LEWES, Del. – The Lewes City Council is presenting two ordinances Feb. 27 to look at amending the city’s taxation policies, implementing a 2 percent lodging tax and modifying the gross receipts tax rate for rental properties.
The first ordinance establishes a 2 percent lodging tax on hotel, motel, and tourist home stays within city limits. Revenue from this tax will support public services. Property owners collecting rent must file a monthly rental tax report with the city manager, with payments due by the 15th of the following month. Failure to comply may result in penalties, interest charges, and potential loss of rental licenses. Reservations made before April 1, will be exempt.
A second ordinance looks to update the city’s gross receipts tax on rental properties. Short-term rentals of 30 days or less will be subject to a 5.5 percent tax, while long-term rentals will be taxed at 5 percent. Property owners are responsible for tax payments, though they may designate an agent to handle collection and remittance. Certain accessory dwelling units used for long-term rentals may qualify for tax exemptions if rental rates meet affordability criteria.
If introduced, both ordinances will take effect on April 1, with exemptions for leases executed before that date.
Rick Quill owns the Blue Water House, and he thinks the 2 percent lodging tax wouldn't be equitable.
"I fight for my customers," said Quill, noting that his customers would have to take the burden of that fee.
Jesse Burns with The Inn At Canal Square is also worried what higher fees would mean for customers.
"With those price points, it makes it very difficult for people to travel, especially in these difficult times. Every 8 percent counts or two on top of that even. So every 2 percent does count," said Burns.
Burns also says it's hard for hotels to compete with rental properties.
"We have a tremendous amount of overhead that these properties don't have; employees is the main one." said Burns.