Dane County, Wisconsin Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Dane County, Wisconsin?

Short-term rentals, commonly offered through platforms like Airbnb and VRBO, have become increasingly popular in Dane County, Wisconsin. However, hosts must navigate a complex web of regulations at the state, county, and municipal levels. This article breaks down the key rules and requirements for operating a short-term rental in Dane County.

Starting a Short-Term Rental Business in Dane County

Before listing your property on Airbnb or VRBO in Dane County, you'll need to obtain a Tourist Rooming House license from Public Health Madison & Dane County. This involves a pre-inspection to ensure compliance with health and safety standards. Licenses must be renewed annually, with follow-up inspections each year.

Zoning laws vary across municipalities in Dane County. In the City of Madison, short-term rentals are limited to the host's primary residence and cannot exceed 30 rental days per year when the host is off-site. There is no day limit if the host remains on-site. Tenants must obtain written permission from their landlord to operate a short-term rental.

In addition to licensing and zoning requirements, short-term rental operators in Dane County must collect applicable taxes, including municipal room tax (if required by the local municipality) and state sales tax of 5.5%. Certain exemptions may apply for occasional rentals totaling less than $1,000 per year.

By carefully researching and complying with state, county, and local regulations, responsible hosts can successfully operate short-term rentals in Dane County while being mindful of community impact. Balancing the rights of property owners and neighbors is key to the long-term viability of the short-term rental market in this popular Wisconsin destination.

Short-Term Rental Licensing Requirement in Dane County

All short-term rentals in Dane County, defined as rentals for less than 30 consecutive days, must obtain a Tourist Rooming House license from Public Health Madison & Dane County (PHMDC) before operating. This applies whether you rent out an entire property or just a room, and regardless of the booking platform used.

To apply for a Tourist Rooming House license, you must submit the following to PHMDC:

• Completed license application (available online or by mail)
• Proof of a valid Wisconsin Seller's Permit for collecting sales tax
• Proof of registration with the City or County Treasurer for room tax collection
• Payment of the $535 license fee, which includes a $375 pre-inspection fee
• Completed self-inspection checklist verifying health and safety compliance
• If you are a tenant, written permission from your landlord to operate an STR

Once all required documents and payment are received, PHMDC will schedule a pre-inspection of your property. If everything meets health and safety standards, your Tourist Rooming House license will be issued. The entire process typically takes 2-4 weeks from application to license issuance.

STR licenses must be renewed annually, with a renewal fee of $160. Each year, PHMDC will conduct a health inspection to ensure ongoing compliance with regulations.

Operating an unlicensed STR in Dane County can result in fines of up to $1,000 per day of illegal rental activity. The county actively investigates unlicensed listings and will issue citations for non-compliance. Repeated violations may lead to additional legal action.

It's crucial for Dane County STR hosts to obtain proper licensing before welcoming short-term guests. The licensing process ensures STRs meet important health and safety standards to protect visitors and neighborhoods. By staying compliant, hosts can run successful STR businesses while avoiding costly penalties.

Required Documents for Dane County Short-Term Rentals

To operate a short-term rental in Dane County, you must submit the following documents to Public Health Madison & Dane County (PHMDC) as part of your Tourist Rooming House license application:

1. Completed license application: Fill out the application form online or print and mail it in. This provides PHMDC with details about your STR property, contact information, and operation plans.
2. Proof of a Wisconsin Seller's Permit: Obtain this permit from the Wisconsin Department of Revenue for a $20 fee. It allows you to collect the required 5.5% state sales tax from guests.
3. Proof of room tax registration: If your municipality requires room tax collection, register with your local clerk or treasurer. For example, the City of Madison charges a $2 registration fee to collect its 10% room tax on stays under 30 days.
4. Payment of license fees: Submit the $535 Tourist Rooming House license fee to PHMDC, which includes a $375 pre-inspection fee. The annual renewal fee in subsequent years is $160. Pay by credit card online or mail a check.
5. Self-inspection checklist: Complete this form to verify your STR meets health and safety standards like working smoke detectors, fire extinguishers, and carbon monoxide detectors. A PHMDC inspector will then conduct an on-site pre-inspection.
6. Landlord permission (if applicable): If you are a tenant renting out your unit as an STR, provide written permission from your landlord to ensure compliance with lease terms.

These documents help ensure STRs in Dane County meet important public health, safety, and tax collection requirements. PHMDC provides guides and checklists on its website to assist with the licensing process. Failure to obtain a valid Tourist Rooming House license before operating an STR can result in fines of up to $1,000 per day.

Some municipalities within Dane County have additional STR requirements, such as occupancy limits or parking rules. For example, the City of Fitchburg requires a separate $100 STR permit, while the Village of Cottage Grove mandates a local STR agent if the owner lives more than 30 miles away. Always check with your local clerk or zoning department for any supplementary documentation needed for STR licensing in your specific community.

Dane County Short-Term Rental Taxes

Short-term rental hosts in Dane County must collect and remit several types of taxes on their rental income. Understanding these tax obligations is crucial for operating a compliant and profitable STR business.

Wisconsin Sales Tax

Wisconsin imposes a 5.5% sales tax on short-term lodging, consisting of a 5% state sales tax and a 0.5% county sales tax in Dane County. STR hosts must collect this tax from guests and remit it to the Wisconsin Department of Revenue.

Hosts with less than $2,000 in annual taxable sales may qualify for the occasional sales exemption and not need to collect sales tax.

Municipal Room Tax

Some municipalities in Dane County, like the City of Madison, charge an additional room tax on short-term rentals. Madison's room tax rate is 10%. Hosts must register with the local municipality to collect and remit this tax, which is used to fund tourism promotion and development.

If renting solely through Airbnb in Madison, the platform automatically collects and remits the municipal room tax on the host's behalf. For other booking channels or municipalities, hosts are responsible for collecting and paying the tax themselves.

Possible Deductions

STR hosts can deduct many of their rental expenses to reduce their taxable income. Some common deductions include:

1. Depreciation on the rental property and furnishings
2. Mortgage interest
3. Property taxes
4. Cleaning fees and supplies
5. Repairs and maintenance costs
6. Utilities (electricity, water, internet, etc.)
7. Host service fees charged by booking platforms like Airbnb and Vrbo
8. Insurance premiums
9. Professional services (property management, accounting, etc.)

Hosts should keep detailed records of all rental income and expenses to maximize their deductions. Consulting a tax professional experienced with short-term rentals can help ensure proper tax compliance and optimization.

By understanding the applicable sales taxes, room taxes, and allowable deductions, Dane County STR hosts can stay on top of their tax obligations and run a successful rental business. Investing time to learn the rules upfront will pay off in the long run.

Wisconsin-Wide Short-Term Rental Rules

In addition to Dane County's specific regulations, short-term rental hosts must also comply with state-level laws and requirements. These Wisconsin statutes provide a framework for the operation of vacation rentals across the state, including in Dane County.

In 2017, Wisconsin enacted Act 59, also known as the Right to Rent Law, which prohibits cities, villages, towns, and counties from banning short-term rentals of 7 days or longer. However, municipalities can still regulate rentals of less than 7 days if not in conflict with the state law.

Under Act 59, local governments cannot limit when during the year a property may be rented, but they can cap the total number of allowable rental days in a 365-day period to a minimum of 180 days. If a municipality sets a rental day cap, it may require that the maximum number of rental days run consecutively.

The state law requires anyone who maintains, manages, or operates a short-term rental for more than 10 nights per year to obtain a tourist rooming house license from the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). This license, which costs $110 annually with a one-time $300 pre-inspection fee, is in addition to any permits required by local municipalities.

Act 59 allows local governments to enact ordinances regulating short-term rentals that are not inconsistent with the state law. This provision has led some municipalities, like the Town of Holland in Sheboygan County, to implement additional restrictions such as occupancy limits, parking requirements, and property manager availability.

The Wisconsin Realtors Association has filed lawsuits against several municipalities to compel compliance with Act 59 and establish a reasonable regulatory framework. The organization argues that behavior, not the length of stay, should be the focus of regulation.

Ultimately, while Act 59 prevents local governments from prohibiting many short-term rentals outright, it still grants them the authority to regulate this growing lodging sector. Dane County hosts must carefully navigate both state and local requirements to operate legally and avoid potential penalties.

Does Dane County Strictly Enforce STR Rules?

Dane County is known for having some of the strictest short-term rental regulations in the country, and local officials do actively enforce these rules. The county's approach to STRs is less friendly than many other destinations, prioritizing neighborhood preservation and housing affordability over the interests of Airbnb hosts.

On Reddit and Bigger Pockets, Madison hosts have shared stories of the city cracking down on unlicensed rentals. One Redditor noted, "The city actively looks for unlicensed STRs and will issue citations, so it's not worth the risk of operating without a license." Fines for non-compliance can reach $1,000 per day, a steep penalty for most hosts.

Some hosts have tried to skirt the rules, but with limited success. Another Reddit user shared, "There was a one-bedroom apartment in my complex that was an Airbnb for two years before they were evicted. The caretaker told me the person on the lease had two other apartments in Madison under their name that they were listing. So one person wasted at least three decent apartments."

While a few hosts may slip through the cracks, the consensus among local hosts is that Dane County's enforcement is robust and not worth challenging. The strict regulations have kept the Madison Airbnb market small, with only around 266 active listings as of 2022.

Compared to Airbnb-friendly cities like Savannah, Georgia or Joshua Tree, California, Dane County is a tough market for hosts. The 30-day annual cap on whole-home rentals, in particular, makes it difficult to turn a significant profit. As one Bigger Pockets user put it, "Madison is not the place to try to make Airbnb your primary revenue stream."

However, hosts who can work within the rules may find opportunity in the limited supply. One Madison host on Reddit shared, "The somewhat ironic thing is that for those that are able to work within these restrictions, the low supply makes doing it unbelievably profitable. My family does this and we keep raising the rates to stay under the 30 day cap because demand for reasonably located houses is so high."

In summary, while some hosts have tried to operate under the radar, Dane County's active enforcement of its strict STR regulations makes it a challenging and risky market for Airbnb hosts. The county's rules have effectively limited the growth of STRs, but also created a potential opportunity for hosts who can comply with the many requirements. Ultimately, Dane County remains one of the least Airbnb-friendly markets in the U.S.

How to Start a Short-Term Rental Business in Dane County

Starting a short-term rental business in Dane County requires careful planning and compliance with local regulations. Follow these steps to launch your STR venture:

1. Confirm your property is eligible for STR use: Check your local zoning laws to ensure your property can be used as an STR. In the City of Madison, STRs must be located in the host's primary residence and are limited to 30 rental days per year when the host is off-site.
2. Obtain necessary licenses and permits: Apply for a Tourist Rooming House license from Public Health Madison & Dane County (PHMDC). Submit a completed application, proof of a Wisconsin Seller's Permit, room tax registration, payment of fees, a self-inspection checklist, and landlord permission if you're a tenant. Schedule a pre-inspection with PHMDC. Apply for your license at least 30 days before you plan to start renting to allow time for processing and the pre-inspection.
3. Register for tax collection: Obtain a Wisconsin Seller's Permit from the Department of Revenue to collect state sales tax. Register with your local municipality to collect room tax, if required. In Madison, STR operators must register with the City Treasurer and collect a 10% room tax. If you rent solely through Airbnb, the platform will automatically collect and remit sales and room taxes on your behalf.
4. Prepare your property for guests: Ensure your STR meets all health and safety requirements, such as working smoke detectors, fire extinguishers, and carbon monoxide detectors. Create a welcoming space with clean linens, toiletries, and helpful amenities. Consider hiring a professional photographer to showcase your property in its best light. Provide a detailed guidebook with check-in instructions, house rules, Wi-Fi password, and local recommendations to enhance the guest experience.
5. Choose a pricing strategy: Research similar STRs in your area to determine competitive nightly rates. Consider factors like seasonality, events, and weekday vs. weekend demand. Set your prices to cover costs while remaining attractive to guests. Use dynamic pricing tools to automatically adjust your rates based on market conditions.
6. Create a listing on STR platforms: List your property on popular sites like Airbnb and Vrbo. Craft an engaging description highlighting your STR's unique features, amenities, and location. Use high-quality photos and encourage guests to leave reviews. Optimize your listing with relevant keywords, quick response times, and a user-friendly cancellation policy to boost your search rankings.
7. Develop a cleaning and maintenance plan: Establish a thorough cleaning protocol between guests to maintain a high standard of cleanliness. Perform regular maintenance checks to address any issues promptly. Consider hiring a professional cleaning service to ensure consistency. Use a digital guidebook and messaging automation to streamline communication with guests and quickly address any concerns.
8. Promote your listing and build your brand: Share your STR on social media and create a dedicated website to showcase your property. Encourage satisfied guests to leave reviews and recommendations. Foster relationships with local businesses to offer unique experiences and attract repeat visitors. Offer special promotions or discounts during slower periods to maintain steady bookings throughout the year.

By following these steps and staying compliant with Dane County's STR regulations, you can build a successful and sustainable short-term rental business. Remember to prioritize guest satisfaction, maintain open communication, and adapt to changing market conditions to thrive in this competitive industry.

Who to Contact in Dane County about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations or zoning in Dane County, there are several key resources and contacts available:

Dane County Zoning Division: For inquiries related to zoning ordinances, land use, and permitting, contact the Dane County Zoning Division at (608) 266-4266 or email them at plandev@countyofdane.com. Their office is located at:

City County Building, Room 116
210 Martin Luther King Jr. Blvd.
Madison, WI 53703

1. Business hours are Monday through Friday, 7:45am to 4:30pm, with service counter hours from 8:00am to 4:00pm.
2. Public Health Madison & Dane County (PHMDC): PHMDC handles the licensing and inspection of short-term rentals, known as Tourist Rooming Houses. For questions about licensing requirements, contact their office at (608) 242-6515 or email them at health@publichealthmdc.com.
3. City of Madison Zoning Department: If your short-term rental is located within the City of Madison, you may need to contact their Zoning Department for additional requirements. Call them at (608) 266-4551 or email zoning@cityofmadison.com.
4. Municipal Clerk's Offices: For questions about room tax registration and collection, contact your local municipal clerk's office. In the City of Madison, the Treasurer's Office handles room tax and can be reached at (608) 266-4771.

In addition to these official resources, connecting with other local short-term rental hosts can provide valuable insights and support. Some online communities to check out include:

1. The Greater Madison Airbnb Hosts Facebook group
2. The Wisconsin Vacation Rental Owners Facebook group
3. The Madison Area Short Term Rental Association (MASTRA)
4. The Wisconsin Vacation Rental Managers Association (WVRMA)

These groups offer forums to ask questions, share experiences, and stay up-to-date on local regulations impacting short-term rentals in Dane County.

Remember, regulations can change over time, so it's important to stay informed and connected with local officials and host communities. By working together and staying compliant, short-term rental hosts can continue to thrive in Dane County while being good neighbors and community members.

What Do Airbnb Hosts in Dane County on Reddit and Bigger Pockets Think about Local Regulations?

Dane County's strict short-term rental regulations have been a hot topic among local Airbnb hosts on forums like Reddit and Bigger Pockets. Many hosts have shared their experiences navigating the complex web of rules and their thoughts on how these policies impact the local STR market.

On the Bigger Pockets forum, one user seeking advice on starting an STR business in the Madison area noted the challenging regulatory landscape:

1. "Hi all, I'm looking to get into short term rentals in Wisconsin (1-3 hours from the Madison area). I've been reading a lot about city and county ordinances and many of them aren't the most forgiving. For example many of them only allow a 6-7 day rental minimum, requires the owners primary residence or management company to be 25-30 miles from the property and permitting etc."
2. They went on to ask if experienced hosts typically follow all the ordinances and obtain required permits, or if some take the risk of operating without full compliance. The responses highlighted the importance of following the rules to avoid costly penalties.

In the Madison subreddit, a discussion on the city's housing market touched on the impact of STR regulations. One commenter expressed support for the restrictions, stating:

1. "Glad that Dane County is so restrictive. Airbnb and similar things are a large piece of the high-priced-housing puzzle in other locations for sure.
2. There was a one-bedroom apartment in my complex that was an Airbnb for two years before they were evicted. The caretaker told me the person on the lease had two other apartments in Madison under their name that they were listing. So one person wasted at least three decent apartments. They were just leeches."
3. This sentiment reflects the county's goal of preserving long-term housing affordability by limiting the growth of STRs.

Another Redditor shared their experience with the practical implications of Dane County's STR regulations, particularly the prohibition on guest hot tubs without a commercial license:

1. "Technically, no Airbnb rental in Dane County is going to have a hot tub. The Public Health department licensing rules require hot tubs for guest use to meet commercial requirements (and have associated permits/inspections). That's a high bar to meet. Any hot tub you find in the city is part of an unlicensed rental (legal listings have to have their license number posted). Not saying this is right or wrong, just that you're gonna have a hard time finding one that explicitly says it has a hot tub."
2. These real-life experiences from local hosts underscore the challenges of operating STRs under Dane County's strict rules. While some hosts may skirt the regulations, the consensus among responsible operators is that compliance, however onerous, is essential to running a sustainable and legal STR business in the Madison area. The discussions also highlight the broader debate over balancing the rights of STR hosts with the need to protect long-term housing affordability and neighborhood character.

Disclaimer: While we here at BNBCalc strive to keep all of our 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 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