MEMPHIS, TN (WMC) - Memphians are cashing in on the latest vacation trend, but a change in local law could slow the flow of cash.
Sites like Airbnb and VRBO allow Memphians like Sterling Owens to rent out their homes for extra income. For tourists, the sites allow them to vacation in different living quarters, often at cheaper rates than hotels.
Homeowners can either rent out a room or their entire house. Plus, homeowners can set their own rates.
"It's been great meeting people from all over the world. I've learned more about my hometown." Owens said.
Owens is a lawyer by day, but rents out her place on Airbnb.
"I like the experience, and it's profitable," she said.
Currently, City of Memphis does not collect any taxes for short term rental sites, but on March 1, that will change.
Homeowners that use Airbnb to rent out rooms or their homes will have to pay a 3.5 percent tax--the same rate that hotels in the area pay.
There will also be a $2 per night tax as well. That's on top of the up to 12 percent service charge that sites like Airbnb and VRBO charge.
The City Council says the money collected from the tax ordinance will go to the Memphis Tourism Bureau to fund projects like renovations for FedExForum and the Cook Convention Center.
Homeowners should also consider that the money they earn from renting out their homes is considered a taxable income. Which, if not reported on taxes could get the IRS on their backs.
Local governments around the country have been working to tax sites like Airbnb and VRBO, so Memphians who use the service said they were not too surprised when they learned that Memphis would start taxing them.