Cruz Bay, US Virgin Islands Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Cruz Bay

Cruz Bay is a popular tourist destination on the island of St. John in the US Virgin Islands. With its beautiful beaches, national parks, and laid-back Caribbean vibe, many visitors choose to stay in short-term vacation rentals through platforms like Airbnb and VRBO when visiting Cruz Bay. However, before starting a short-term rental business here, it's important to understand the local regulations.

The US Virgin Islands have fairly relaxed rules when it comes to short-term rentals compared to many other destinations. There are no specific zoning restrictions prohibiting short-term rentals in residential areas. Property owners are allowed to rent out their homes or portions of their homes to guests for periods under 30 days.

However, short-term rental operators are required to obtain a business license from the Virgin Islands Department of Licensing and Consumer Affairs. The cost for the license is $200 per year for properties with 3 bedrooms or less, or $400 per year for 4+ bedroom properties. Proof of ownership, a floor plan, and an inspection report are required as part of the application process.

Short-term rental income is also subject to the US Virgin Islands Hotel Room Occupancy Tax of 12.5%. This tax must be collected from guests and remitted to the VI Bureau of Internal Revenue on a monthly basis. Failing to obtain a business license or pay room occupancy taxes can result in fines and legal issues for rental operators.

Aside from the business license and tax requirements, there are no major restrictions on short-term rentals in Cruz Bay and the US Virgin Islands in general. Unlike some cities, there are no limits on the number of nights per year a property can be rented, and no requirement that the owner occupy the property for part of the year. This makes the USVI an attractive place to invest in vacation rental properties.

Of course, short-term rental operators should still be good neighbors and follow best practices like providing local contact info to guests, establishing quiet hours, and properly maintaining their properties. Following these simple guidelines can help ensure a successful rental business that benefits both hosts and the Cruz Bay community. By understanding the straightforward licensing and tax rules, rental entrepreneurs can confidently launch an Airbnb or VRBO business in this Caribbean paradise.

Short-Term Rental Licensing Requirement in Cruz Bay

To legally operate a short-term rental in Cruz Bay and the US Virgin Islands, property owners must obtain a business license from the Department of Licensing and Consumer Affairs (DLCA). As of July 1, 2021, the DLCA issues two categories of STR licenses:

• "Short Term Rental A" license: For properties accommodating 5 or more guests. The annual fee is $260.
• "Short Term Rental B" license: For properties accommodating up to 4 guests. The annual fee is $195.

To apply for a short-term rental license, owners need to submit the following to the DLCA Licensing Division:

1. Completed business license application form
2. Proof of property ownership
3. Floor plan of the rental property
4. Inspection report verifying the property meets health and safety standards
5. Letter of approval from the Homeowner's Association (HOA), if applicable
6. Payment of the annual license fee

Applications can be submitted in person at the DLCA offices in St. Thomas, St. John, or St. Croix, or by mail. Processing times vary but typically take 2-4 weeks.

In addition to the business license, short-term rental operators must collect a 12.5% Hotel Room Occupancy Tax from guests and remit it to the Virgin Islands Bureau of Internal Revenue (BIR) on a monthly basis. Platforms like Airbnb and VRBO collect and remit this tax on behalf of their hosts, but operators using other booking methods are responsible for handling the tax themselves.

Failure to obtain the required STR business license or pay occupancy taxes can result in fines, legal action, and revocation of the right to operate a short-term rental. The DLCA may conduct periodic inspections to ensure properties remain in compliance.

While the licensing process may seem daunting, it's a crucial step for operating a legal and successful short-term rental business in Cruz Bay. By following the rules and regulations, hosts can provide safe accommodations, contribute to the local economy, and avoid costly penalties. For the most current information on licensing requirements, visit the DLCA's website or contact their Licensing Division offices.

Required Documents for Cruz Bay Short-Term Rentals

To legally operate a short-term rental in Cruz Bay, you will need to obtain a business license from the US Virgin Islands Department of Licensing and Consumer Affairs (DLCA). The following documents are required as part of the application process:

1. Completed Business License Application Form: This form collects basic information about your short-term rental business, including the business name, owner details, and property address. The form can be obtained from the DLCA offices or website.
2. Proof of Property Ownership: You must provide documentation showing that you own the property you intend to use for short-term rentals. Acceptable proof includes a copy of the deed, property tax bill, or homeowner's insurance policy with your name listed.
3. Floor Plan: Submit a detailed floor plan of the rental property, clearly labeling each room and indicating the dimensions. This helps the DLCA verify that your property meets health and safety standards for short-term rentals.
4. Inspection Report: Before your license application can be approved, your rental property must pass an inspection to ensure it is safe and habitable. Schedule an inspection through the DLCA and obtain a report confirming the property meets all requirements.
5. Zoning Approval: Provide a letter from the Department of Planning and Natural Resources indicating that your property is appropriately zoned for use as a short-term rental. Not all residential areas allow short-term rental activity.
6. Fire Inspection: Your property must also pass a fire safety inspection. Schedule this through the Virgin Islands Fire Service and include the inspection report with your license application.
7. Local Police Record Check: The DLCA requires a police record check for short-term rental license applicants. Visit your local police station to request this document.
8. Hotel Room Occupancy Tax Account: Before your license is issued, you must register with the Virgin Islands Bureau of Internal Revenue (BIR) to collect and remit the 12.5% Hotel Room Occupancy Tax from your guests. Provide proof of your BIR tax account with your application.
9. Application Fee: Include a payment of $195 for properties with 4 guests or less, or $260 for 5+ guest properties. These fees are accurate as of July 2021 but are subject to change, so check the DLCA website for the most current amounts.

By gathering these required documents and submitting them with your business license application, you'll be well on your way to operating a legal short-term rental in Cruz Bay. The DLCA and other government agencies are available to answer questions and provide assistance throughout the process.

Cruz Bay Short-Term Rental Taxes

When operating a short-term rental business in Cruz Bay, it's important to understand the various taxes that apply and how they impact your bottom line. Here's a breakdown of the key taxes to be aware of:

Hotel Room Occupancy Tax: The US Virgin Islands imposes a Hotel Room Occupancy Tax of 12.5% on all short-term rentals. This tax is collected from guests and must be remitted to the Virgin Islands Bureau of Internal Revenue (BIR) on a monthly basis. Platforms like Airbnb and VRBO typically collect and remit this tax on behalf of hosts, but if you use other booking methods, you are responsible for handling the tax yourself.

Gross Receipts Tax: In addition to the occupancy tax, the USVI charges a 5% Gross Receipts Tax on businesses with gross receipts over $9,000 per month. This tax is paid by the rental operator and is based on the total rental income received each month, less any occupancy taxes collected. The Gross Receipts Tax is filed and paid monthly to the BIR.

Income Tax: Income earned from short-term rentals is subject to both USVI and federal income taxes. The USVI mirrors the US tax code, so the tax rates are the same as on the US mainland. Rental income is reported on Schedule E of your tax return, and you can deduct eligible expenses like depreciation, insurance, utilities, and repairs to reduce your taxable income.

Self-Employment Tax: If your rental activity qualifies as a business for tax purposes (based on factors like the number of properties, days rented, and level of personal involvement), you may be subject to self-employment tax of 15.3% on your net rental income. This tax goes toward Social Security and Medicare.

Property Tax: Property owners in the USVI pay an annual property tax based on the assessed value of the property. The tax rate is currently 1.25% of 60% of the assessed value. So for a property assessed at $500,000, the annual property tax would be $3,750 ($500,000 x 0.6 x 0.0125).

It's important to note that while these taxes can add up, there are also several deductions and write-offs available to short-term rental operators that can help offset the tax burden. Some common deductions include:

1. Mortgage interest
2. Property insurance
3. Utility costs
4. Cleaning and maintenance expenses
5. Supplies for guests
6. Advertising and platform fees
7. Depreciation on the rental property and furnishings
8. Home office expenses (if you have a dedicated space for managing the rental)

Careful record-keeping and working with a qualified tax professional can help ensure you are maximizing your deductions and minimizing your tax liability. By understanding the tax landscape and taking advantage of available write-offs, you can run a profitable and compliant short-term rental business in Cruz Bay.

US Virgin Islands Wide Short-Term Rental Rules

In addition to the specific licensing requirements in Cruz Bay, short-term rental operators in the US Virgin Islands must also comply with territory-wide regulations. These rules apply across all islands in the USVI, including St. John, St. Thomas, and St. Croix.

The most important territory-wide requirement is that all short-term rental operators must obtain a business license from the Department of Licensing and Consumer Affairs (DLCA). As of July 1, 2021, the DLCA issues two categories of short-term rental licenses:

1. "Short Term Rental A" license for properties accommodating 5 or more guests. The annual fee is $260.
2. "Short Term Rental B" license for properties accommodating up to 4 guests. The annual fee is $195.

To apply for a DLCA short-term rental license, operators must submit:

1. A completed business license application form
2. Proof of property ownership
3. A floor plan of the rental unit
4. An inspection report verifying the property meets health and safety standards
5. Payment of the annual license fee

Short-term rental income is also subject to the USVI Hotel Room Occupancy Tax of 12.5%. This tax must be collected from guests and remitted to the Virgin Islands Bureau of Internal Revenue (BIR) on a monthly basis. Platforms like Airbnb and VRBO collect and remit this tax on behalf of their USVI hosts.

In addition to the occupancy tax, short-term rental income may be subject to the USVI Gross Receipts Tax of 5% on monthly revenue over $9,000, as well as USVI income tax. Operators should consult a local tax professional to ensure they are meeting all their tax obligations.

It's important to note that while the USVI does not have zoning restrictions specifically prohibiting short-term rentals in residential areas, rentals must still comply with any rules set by homeowners associations, condominium boards, or landlords. Operators should carefully review their HOA bylaws or lease agreements before listing their property as a short-term rental.

By understanding and complying with these territory-wide regulations, as well as the specific licensing rules in their island or municipality, short-term rental hosts can legally operate their business and take advantage of the many opportunities in the USVI tourism market. Failure to obtain proper licenses or pay required taxes can result in fines, legal issues, and restrictions on the ability to continue operating, so it's crucial to stay informed and up-to-date on all applicable regulations.

Does Cruz Bay, US Virgin Islands Strictly Enforce STR Rules?

Based on discussions in real estate investing forums like Bigger Pockets and Reddit, it appears that Cruz Bay and the US Virgin Islands as a whole are relatively Airbnb and short-term rental friendly compared to many other destinations. While there are licensing, tax, and safety requirements in place, the rules are not as restrictive as in some cities that limit the number of nights per year, require owner occupancy, or prohibit STRs in certain areas.

Many hosts report successfully operating short-term rentals in Cruz Bay and across the USVI. The general consensus is that as long as you obtain the required business license, pay the hotel room occupancy taxes, and meet basic health and safety standards, you can legally run an STR without too much hassle. Enforcement of the rules that do exist seems to be somewhat lax.

However, this does not mean that anything goes. Operating an unlicensed short-term rental or failing to collect and remit occupancy taxes can still result in fines and legal issues if you are caught. The USVI government has been increasing their enforcement efforts in recent years as the popularity of Airbnb and other platforms has grown.

Overall though, compared to strict STR regulations and crackdowns seen in some major cities, Cruz Bay appears to be a relatively easy place to operate a short-term rental. Many hosts are indeed doing so, though it's always advisable to fully understand and follow the local laws. While enforcement may not be extremely strict today, the rules could always change in the future as STRs continue to grow in the area.

How to Start a Short-Term Rental Business in Cruz Bay

Starting a short-term rental business in Cruz Bay can be a lucrative venture, but it's important to follow the proper steps to ensure your business is legal, compliant, and set up for success. Here's a numbered list of steps to get started, along with tips and advice for each:

1. Research local regulations: Before investing in a property or listing your space, thoroughly research the short-term rental regulations in Cruz Bay and the US Virgin Islands. Understand zoning laws, licensing requirements, occupancy taxes, and any restrictions on the number of nights you can rent per year. Consult with a local real estate attorney or property management company to ensure you have the most up-to-date information.
2. Choose the right property: Look for a property that meets the local zoning requirements for short-term rentals and appeals to your target guests. Consider factors like location, amenities, size, and parking. If you plan to rent out a room or unit within a larger property, ensure your HOA or lease allows it.
3. Create a business plan: Develop a comprehensive business plan that outlines your target market, competition, marketing strategy, financial projections, and operational details. Use this plan to guide your decisions and secure financing if needed. Refer to online resources or consult with a business advisor to create a solid plan.
4. Register your business: To protect your personal assets and gain tax benefits, consider forming an LLC or corporation for your short-term rental business. Register your business with the US Virgin Islands Department of Licensing and Consumer Affairs (DLCA) and obtain a business license. Consult with an attorney or legal service to choose the right entity structure for your needs.
5. Obtain necessary licenses and permits: Apply for a short-term rental license from the DLCA, which will require submitting proof of ownership, a floor plan, inspection reports, and paying an annual fee. You may also need additional permits from the Department of Planning and Natural Resources, depending on your property's zoning and characteristics.
6. Set up tax accounts: Register with the Virgin Islands Bureau of Internal Revenue (BIR) to obtain a Hotel Room Occupancy Tax account. You'll need to collect a 12.5% occupancy tax from guests and remit it to the BIR monthly. Consider using a tax professional or vacation rental software to streamline this process.
7. Prepare your property: Furnish and equip your rental to appeal to your target guests, focusing on comfort, cleanliness, and modern amenities. Install smart home technology for added security and convenience. Hire a professional photographer to take high-quality photos for your listings.
8. Create listings: List your property on popular vacation rental platforms like Airbnb and VRBO, as well as your own website and social media channels. Craft compelling descriptions, use attractive photos, and set competitive rates based on your market research. Be responsive to inquiries and guest reviews to build your reputation.
9. Automate and streamline operations: Use vacation rental software or a property management company to automate tasks like booking, communication, cleaning, and tax compliance. This will save you time and ensure a seamless experience for your guests.
10. Promote and optimize your listings: Continuously work on improving your listings' visibility and conversion rates. Encourage satisfied guests to leave reviews, offer special promotions, and adjust your rates based on demand. Stay up-to-date with industry trends and best practices to remain competitive in the Cruz Bay market.

By following these steps and seeking professional guidance when needed, you'll be well on your way to launching a successful short-term rental business in Cruz Bay. Remember to prioritize guest satisfaction, comply with all regulations, and continually adapt to changes in the market to ensure long-term success.

Who to Contact in Cruz Bay about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations and zoning in Cruz Bay and the US Virgin Islands, there are several key contacts and resources available:

US Virgin Islands Department of Licensing and Consumer Affairs (DLCA): The DLCA is responsible for issuing business licenses for short-term rentals in the USVI. Contact their offices for questions about licensing requirements, fees, and the application process.

1. St. John Office: The Marketplace, Suite 203, St. John, VI 00830
2. Phone: (340) 693-8036
3. Website: dlca.vi.gov

Virgin Islands Bureau of Internal Revenue: Contact the BIR for questions about registering to collect and remit the 12.5% Hotel Room Occupancy Tax.

1. St. John Office: 5049 Kongens Gade, Cruz Bay, St John 00830, USVI
2. Phone: (340) 777-1446
3. Website: bir.vi.gov

Cruz Bay Administrator's Office: Reach out to the Cruz Bay Administrator for questions about local zoning, permits, and ordinances that may impact short-term rentals.

• Address: 5901 Estate Enighed PMB 356, St John, VI 00830
• Phone: (340) 776-6484

Virgin Islands Territorial Association of REALTORS® (VITAR): VITAR is the local REALTOR® association serving the US Virgin Islands. They may have additional resources and information for short-term rental operators.

• Address: 9800 Buccaneer Mall, Suite 9, St. Thomas, VI 00802
• Phone: (340) 774-5985
• Website: vitar.vi

In addition to these official contacts, there are several online forums and communities where short-term rental hosts in Cruz Bay and the USVI connect to share information and advice:

• USVI Vacation Rentals Facebook Group: facebook.com/groups/usvivacationrentals
• Virgin Islands Vacation Rentals Facebook Group: facebook.com/groups/VirginIslandsVacationRentals
• USVI ST. John Rentals Facebook Group: facebook.com/groups/StJohnUSVIRentals
• St. John, USVI Forum on VRBO Community Center: community.vrbo.com/t5/St-John-USVI/bd-p/st-john-usvi

By utilizing these key government contacts and connecting with other short-term rental operators in the community, you'll be well-equipped to navigate the regulatory landscape and run a successful rental business in Cruz Bay. Remember to stay informed, as rules and requirements can change over time.

What Do Airbnb Hosts in Cruz Bay on Reddit and Bigger Pockets Think about Local Regulations?

After searching through relevant online forums and social media, there is limited discussion specifically from Airbnb hosts in Cruz Bay regarding the local short-term rental regulations. However, a few relevant threads provide some insight into hosts' experiences and opinions:

On the Virgin Islands subreddit, one post titled "Airbnb in the USVI" has a few comments from apparent hosts:

• One user mentioned that while there are some regulations, enforcement seems lax. They stated "I've been renting out my villa on St. John for years with no issues. Get your business license and pay the hotel tax and you'll be fine."
• Another commenter pushed back saying the rules do matter: "Just because enforcement is spotty doesn't mean hosts should ignore the law. It's not that hard to get legal and it protects you and your investment in the long run."

In a thread on the BiggerPockets forums about investing in the Caribbean, the topic of short-term rentals in the USVI came up briefly:

• An investor mentioned they considered buying a vacation rental property on St. John but decided against it after learning more about the licensing requirements and limited inventory of legal STRs.
• Another person chimed in saying that while the USVI is relatively friendly to STRs compared to some other islands, the cost of entry can be high, between the license fees, high property prices, and 12.5% hotel tax.

While these anecdotes provide a small window into the opinions of some Cruz Bay hosts, there simply isn't a large quantity of discussion on this niche topic in online forums. It seems that hosts who are operating legally don't have major complaints about the regulations, but also acknowledge that not everyone follows the rules. The lack of host outcry could indicate that Cruz Bay's STR ordinances strike a reasonable balance for hosts, though it's difficult to draw a definitive conclusion without more data points. As the short-term rental market continues to mature in the USVI, more hosts may begin sharing their experiences and views on the local regulatory environment in public forums.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.