The short-term rental space is ever changing. From rulings at the state level to local policies, making sure the property you’re renting out is in compliance with these regulations should be priority number one.
Making the decision to purchase a second home to use as a short-term rental or rent out a property you already own is exciting – but before you make a down payment or create a listing, there are a few things you need to know as a vacation rental homeowner.
What kind of permits do I need to legally operate a STR?
Do I have to disclose to my Homeowner Association that I’m renting out my home?
How will owning a second home affect filing my taxes?
To avoid any confusion, make sure you do these 4 things before you make the decision to rent out your home:
Check Zoning Laws
Some cities have blanket policies for STRs, while others will create zone-based policies. For example – it might be legal for you to operate a vacation rental in the downtown area of your city, but not in the residential part of it.
Visit your city’s website to see current rulings and keep an eye on any future hearings regarding zone changes.
Secure Licenses and Permits
Most cities, whether they’re short-term rental friendly or not, require homeowners to obtain permits and licenses to legally list their home on vacation rental sites.
Some cities just require a permit, while some go so far as to require homeowners to register their home as a business and meet certain occupancy requirements.
Research your city’s requirements before you commit to buying or listing a home but remember – it’ll be cheaper to pay for a city permit than to pay for a fine for illegally operating a short-term rental.
Connect With Your HOA
Homeowner Associations exist to make the lives of its members easier and to build a sense of community in a neighborhood or apartment complex. Each HOA has its own rules, some of which pertain to owning short-term rentals.
Some HOAs allow short-term rentals with certain caveats, while others forbid it. If you’re looking to list a home you already own, look at your HOA handbook. If you’re looking to purchase a property to use as a short-term rental, consider sitting in on some HOA meetings before you buy.
Understand How Your Taxes Will Change
Operating a short-term rental will change how you file your taxes each year. Usage, local tax regulations, and income will affect what your taxes will look like. Here are 6 tax tips to keep in mind as a vacation rental homeowner.
Meeting with an accountant to discuss possible tax changes is a great way to get an idea of how vacation rental income can alter your current income and tax bracket.
If keeping up with regulations, rulings, and legalities seems too daunting, you might want to consider hiring a property manager, like TurnKey. We make sure your home is in compliance with local laws every step of the way, and we have your back during tax season.
Learn more about partnering with TurnKey here.