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Your Legal Obligations as a Short-Term Rental Owner

With the popularity of sites such as Airbnb and VRBO, you may have considered offering your vacation home as a short-term rental. It sounds like a good way to earn extra income and may substantially offset your costs to maintain the property. But it’s important to note that renting out a vacation home should be viewed as a business. You should understand any regulations, restrictions, permits and taxes you will be responsible for before offering your property up for rent. Because short-term rentals have become such a popular option for vacationers, the hotel industry as well as neighbors of these properties have offered pushback in recent years. Lack of compliance can result in fines and lawsuits. Because the short-term rental industry is evolving and adapting to ever-increasing scrutiny, property owners need to understand their legal obligations.

What is a Short-Term Rental?

A short-term rental means more than merely renting out a property for short periods of time. They are more clearly defined in two different kinds of ways. One is the structure itself. Depending on the state or municipality, there may be a minimum of rooms that will designate it a short-term rental instead of just renting a private room in a home. You will want to understand how your local city or country defines a short-term rental in order to understand what licenses or permits you may need. Another way that a short-term rental may be designated is by the length of stay. Some municipalities prohibit rentals less than 30 days. It’s important to understand what your local municipality allows before renting your property as a vacation rental.

What Are the Legal Restrictions?

Other than the designation of what is a short-term rental, there may be other laws that exist that will affect your decision to rent your property. In some municipalities, short-term rentals are not legal at all while others are limited by zoning or other restrictions. Other municipalities restrict the number of days per year that a property can be rented before a surcharge is imposed. Some regulate the areas where rentals can operate. It’s important to understand your particular community’s laws and restrictions. Failure to abide by these can result in steep penalties.

Licenses and Permits

If you intend to rent your property as a short-term rental, you probably may need to secure the following licenses and permits.

  • Business license -- your municipality probably requires you to have a general business license
  • Short-term rental license -- you may need to apply for a license or permit for a short-term rental depending on your municipality and county. This will ensure that you are compliant with zoning restrictions, health and safety requirements and, if necessary, that neighbors have received notification of your intention.

Taxes

Depending on your county or municipality, you may be responsible for paying lodging taxes or a hotel tax for each rental period.

Get Professional Help

Because short-term rental regulations are constantly evolving, it’s important to frequently check with your local government to make sure you’re in compliance. If you have questions about short-term rentals, it’s helpful to consult with an attorney or a professional Airbnb management company . Our management experts at Better Vacations would be glad to help.