent charged, fees, tax collected, and dates of occupancy. These support your filings and matter if the state questions a return.
Who Is Exempt
The lodging tax does not apply to permanent residents. An occupant who resides in, or has the contractual right to reside in, a hotel, motel, or tourist home for at least five consecutive months qualifies.2Justia Law. Delaware Code Title 30 Chapter 61 – Section 61018State of Delaware. Public Accommodations Tax The threshold is five consecutive months of occupancy or the right to occupy, not a specific number of nights.
Some institutions are excluded from the definition of “hotel” altogether: charitable, educational, and religious institutions, children’s summer camps, hospitals, and nursing homes.2Justia Law. Delaware Code Title 30 Chapter 61 – Section 6101 Those properties fall outside the lodging tax regardless of length of stay.
Exemption from the lodging tax does not mean the rental income is tax-free. Long-term rental income is reached by the gross receipts tax instead.
Local Lodging Taxes
The state’s 8% does not replace municipal taxes. If a Delaware town or city imposes its own accommodations or rental tax, you collect and remit that separately to the municipality.3Division of Revenue – State of Delaware. Short-Term Rental FAQs Several Sussex County beach towns impose their own local lodging and rental taxes at varying rates, so a property’s combined tax burden can run well above 8%. Check with the municipality directly for the rate and registration process. The Division of Revenue handles only the state side.
Gross Receipts Tax on Long-Term Rentals
Rental income that falls outside the lodging tax is reached by Delaware’s gross receipts tax, which applies to most business activity in the state. For commercial lessors, the rate is 0.3983% of rental income received, with the first $100,000 per month (or $300,000 per quarter) excluded.9State of Delaware. Tax Tips for Commercial Lessor Conducting Business in Delaware Smaller landlords often owe nothing after the exclusion, but still have to file.
New businesses start as quarterly filers. The Division of Revenue uses a look-back period to decide whether you file monthly or quarterly going forward. Quarterly returns are due by the last day of the first month after the quarter ends; monthly returns are due by the twentieth of the following month.10Delaware Division of Revenue. Gross Receipts Tax FAQs
Interest on Late Payments
Late lodging tax payments accrue interest at 1% per month or any fraction of a month from the due date.4Delaware Code Online. Delaware Code Title 30 Chapter 61 – Lodging Tax Six months late means an added 6% on top of the tax owed. Operating without the required business license or accommodations intermediary license can also trigger action by the Division of Revenue against your ability to do business, and the state may audit your records if it suspects underreporting. Accurate monthly filings and organized records are the cheapest protection.