Ezel / Tax Rulings / VA
VA P.D. 07-141 BPOL Tax Transient Occupancy Tax 2007-09-05

Did occasional short-term rental of an owner's second home owe BPOL tax, and did the Virginia Tax Commissioner decide the transient occupancy tax?

Short answer: The private-home rental was exempt from BPOL tax. The Tax Commissioner did not decide whether transient occupancy tax was due because that tax fell outside the Commissioner's advisory jurisdiction; the owner had to pursue the local administrative and court appeal route.

Apply this to your situation

This page answers the general question as of 2007. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2007
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a Virginia Tax Commissioner advisory opinion on locally administered taxes and one owner's occasional second-home rentals. It concludes only the BPOL issue; it expressly declines to decide transient occupancy tax for lack of jurisdiction. Local ordinances, rental facts, and current appeal procedures can change the outcome. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Subject

County is requiring the Taxpayer to remit transient occupancy tax.

Plain-English summary

Virginia found the owner's rental of a private second home exempt from BPOL tax, but the Tax Commissioner did not decide whether the county's transient occupancy tax applied.

The home was rented for stays under 30 days during about one-third of the year and used by the owner for the remaining two-thirds. Virginia's BPOL statute prohibited local license tax or fees on an owner renting real property other than the listed hotel, motel, lodging-house, and similar businesses. The private residence therefore fell within the BPOL protection described in the opinion.

Transient occupancy tax followed a different path. The Tax Commissioner's local advisory jurisdiction covered only specified business property taxes, not transient occupancy tax. That assessment had to be challenged first with the local commissioner of the revenue and, if necessary, in circuit court.

What this means for you

  • Owner rental of a private residence can be exempt from BPOL tax under the rule applied here.
  • BPOL exemption does not itself eliminate transient occupancy tax.
  • Different local taxes can have different appeal routes and decision-makers.
  • Review the locality's current ordinance and filing duties even when no BPOL license tax is due.

Common questions

Did the owner owe BPOL tax? No, on the stated private-residence facts.

Did Virginia say the transient occupancy tax was valid? No. The Commissioner expressly lacked jurisdiction to decide it.

Where did that dispute go next? First to the local commissioner of the revenue, then potentially to circuit court.

Citations and references

  • Va. Code § 58.1-3701 and § 58.1-3703(C)(7).
  • Va. Code § 58.1-3983.1, § 58.1-3980, and § 58.1-3984.
  • P.D. 99-13 (January 14, 1999).

Source

Original ruling text

September 5, 2007

Re: Request for Advisory Opinion

Business, Professional and Occupational License tax

Transient Occupancy Tax

Dear *:

This is in response to your letter requesting an advisory opinion about the applicability of the transient occupancy tax and the business, professional and occupational license (BPOL) tax to the occasional rental of your second home.

The local license fee and tax are imposed and administered by local officials. Virginia Code § 58.1-3701 authorizes the Department to promulgate guidelines and issue advisory opinions on local license tax issues. The following opinion has been made subject to the facts presented to the Department summarized below. Any change in these facts or the introduction of facts by another party may lead to a different result.

The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site.

FACTS

* (the "Taxpayer") owns a second home in *** (the "County") that is rented for periods of less than 30 days. The house is rented for about a third of the year and used by the Taxpayer for the other two-thirds. The County assessed BPOL taxes on the rental of the house. In addition, the County is requiring the Taxpayer to remit transient occupancy tax. The Taxpayer requests an opinion as to whether she is required to pay these taxes.

OPINION

BPOL Tax

Virginia Code § 58.1-3703 C 7 prohibits any locality from imposing a license fee or tax:

[u]pon any person, firm or corporation for engaging in the business of renting, as the owner of such property, real property other than hotels, motels, motor lodges, auto courts, tourist courts, travel trailer parks, lodging houses, rooming houses and boardinghouses . . .

Under this provision, persons who rent their private residences are clearly exempt from both the license tax and fee. For further discussion of this, see Public Document (P.D.) 99-13 (1/14/1999).

Transient Occupancy Tax

Virginia Code § 58.1-3983.1 authorizes the Tax Commissioner to issue advisory opinions of certain local business taxes. These taxes are: the business tangible personal property tax, the machinery and tools tax, the merchants capital tax and the local mobile property tax. Therefore, I do not have jurisdiction to issue an advisory opinion or make any determination with respect to the transient occupancy tax.

All other local business tax assessments, including transient occupancy tax assessments, may be appealed first through the local commissioner of the revenue, under the provisions of Va. Code § 58.1-3980, then, if necessary, to the circuit court pursuant to the provisions of Va. Code § 58.1-3984.

If you have any questions regarding this opinion, you may call * Office of Policy and Administration, Appeals and Rulings at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1421233995H

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