Airbnb: Legal Restrictions, Licenses, Permits, And Zoning

When deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city’s zoning or administrative codes. In many cities, you must register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local governments vary greatly in how they enforce these laws. Penalties may include fines or other enforcement.

These rules can be confusing. We’re working with governments around the world to clarify these rules so that everyone has a clear understanding of what the laws are.

In some tax jurisdictions, Airbnb will take care of calculating, collecting, and remitting local occupancy tax on your behalf. Occupancy tax is calculated differently in every jurisdiction, and Airbnb is trying to extend this benefit to more hosts around the globe.

In the meantime, please review your local laws before listing your space on Airbnb. More information about your city’s laws and regulations may be available on Airbnb’s Responsible Hosting page in the Your City’s Regulations section.

By accepting our Terms of Service and activating a listing, you certify that you will follow your local laws and regulations.

What Regulations Apply To My City?

As an Airbnb host, it’s important for you to understand the laws in your city, county, state, province, territory, and/or country (your “jurisdiction”). Dynamic.RE does not provide legal advice, but we do want to give you some useful considerations that may help you better understand the laws and regulations in your jurisdiction. This list is not exhaustive, but it should give you a good start in understanding the kinds of laws that may apply to you. If you have questions, contact your local government, or consult a local lawyer or tax professional.

Business Licenses: Many jurisdictions require owners or operators of certain businesses to apply for and obtain a license before the business can be operated. Many local governments have sections on their websites explaining the business licensing process and providing you with relevant forms and information. Contact your local jurisdiction for more information.
Building and Housing Standards: Most local governments and many jurisdictions have rules and regulations specifying minimum construction, design, and maintenance standards for buildings, including regulations on habitability, health, and safety. Certain rules applicable to residential and non-residential uses may be relevant to your listing. Some jurisdictions may also require an inspection of your property to make sure it meets minimum habitability standards. Contact your local government to find out what standards apply to your listing.
Zoning Rules: Most cities or other local jurisdictions have laws that set out the way you can use your home. These rules are often found in a zoning code, planning code, or city ordinances. You should consult these rules or regulations to see if your listing is consistent with current zoning requirements or use definitions or contact your local government directly.
Special Permit: Some jurisdictions may require a special permit to rent out your home. Contact your local government to see if you need one, and, if you do, how to get it.
Taxes: Many jurisdictions require hosts to collect a tax for each overnight stay, and pay that tax to the city or other jurisdiction. Contact your local government to see if you need to collect any taxes. In certain jurisdictions, Airbnb automatically collects and remits certain taxes on your behalf. If you’re interested we collected 7 tax tips that you can benefit from today!
Landlord-Tenant Laws: When hosting longer stays, you may be subject to landlord-tenant laws that vary by jurisdiction and may impose more onerous legal obligations on you and provide guests with certain additional legal rights. For example, in certain jurisdictions, guests who stay in a home or apartment for a certain period of time—the exact number of days depends on jurisdiction—may establish rights as a tenant. Generally, this means that local tenancy laws could protect them, and you may not be able to remove them from your property without proceeding through required eviction processes. Consult a local lawyer specializing in landlord-tenant law to learn more.
Other Rules: It’s also important to understand and follow other contracts or rules that might apply to your listing, such as leases, timeshare ownership rules, condo board or co-op rules, homeowners association (HOA) rules, or rules established by tenant organizations. Read your lease agreement and check with your landlord, if applicable. If you live in rent-controlled or stabilized housing, there may be special rules that apply to you. Contact your local government to ask questions about this topic.

We’re committed to working with local officials to help them understand how Airbnb benefits our community. Where needed, we will continue to advocate for changes that will allow regular people to rent out their own homes.

In order to stay up-to-date on changing laws and regulations, it is highly encouraged to attend city council meetings and talk with local legislators to share best practices and be aware of what community needs are around the topic.

Short-term rental business opportunities such as Airbnb, HomeAway, and VRBO are a great way for homeowners to earn money. Whether you’re looking to subsidize your income or defray the costs of owning a second home or vacation property, it’s a hot market. According to Research and Markets, the global vacation rental market will register a Compound Annual Growth Rate (CAGR) of close to 7% (an incremental growth of an estimated $57.1 billion) by 2022.

But as short-term rentals have grown beyond a cottage industry, regulators are starting to play catch-up. Spurred by complaints from neighboring residents and the traditional hotel industry, cities have enacted laws to regulate short-term rentals across the nation. The fines for non-compliance can be substantial. In Miami Beach, FL, fines for a first violation start at $20,000.

With such costly and ever-evolving regulatory dynamics, it’s important that property owners understand the legal considerations for short-term rentals. Below are the answers to five commonly asked questions about the laws and regulations that govern short-term rental businesses.

What’s The Definition Of A Short-Term Rental?

Sounds straightforward, right? You rent a room or your entire property to a guest for a short period of time. However, it’s not quite that simple. The definition of a short-term rental can vary based on several key factors:

Type of structure: Each city or county has varying definitions of what constitutes a “short-term rental property”. In Charleston, SC, if the residential property is outside the historic district, it must be over 50 years old. There are even more restrictions imposed on houses that are in the historic district. Whole-house rentals are not allowed.Head on over to the Rockies where in Denver, CO, and you’ll come across a different set of rules for what’s considered a short-term rental: the property must still clearly look and feel like a residence in which someone lives; and mobile homes, RVs or travel trailers cannot serve as short-term rentals.The definition is important because it doesn’t just impact how you rent out your space, but also the types of licenses and permits you need and other laws that may apply. Check with your city or county website to find out more.
Length of stay: How long you open your property to renters is also key in defining it as a short-term rental or not. In many cities, including Denver and Charleston, the length of stay is limited to less than 30 days. Los Angeles recently approved to limit the number of days to 120 a year—although exceptions can be made to those who qualify. Manhattan Beach, CA, is considering lifting its ban on short-term rentals but is looking to restrict the number of days to at least seven.
Residency: Some cities also require that the property have a primary residence in order to prevent investors who don’t live on the property from renting out a unit or entire property as a short-term rental.

What Are The Legal Restrictions For Short-Term Rentals?

In addition to regulating the type of structure and length of stay, there are several other legal restrictions to which short-stay rental businesses are subject. Again, these vary by city, county, and state.

Here are just some of the common restrictions:

Prohibition of short-term rentals: Some cities completely prohibit short-term rentals. In California, the City of Santa Barbara defines short-term rentals as “hotels” that can only operate in designated zones and then only if all necessary approvals are obtained. In San Diego, short-term rentals are prohibited in any zone.
Limits to the number of rental properties in a location: Large cities and tourist destinations tend to have strict rules, such as placing limits on the number of short-term rentals in any given zone. For example, New Orleans, bans short-term rentals in the French Quarter, except for certain areas. The city even has the cooperation of Airbnb and city enforcement officers to track down violations and complaints.
Multiple dwelling laws: New York City has some of the toughest restrictions on short-term lets. To prevent disruption to residents and help prop up its hotel industry, New York’s Multiple Dwelling Law (MDL) only permits rentals of less than 30 days in “Class A” multiple dwellings (buildings with three or more families living independently) if a permanent resident is present. Penalty for the first violation is $1,000; $5,000 for the second; $7,500 for the third and subsequent violations. It is also illegal to advertise a rental that is prohibited by the MDL.

Be sure to check the laws in your state, which are subject to change. If you intend to rent condo or co-op space, consult your association rules to see if anything limits your ability to rent space as well as HOA bylaws or timeshare ownership rules. If you rent your property from a landlord, be sure to get their okay too.

What Licenses And Permits Are Required?

Here’s a checklist of what licenses or permits you may need to obtain:

General business license: If you’re operating any sort of business, including renting property, your city or county will likely require you to obtain a license or permit.
Short-term rental license: You may also need a short-term rental license or permit. Applications typically require you to attest that the property meets health and safety requirements (such as smoke detectors and fire extinguishers), is up to code, is compliant with zoning laws and that adjoining properties have been notified. Proof may also be required that the unit being rented is your primary or secondary residence.

Check your local government website for details or refer to the “Getting Started” information through your online rental company (Airbnb, VRBO, etc.) for license and permit requirements in your area.

What About Zoning Rules?

As we’ve already covered, zoning rules aren’t something to sleep on. Be sure you don’t skip this important step in your business planning. If your property is not zoned for short-term rentals, your options are very limited. Don’t take the risk. All it takes is a complaint from a disgruntled neighbor to trigger a cease and desist notice from the zoning department.

How To Pay Taxes On Short-Term Rentals

Taxes are a critical part of regulatory compliance. In addition to paying income tax and self-employment taxes, some local governments impose a short-term rental occupancy tax (lodging or hotel tax). It’s a good idea to consult your tax advisor to see which tax deductions you can claim. For example, the IRS lets you [claim rental expenses] (https://www.irs.gov/taxtopics/tc415)for property and rooms rented (such as rental fees charged by short-term rental companies) if you meet certain criteria. It’s important to keep thorough records of all rental periods and any expenses incurred throughout the year.

Taxes can be confusing, don’t miss out on these 10 deductions you could be getting for having a short-term rental!

Conclusion

The laws and regulations that govern the short-term rental market are constantly changing. As demand remains high, more and more cities and vacation destinations will continue to take steps to protect residential neighborhoods and guests alike.

For now, check your city’s ordinances and state laws before getting started and revisit them often as regulations can change at any time.