4 Things to Check on Short Term Rental Regulations in Your City

4 Things to Check on Short Term Rental Regulations in Your City

For many years, rental businesses have been a feasible way for property owners to make some extra cash. Managing short-term rentals comes with many advantages like the high-profit margins and the flexibility they offer. However, many people are not aware that rules are governing renting out of promises for a short-term period yet there are actually penalties for those who do not comply with the regulations.

Therefore, one needs to be conversant with the regulations to avoid running into trouble with the law. Here are a few things you need to check out before starting a short-term rental service.

State Specific Legal Regulations

Every state has different measures established to regulate the number of rentals in the area. At times, this is done to aid in sustaining the other lodging businesses available like hotels. Notably, these laws keep changing so it is important to check first before starting rentals. Some restrictions that you should check out include:

•    Multiple dwelling Laws: Cities like New York have some tough regulations on short-term rentals. This is to done to promote the local hotel industry. For the city, this law permits rentals for a maximum of 30 days and only if the permanent resident is available. Breaking this law attracts a hefty fine of up to $2,500 a day.

•    Limits to the number of rentals in an area: This also varies according to state, and it regulates the number of rentals in a given place.

•    Bans on short-term rentals: In some cities, like the City of Santa Barbara, short-term rentals are completely banned and only hotels are allowed to operate.

Check Your Tax Requirements

When operating short-term rentals, you may be required to pay additional taxes which are separate from your other taxes like income tax. Precisely, this will be a short-term rental occupancy tax. This tax works like a hotel tax. And if you’re renting out a condo, you also have to pay the condo property tax once a year. Ideally, you should get an accountant to determine how much you can claim and how much you will have to subtract. This will help you in monitoring your costs over the year. Your financial advisor will also guide you on getting a separate bank account if it may be necessary for your rental venture.

Permits and Licenses Required

These are a must-have because they grant permission from the state to use your premises as short-term rentals. They also show that your business is compliant with the health and safety laws. The two licenses you will require before renting are General Business License and Short-Term Rental License. The first one is mandatory for every business owner as is the norm in every state. The second one, Short-Term Rental License, is the more complicated one as it will involve following the zonal laws and meeting the required safety and health standards. Your neighbors have to be in the know that you are renting out.

Define your Short-term Rental Type

Short-term rental is defined in two ways: by the length of stay and type of structure. Under the type of structure, the definition is dependent on the state. For some, it is defined as a furnished home, condo or dwelling rented out to the transient or traveling public. Others may define it as a dwelling unit with 6 or fewer sleeping rooms meant for occupation by guests.
Under the length of stay, how long and how often you rent out your property is important in defining your rental type and its accompanying regulations. In Florida, it is defined as a property rented out more than three times a year and less than 30 days a time. Seattle defines it differently as a home rented for a fee for less than 30 consecutive nights.

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