Short-term rental licenses and regulations

Remote work has heightened the demand for short-term rentals as more Americans choose to work from “home” while away from home.

What licenses and permits do a short-term rental business need?

Cities and counties may require short-term rentals to register and obtain at least one license or permit to operate. These may include the following:

• General business license: Some cities require all businesses to obtain a general business license (sometimes called a privilege or occupation license or a business tax certificate).
• Short-term license/permit: The steps to obtaining a license/permit may involve:
• Reviewing the local ordinance to check eligibility
• Submitting an application
• Providing any required documents (proof of property insurance, possession of property certificate (if applicable)
• Paying a fee
• Getting an inspection
• Certificate of occupancy: States a legal use and/or type of permitted occupancy of a building.

Property owners are also responsible for ensuring their short-term rental properties are maintained in a safe and code-compliant manner.

Other business requirements may include:

• Registering with the Secretary of State
• Obtaining an Employer Identification Number (EIN) from the IRS
• Obtaining a sales tax permit

Note: Most short-term licensing is handled at the local level. However, in Miami, Florida, short-term vacation rentals must be licensed by the State of Florida, including registration with the Florida Department of Revenue for tax purposes, and must comply with all applicable state laws.

Short-term rentals and HOAs

If you intend to seek a short-term rental in a community governed by a homeowner’s association (HOA), you may need to obtain a letter of approval. There may also be limitations in the HOA covenants, restrictions, and private codes as to how the property is used.

What are the penalties for operating a short-term rental without a license?

Jurisdictions are beginning to implement laws that regulate the rise in short-term rentals and crack down on license violations.

In early 2022, the mayor of Honolulu signed a bill into law that strengthens enforcement of illegal short-term rentals and raised regulations and fees for legal ones. Fines are as high as $10,000 for non-compliance. In New York City, a lawsuit was filed in July 2022 that shut down an alleged illegal short-term rental operation.

Evolving regulatory landscape

Short-term rental laws and regulations are evolving and fluctuate wildly across the country. Lawmakers also lack consensus on how regulated the industry should be, and laws can change annually or even monthly — adding to the confusion that rental operators face.

If you own a short-term rental business, you must remain vigilant and stay informed of these constant changes.

CT can help

Outsourcing short-term rental business registration and license research, applications, management, and renewals can take the pressure off you. By working with a full-service management provider who specializes in efficiently processing business licenses, permits, and registrations you can free up your time to focus on starting and growing your business while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us or call us at 844-878-1800.