Maine Sales Tax on Casual Rentals

By Daniel Gayer November 3, 2012

Many people in Maine own vacation homes, camps, or ski condos that they rent casually for a few weeks or perhaps several months during the year, often to defray costs of ownership when they are not using the property themselves.  Even though most people probably would think of sales tax more in connection with buying a new car or other products, this type of casual rental is also subject to Maine sales tax.  If you own living quarters that you rent for 15 days or more in a year, you are required to register with Maine Revenue Services and collect and remit sales tax at a rate of 7%.

There are several exceptions to this rule.  A property owner does not need to collect sales tax if:

• The property is rented for fewer than 15 days during the calendar year.  However, if the owner uses a real estate agent or property rental company, the owner must collect and remit sales tax regardless of the number of days rented.
• The property is rented to a sales tax exempt organization such as a governmental agency.
• The property is rented to a person continuously for 28 days or more for use as a primary residence.
• The property is rented to a person continuously for 28 days or more when the person is residing away from his or her primary residence for employment or education.  If this exception is used, the property owner must obtain a statement from the employer or educational institution confirming that the renter’s stay in the area relates to work or education.
• The property owner also owns a business and rents living quarters to an employee for the convenience of the property owner.

If the property owner is an individual who files a Maine Individual Income Tax Return (Form 1040-ME) and sales tax of less than $2,000 is collected during the year (taxable rents of less than $28,570), the owner does not need to file a separate sales tax return.  Instead, the sales tax may be reported and remitted along with his or her individual income tax.  If total sales tax collected exceeds $2,000, Maine Revenue Services requires separate sales tax returns.

For more information on Maine sales tax, how to register and file returns, or other state and local tax questions, please contact Merrill Barter, BNN’s state and local tax practice leader, at 1.800.244.7444.