Arkansas Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Arkansas

Starting a short-term rental business in Arkansas requires navigating a complex web of state and local regulations. While the state has not enacted comprehensive legislation specifically targeting short-term rentals, many cities and counties have implemented their own rules and ordinances.

One of the first steps in starting a short-term rental business is obtaining the necessary licenses and permits. In Hot Springs, for example, operators must obtain a short-term rental license, which is valid for the calendar year in which it is issued. The city also conducts inspections to ensure compliance with safety standards.

It's important to note that some cities, such as Springdale, have imposed temporary bans on new transient lodging applications, effectively halting the initiation of new short-term rental operations. Before investing in a property, it's crucial to research the specific regulations in the desired location.

Short-Term Rental Licensing Requirement in Arkansas

Licensing requirements for short-term rentals (STRs) in Arkansas vary by city, with some municipalities having more stringent regulations than others. It's essential for STR owners to familiarize themselves with the specific requirements in their area to ensure compliance and avoid potential fines or penalties.

In Hot Springs, for example, STR owners must obtain a business license and pass a Certificate of Occupancy (CO) inspection. The CO inspection is required if the maximum occupancy has changed from what is listed on the STR license or for STRs that were conditionally passed due to window compliance. To apply for a new STR license, owners must first complete and pass the STR Certificate of Occupancy Inspection. Once the inspection is completed, they will be assigned registration into the GovOS system to complete the licensing process.

The city of Bella Vista also requires STR owners to obtain a permit, which must be renewed annually and posted clearly visible at the location of the STR. To apply for a permit, owners need:

• An issued Certificate of Compliance from the A&P Commission
• A completed application form that includes the name, address, phone number, and email of the property owner and a local point of contact within 50 miles (if applicable)
• A permit fee ($50 for owner-occupied, $150 for non-owner-occupied)

Applications should be submitted to the Planning Division either by email to planning@bellavistaar.gov or in person at 616 W. Lancashire Blvd. The processing time for applications is not specified, but owners will be notified by email through the CDS permitting system, iWorQ, if the permit is issued.

Failure to obtain the necessary licenses and permits can result in fines and penalties. In Bella Vista, the fines for violations are:

1. First offense: $250-$500 fine
2. Second offense: $500-$1,000 fine
3. Third offense: $1,000 (maximum allowed by the state) plus loss of permit

Those who have a permit revoked cannot be issued another for one year.

It's crucial for STR owners to stay informed about the latest regulations in their area, as the legal landscape surrounding short-term rentals in Arkansas continues to evolve. Consulting with local authorities and staying up-to-date with any changes in licensing requirements can help ensure a smooth and compliant operation of short-term rental properties in the state.

Required Documents for Arkansas Short-Term Rentals

To operate a short-term rental (STR) in Arkansas, you'll need to gather several important documents. While requirements may vary slightly by city, here's a general list of what you'll need:

1. Proof of Ownership or Long-Term Lease Agreement: This establishes your legal right to use the property as an STR. You can provide a warranty deed, property tax statement, mortgage statement, or homestead tax credit.
2. Business License: Required in most Arkansas cities. For example, in Fayetteville, you can apply online through the Citizen Self-Service portal.
3. Short-Term Rental Permit: Some cities, like Hot Springs, require a specific STR permit. Check with your local city hall or planning department.
4. Certificate of Occupancy: In Hot Springs, this is required if the maximum occupancy has changed or for conditionally passed STRs.
5. Proof of Insurance: You'll need to show that you have adequate liability insurance coverage for your STR. This protects you and your guests.
6. Hotel, Motel, Restaurant (HMR) Tax Form: Required in some cities like Fayetteville. This is for reporting and paying the local lodging tax.
7. Conditional Use Permit: In some residential zones, you may need this permit before obtaining a business license. For instance, Fayetteville requires this for Type 2 STRs in residential areas.
8. Landlord's Representative Registry Form: Required in Fayetteville for all STR properties. This provides contact information for the property manager or owner.
9. Inspection Checklist: Many cities require an inspection of your property. You'll need to complete this checklist to ensure your STR meets all safety standards.
10. Arkansas Sales Tax Permit: You'll need to register with the Arkansas Department of Finance and Administration to collect and remit state sales tax.
11. Local Contact Information: Some cities require you to provide contact details for a local representative who can respond to issues within a certain timeframe.
12. Floor Plan: In some jurisdictions, you may need to provide a floor plan of your rental property showing the number of bedrooms and maximum occupancy.

Remember, requirements can vary significantly between different Arkansas cities and counties. It's crucial to check with your local government offices for the most up-to-date and accurate information regarding STR regulations in your specific area.

Arkansas Short-Term Rental Taxes

Short-term rental operators in Arkansas are subject to various state and local taxes. Understanding these tax obligations is crucial for hosts to ensure compliance and avoid potential penalties. Let's break down the key taxes that apply to short-term rentals in Arkansas.

State Sales Tax

The state sales tax rate for short-term rentals in Arkansas is currently 6.5%. Hosts are required to collect this tax from their guests and remit it to the state's tax authorities. This tax applies to the rental fee, cleaning fees, and any other mandatory charges associated with the rental.

Short-Term Rental Tax

In addition to the state sales tax, Arkansas imposes a 1% short-term rental tax on the gross receipts from the rental of tangible personal property, regardless of whether the Arkansas gross receipts or use tax was paid at the time of purchase. This tax is specific to short-term rentals and must be collected and remitted by the host.

State Tourism Tax

Arkansas also levies a 2% state tourism tax on short-term rentals. This tax is designed to support the state's tourism initiatives and is collected in addition to the state sales tax and short-term rental tax. Hosts are responsible for collecting and remitting this tax to the appropriate authorities.

Local Sales Tax

On top of the state-level taxes, short-term rental operators must also collect and remit local sales tax. The local sales tax rate varies by locality, as it is determined by individual cities and counties. Hosts should check with their local tax authorities to determine the specific rate applicable to their area.

Occupancy Tax

Some areas in Arkansas, particularly popular tourist destinations, may impose an occupancy tax on short-term rentals. This tax is intended to support local tourism initiatives and is usually assessed as a percentage of the rental fee. Hosts operating in areas where occupancy tax is applicable must collect and remit this tax as well.

Possible Write-Offs and Deductions

Short-term rental operators in Arkansas may be eligible for various write-offs and deductions that can help reduce their tax liability. Some possible deductions include:

1. Depreciation: Hosts can write off the value of their rental property over time using the Modified Accelerated Cost Recovery System (MACRS).
2. Furniture and Supplies: The cost of furnishing and equipping the rental property, including items like linens, kitchenware, and cleaning supplies, can be deducted.
3. Cleaning and Maintenance Fees: Expenses related to cleaning and maintaining the rental property between guests are deductible.
4. Marketing and Advertising: Costs associated with promoting the rental property, such as online listings, professional photography, and advertising fees, can be written off.
5. Home Office Deduction: If a portion of the host's home is used exclusively for managing the short-term rental business, they may be able to claim a home office deduction.
6. Utilities: A portion of utility expenses, such as electricity, water, and internet, can be deducted based on the percentage of rental use.
7. Insurance: Premiums paid for rental property insurance are deductible as a business expense.

It's essential for short-term rental operators in Arkansas to keep accurate records of all income and expenses related to their rental business. Consulting with a tax professional can help ensure compliance with state and local tax laws while maximizing available deductions and write-offs.

Does Arkansas Strictly Enforce STR Rules? Is Arkansas Airbnb Friendly?

The enforcement of short-term rental (STR) rules in Arkansas varies by city, with some municipalities being stricter than others. However, based on discussions in real estate investing forums like BiggerPockets and Reddit, Arkansas generally appears to be less Airbnb-friendly compared to other states.

Cities like Fayetteville have a reputation for being particularly diligent in enforcing STR regulations. Several BiggerPockets and Reddit users have noted that Fayetteville actively monitors STR listings and pursues enforcement actions against non-compliant hosts. The city has dedicated resources, including hiring a compliance officer and contracting with a leading national short-term rental monitoring and enforcement firm, to identify and address violations.

In contrast, some cities like Little Rock have faced criticism for lackluster enforcement of STR regulations. In June 2024, Little Rock Vice Mayor Kathy Webb expressed concerns about the city's enforcement of its 500-property cap on STRs, suggesting that the actual number of operating STRs may exceed this limit.

Despite the rules and potential consequences, some hosts still attempt to operate STRs in Arkansas without proper licensing and permits. However, the prevailing opinion on forums like BiggerPockets and Reddit is that it's not worth the risk, particularly in cities with strict enforcement like Fayetteville. The potential fines and legal issues outweigh any benefits of non-compliance.

Compared to more STR-friendly states, Arkansas has a reputation for being less accommodating to Airbnb and other short-term rental platforms. The state's cities are increasingly enacting regulations to restrict and control the growth of STRs, such as caps on the number of licenses, zoning restrictions, and permitting requirements. This trend suggests that Arkansas is prioritizing the concerns of local communities and the preservation of residential neighborhoods over the interests of STR operators.

In conclusion, while enforcement may vary by city, Arkansas is generally not considered to be a particularly Airbnb-friendly state. Cities like Fayetteville are known for their strict enforcement of STR regulations, while others like Little Rock have faced criticism for lax enforcement. Despite the challenges, some hosts still operate STRs in Arkansas, but the consensus on real estate investing forums is that the risks of non-compliance outweigh the potential benefits.

How to Start a Short-Term Rental Business in Arkansas

Starting a short-term rental business in Arkansas can be a lucrative venture, but it requires careful planning and execution. Here's a step-by-step guide to help you get started:

Research and plan: Conduct thorough market research to understand the demand for short-term rentals in your desired location within Arkansas. Identify potential properties and develop a comprehensive business plan that outlines your goals, target audience, financial projections, and marketing strategies.

Tip: Use data from platforms like AirDNA or Mashvisor to gain insights into occupancy rates, average daily rates, and revenue potential in your chosen area.

Check local regulations: Familiarize yourself with the short-term rental regulations and zoning laws in your specific Arkansas city or county. Requirements for permits, licenses, and taxes can vary significantly from one location to another.

Tip: Contact your local city hall, county office, or zoning department to obtain the most accurate and up-to-date information on short-term rental regulations.

Choose a property: Select a suitable property that meets the zoning requirements and has the potential to attract your target guests. Consider factors such as location, amenities, and rental income potential when making your decision.

Tip: Look for properties in popular tourist destinations or near major attractions, as these areas tend to have higher demand for short-term rentals.

Create a legal entity: Establish a legal business entity, such as an LLC, to protect your personal assets and take advantage of potential tax benefits. Consult with a local attorney or financial advisor to determine the best structure for your short-term rental business.

Tip: Setting up an LLC is relatively simple in Arkansas, but requirements may vary by county. Be sure to obtain an Employer Identification Number (EIN) for tax purposes.

Obtain necessary permits and licenses: Apply for the required business licenses, permits, and tax registrations in your Arkansas location. This may include a general business license, a short-term rental permit, and registering for state and local taxes.

Tip: Begin the licensing process early, as it can take several weeks to receive approval. Ensure your property meets all building, fire, and safety codes before applying.

Prepare your property: Renovate and furnish your property to meet the needs and preferences of your target guests. Install required safety features, such as smoke alarms and fire extinguishers, and consider adding amenities that will make your property stand out.

Tip: Focus on creating a clean, comfortable, and visually appealing space. Invest in high-quality furniture, linens, and decor that reflect the style and character of your property.

Create a listing: Develop an attractive and informative listing on popular short-term rental platforms like Airbnb and VRBO. Include high-quality photos, detailed descriptions, and competitive pricing to attract potential guests.

Tip: Highlight your property's unique features, amenities, and location advantages in your listing description. Use professional photography to showcase your space in the best possible light.

Manage your business: Establish a system for managing bookings, communicating with guests, and handling day-to-day operations. Consider using property management software or hiring a professional property manager to streamline processes.

Tip: Respond promptly to guest inquiries and maintain open communication throughout their stay. Provide excellent customer service to encourage positive reviews and repeat bookings.

By following these steps and staying informed about local regulations, you can successfully launch and grow your short-term rental business in Arkansas.

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

When it comes to short-term rental regulations and zoning in Arkansas, it's important to note that rules can vary significantly between different cities and counties. Here are some key contacts and resources for hosts in Arkansas:

Arkansas Department of Finance and Administration

For state-level tax registration and remittance:

1. Phone: (501) 682-7104
2. Website: https://www.dfa.arkansas.gov/excise-tax/sales-and-use-tax/

City-Specific Contacts:

1. Little Rock Planning and Development Department

1. Phone: (501) 371-4867
2. Email: planning@littlerock.gov
3. Website: https://www.littlerock.gov/for-businesses/planning-and-development/

2. Fayetteville Development Services

1. Phone: (479) 575-8267
2. Email: development@fayetteville-ar.gov
3. Website: https://www.fayetteville-ar.gov/447/Development-Services

3. Hot Springs Planning & Development Department

1. Phone: (501) 321-6850
2. Email: planning@cityhs.net
3. Website: https://www.cityhs.net/209/Planning-Development

4. Bentonville Planning Department

1. Phone: (479) 271-3122
2. Email: planning@bentonvillear.com
3. Website: https://www.bentonvillear.com/149/Planning-Department

5. Springdale Planning Department

• Phone: (479) 750-8105
• Email: planning@springdalear.gov
• Website: https://www.springdalear.gov/191/Planning

Useful Communities and Forums:

Arkansas Real Estate Investors Association

• Website: https://www.arkansasreia.com/
• This group offers networking opportunities and educational resources for real estate investors in Arkansas.

BiggerPockets Arkansas Forum

• Website: https://www.biggerpockets.com/forums/530
• This online community has discussions specific to Arkansas real estate investing, including short-term rentals.

r/Arkansas Subreddit

• Website: https://www.reddit.com/r/Arkansas/
• While not specific to short-term rentals, this subreddit can be a good place to ask questions about local regulations and connect with other Arkansas residents.

Remember, regulations can change frequently, so it's always best to contact your local city or county offices directly for the most up-to-date information on short-term rental regulations and zoning in your specific area of Arkansas.

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

Airbnb hosts in Arkansas have shared various experiences and opinions about local regulations on platforms like Reddit and BiggerPockets. Here are some insights from real hosts:

On Reddit's r/Arkansas subreddit, a user expressed concern about the proliferation of short-term rentals in the state:

"I've noticed more AirBNBs and other short term rentals popping up in places across Arkansas to cater to the increasing tourism. Don't get me wrong, tourism can be a major economic boost, but too much of it can kill your communities."

On the r/bentonville subreddit, a user discussed the impact of short-term rentals on the local housing market:

"For first-time home buyers, the high demand for short-term rentals has driven up property values in popular cities like Bentonville and Bella Vista, making it more difficult for these individuals to afford a mortgage."

While these comments provide valuable insights into the perspectives of Arkansas Airbnb hosts and community members, it's important to note that opinions can vary widely. The experiences shared on these platforms reflect individual viewpoints and may not represent the entire host community in Arkansas. However, they do highlight some of the key issues and concerns surrounding short-term rental regulations in the state.

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 area 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.