Bed Tax

A bed tax refers to a fee collected by a city, county or other municipality for each night someone rents a room in a hotel, motel or other temporary lodging place. Common exceptions to this charge are for those staying on the premises more than 30 days or some employees of government agencies. Normally, the business will report and pay this tax once a quarter. When an investor is looking to buy a hotel, motel or inn, it is prudent to review the bed taxes collected from the premises; this is one indicator of whether the place had enough guests to remain profitable. It may not match the gross sales figures exactly, but it should be close. The bed tax is often a popular source of revenue for local governments since it normally taxes people passing through the area instead of those living locally.