Short-Term Rentals & Hosts Bookkeeping in Montana

Montana is one of the five states with no statewide general sales tax, and hosts routinely conclude from that they collect nothing. That is wrong: accommodations are taxed statewide through a lodging facility use tax and a sales tax on accommodations — two separate levies on the same booking, in a state with no general sales tax. Lodging is taxed in every one of those five states, which makes Montana one of the places this gets missed most often. Whatever you collect is money held for a taxing authority from the moment it arrives, and it belongs in a liability account rather than in revenue — otherwise you will spend it, and it will still be owed.

Airbnb and Vrbo collect and remit lodging tax on the host's behalf in many jurisdictions and not in others, and the arrangement can differ between the state portion and the city portion of the same booking. In Montana that means the practical question is never "does the platform handle it" but "which parts of it, and what is left for me" — and direct bookings taken outside a platform are almost always entirely yours to collect and remit. The books have to separate the two streams from the start, because the platform's own reporting will only ever cover its own bookings — and the Montana Department of Revenue will not accept "the platform was handling it" as an account of the rest.

The layer that catches Montana hosts out is local rather than state. Registration or permit requirements for short-term rentals are set by the city or county, often with a cap on nights, a licence fee, and a separate local filing of its own — none of which the Montana Department of Revenue administers or will tell you about. No general sales tax. Resort communities may levy a local resort tax on lodging and certain retail. Treat the local requirement as a distinct compliance track with its own calendar: it generates the fines, and no state-level portal will remind you about it. Because Montana has no statewide sales tax account to maintain, the local registration is very often the ONLY recurring filing a host here has — which is exactly why it gets forgotten.

Rental income earned in Montana is subject to Montana personal income tax, and where the property is here but you are not, that generally means a non-resident filing as well as your home state's. It also means the capitalise-versus-expense line on furnishings, appliances, and improvements has real consequences in two jurisdictions rather than one. We keep those costs separated and consistently treated as they are incurred; the return itself belongs with your CPA or enrolled agent.