A new law in Georgia is expected to make great strides in answering one of the Augusta area’s most mysterious questions: What is the exact economic impact of the Masters tournament?
According to estimates by local tourism officials, the annual impact is more than $ 100 million. But there was always at least one intangible factor – home rental income during Masters Week.
“There really never was a tracking mechanism for the number of homes rented,” said Shelly Blackburn, executive director of the Columbia County Convention and Visitor Bureau.
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Sue Parr, President and CEO of Augusta Metro’s Chamber of Commerce, agreed that the economic impact of the legendary golf tournament is “difficult to calibrate” due to the rental.
“Some of this is facilitated by third party vendors,” she said. “But obviously Augusta is unique when it comes to renting out Masters. Trying to quantify that is a challenge. “
From July 1st, things are likely to get less difficult. Then Georgia House Bill 317 comes into effect after it was signed by Governor Brian Kemp in April. The law requires anyone offering short-term accommodation – less than 30 days – an excise tax of $ 5 per night and remitted to the county governments.
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The bill is Kemp’s latest “market broker” law designed to generate revenue from third parties – in this case, online businesses like Airbnb and Vrbo, which make profits by helping brokerage properties between sellers and customers.
HB 317 also classifies anyone offering short-term accommodation as an “innkeeper” for tax collection purposes. This means that people who make rooms or entire houses available to the master appear in their respective counties as commercial taxpayers who can easily be counted. The gloomy economic picture of short-term master leasing will move more into focus.
Another bill for marketplace intermediaries that went into effect last year required third parties to pay state and local sales taxes on all transactions, including short-term rents. In 2015, a bill to increase state transportation funding included a tax of $ 5 per night per room for Georgia hotels.
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The new law extends the $ 5 tax to people who offer rooms and apartments for rent.
Short-term master rentals have managed to break the tax oversight of the past for decades.
Accountant Tony Nitti wrote a detailed regulation in Forbes magazine in 2013 that is embedded in the vast US Internal Revenue Code.
“When Section 280A was enacted in the mid-1970s to limit the cost of renting a residence, a group of powerful people who were previously able to rent their homes for short term rent – some of them were from Augusta, Georgia , home of the Masters – campaigned for Congress to keep their tax-free windfall, ”wrote Nitti. “And Congress, as it is known from time to time, is dedicated to its influential voters.”
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Then-US Representative Charlie Norwood helped fend off several attempts by Congress in the 1990s to remove the same regulations that exempted rental income of less than 15 days from federal taxation.
The new Georgian law is also designed to simplify the tax collection process, and Parr said she saw an opportunity for city and county governments to rethink their current housing regulations in order to level the playing field for all counties.
“The counties have some flexibility within their county ordinances to define what is taxable and we would like to see tax treatment for all homeowners in the area for those who want to rent their home for masters,” she said .
Richmond County currently has and pays a 6% property tax plus the $ 5 daily tax waived in 2015. Columbia County’s Housing Tax is 5% and the tax is $ 5.
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“I think everyone agrees that the Georgia General Assembly has taken a good step in finding a way for counties to potentially participate in the benefits of home rental as home rental becomes a bigger industry,” Parr said.
Since Columbia County’s CVB moved to its new tourist information center at Savannah Rapids Park in Martinez last summer, Blackburn has seen a surge in visitor numbers when choosing accommodations like Airbnb.
“I think it’s definitely something that will last a while and affect us all year round, obviously the Masters are the majority of it,” she said. How that impact will translate into dollars, she added, “We really have no idea. We are excited to see what the rental market is really like out there. “