HomeAway invests in vacation-rental tax service HotSpot Tax

One of the only things more confusing than determining your city/state’s regulations for a peer-based property rental service is figuring out how to do the book keeping in anticipation of tax season.

That’s part of why Austin, Texas-based HomeAway decided to make a strategic investment in tax service HotSpot Tax, which specializes in automating taxes for short-term rental properties. HomeAway is similar to Airbnb in that it allows people to rent out their properties to strangers via its online marketplace. HomeAway, however, skews more towards upscale properties, like summer homes, beach houses, summer condos, etc.

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While HomeAway didn’t disclose the financial terms of the investment, the company has partnered with HotSpot for years. It’s likely the company sees this as a way to ensure it’s able to offer its property owners an easy, tax-compliant way to do paperwork on all the homes that are rented out on HomeAway. And since those properties are more expensive (and often charge more than an Airbnb rental), screwing up the taxes could cost property owners — possibly enough to make them reconsider renting the property out to begin with.

“Generally, if people are not compliant, it’s because it’s not easy to figure out and comply with local requirements, not because they’re avoiding taxes,” said HomeAway cofounder Carl Shepherd in a statement. “HotSpot makes it easy for owners to know they have properly remitted these highly specific taxes, which in turn increases local compliance and helps municipalities benefit from the vacation rental industry.”

HomeAway said the new investment will allow HotSpot to expand its tax service as well as allow the service to be integrated into other short-term rental platforms like HomeAway.