1. City/County: City and county jurisdictions are the most common for regulation vacation rentals
2. HOA: Homeowners Associations most commonly govern condo properties, but can also be in place within entire neighborhoods
3. Taxes/Permitting: Understand local permitting requirements and occupancy tax rates
While this topic may be more mundane than an exciting renovation, understanding regulations is KEY to ensuring you are permitted correctly and don’t get shut down by local authorities.
The most common regulations are at the city and county levels, with county regulations covering unincorporated areas, while city regulations are for properties within a city’s boundaries. Some areas have outright banned rentals of less than 30 days (the definition of a “short term rental” or “vacation rental”), such as Clark County which surrounds Las Vegas, Nevada. Some jurisdictions are still debating what to do, while cities like Denver, Colorado have created a permitting process but require that a property be your primary residence in order to qualify.
We recommend contacting your local city and county to discuss your specific property address, and ask for the written city code ordinance if one applies, since we have gotten different information from people in the same city department.
You know the monthly payment that gets automatically pulled from your checking account to cover landscaping, asphalt patching and maybe a pool – that’s your HOA and they can control your ability to rent short term. Homeowners Associations are setup for the benefit of residents and might not look kindly on having new guests come several times a week. Read the rules carefully before starting a short term rental, as many associations can levy fines against owners for violating the rules. This mainly applies to condo properties but some neighborhoods also have association rules in place. Some cities now require a letter from your HOA before issuing a permit, so don’t think you can just skirt around this.
In most areas you are required to charge an occupancy tax to travelers (similar to lodging tax you pay staying at a hotel), which is then paid to the city. Airbnb collects and remits this in many (but not all) jurisdictions, while VRBO and other platforms generally do not collect this for you (check where Airbnb remits taxes). These taxes are charged in addition to your nightly rate and cleaning fees, so they are a passthrough expense vs. an additional tax on earnings. While taxes can be a hassle most platforms provide reporting on these amounts, and it’s usually required to be sent to the city monthly or quarterly. There is a company called My Lodge Tax that many owners utilize to take that off your hands.
Understanding the rules and regulations for your area are important to your long term success. This step can be accomplished early in the process, so put in the research upfront and get the ball rolling sooner vs. later to avoid delaying having any renters.