In the past few years, short-term rental websites have been booming. Airbnb and other companies offer a platform for people to list their homes or spaces for rent temporarily. This has become especially popular in large cities that are popular tourist destinations, where hotel rooms can be scarce during certain times of the year. However, with this popularity comes some difficulties– namely keeping up with ever-changing regulations from city governments.
1) Check the Regulations
It is important to know and understand your city’s regulations when it comes to short-term rentals. Every city has its own set of rules, and they can change often! Make sure you are up-to-date on the latest rules and regulations, so you don’t unknowingly break any laws. This allows you to be in the clear when anything comes up, and it also avoids putting your business at risk. You should always check the city’s website, as well as reach out to your local government or a consultant. In some cases, you may even need to register with the city to have your short-term rental listed.
2) Keep Track of Taxes
There are several ways you can pay tax on your short-term rental profits– this could include income, general excise, or transient occupancy taxes. You’ll want to keep track of these numbers throughout the year so you can accurately report them to your city later on. Keeping notes on expenses related to managing the rental property is good practice even if you don’t have to worry about taxes. This way if any questions arise you are prepared with receipts and other information necessary for reporting.
3) Take Advantage of Perks
Many cities offer incentives for short-term rental properties. For example, in LA there is the Short Term Rental Exemption which exempts certain hosts from having to pay transient occupancy tax (TOT). The host must apply and be approved by the city before they can receive this exemption; however, it can mean saving hundreds or thousands of dollars a year depending on the price of their rental. Also, San Francisco has a program called “Sharing Economy Success Stories” that helps connect hosts with resources to help them meet city codes and regulations. Keep an eye out for ways your city might offer discounted business licenses, reduced registration fees, or other perks for being a short-term rental host!
4) Remember It’s Your Responsibility
Despite what you’ve heard, short-term rentals are still illegal in some cities if they aren’t legal in yours this could make it difficult to use many services related to short-term rental economies such as Airbnb. In addition, there may be other costs associated with renting your home if you live in an area where these types of rentals are prohibited. Be sure to check with your city before getting started!
Even though it can be hard to keep up with changing laws and regulations, having a short-term rental can help boost your income, increase bookings on your other rentals, and bring in visitors who might not otherwise discover the area. Just make sure you know what’s required of you so you stay within the law!
