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

What are Short-Term Rental (Airbnb, VRBO) Regulations in Minnesota?

Short-term rental regulations in Minnesota vary by city and county, with some areas having more stringent rules than others. It's essential for hosts to understand and comply with local ordinances to operate legally and avoid potential fines or penalties.

Starting a Short-Term Rental Business in Minnesota

Before launching a short-term rental business in Minnesota, hosts should research the specific regulations in their city or county. Some key steps include:

Obtaining necessary licenses and permits: Many cities, such as Minneapolis and St. Paul, require hosts to obtain a short-term rental license or permit. This process may involve submitting an application, paying fees, and passing a rental inspection.

Complying with zoning laws: Short-term rentals may only be allowed in certain zoning districts, such as commercial areas. In residential neighborhoods, some cities may require a conditional use permit.

Understanding occupancy limits and minimum stay requirements: Some cities impose occupancy limits on short-term rentals, such as no more than 6 adults per unit. Others may have minimum stay requirements, like a 7-day minimum in Plymouth.

Collecting and remitting taxes: Short-term rental hosts in Minnesota must collect and remit applicable sales and lodging taxes. Failure to comply with tax laws can result in fines and penalties.

Real-life examples demonstrate the importance of understanding local regulations. In Minneapolis, the city implemented a cap in late 2020, limiting hosts to one short-term rental property in addition to their primary residence. In buildings with 20+ units, no more than 10% can be short-term rentals.

To navigate the regulatory landscape, aspiring hosts can consult resources like the Minnesota Department of Revenue and local government websites for information on licenses, permits, and taxes. Online forums like Bigger Pockets and Reddit also offer insights from experienced hosts.

Ultimately, the key to success is thorough research and compliance with local regulations. By understanding and following the rules, hosts can operate legally and provide a positive experience for guests while being good neighbors in their communities.

Short-Term Rental Licensing Requirements in Minnesota

Short-term rental hosts in Minnesota must obtain the necessary licenses and permits from their local city or county government. Requirements vary by location, but generally include the following:

Short-Term Rental License Application: Hosts must submit a completed application, which can typically be found on the city or county website. For example, in Mille Lacs County, applications are available on the online permitting portal.

Septic System Compliance Inspection: In some counties, like Mille Lacs, hosts must provide a septic system compliance inspection report that is less than 3 years old (5 years for a new system).

Lodging License: Some areas, such as Mille Lacs County, require hosts to obtain a lodging license from the Minnesota Department of Health.

Site Inspection: A site inspection by the local building official may be required. In Mille Lacs County, hosts must submit a Short-Term Rental Inspection Report.

Management Plan: Cities like Minneapolis require hosts to submit a management plan as part of the license application.

Liability Insurance: Proof of liability insurance is often required. Minneapolis hosts must provide this with their application.

Neighbor Notification: Some cities, including Minneapolis, require hosts to notify neighbors of their short-term rental. A notification letter template is usually provided in the application packet.

Floor Plan: Minneapolis hosts must post a floor plan in the rental unit and include it with their application.

License applications and required documents are typically submitted to the local city or county government office responsible for short-term rentals. Processing times vary but can take several weeks.

Fees for short-term rental licenses also differ by location. For example:

• Chisago County charges an annual license fee of $300.
• Minneapolis imposes licensing fees, which are not specified on their website.

Penalties for operating a short-term rental without a license can be severe. In Chisago County, violations are considered a misdemeanor, punishable by up to 90 days in jail, a fine of up to $1,000, or both. The rental license may also be revoked.

To avoid fines and penalties, hosts should carefully review and comply with all local licensing requirements before listing their property on platforms like Airbnb or VRBO.

Required Documents for Minnesota Short-Term Rentals

When applying for a short-term rental license in Minnesota, hosts must submit various documents to demonstrate compliance with local regulations. While requirements vary by city and county, the following are commonly required:

Rental License Application: This is the main form to apply for a short-term rental license with the city. It collects key information about the property, owner, and short-term rental operations. Obtain the application from the city's permitting/licensing department, often available online.

Management Plan: A written plan detailing how the short-term rental will be managed, including contact information, guest policies, parking arrangements, etc. The purpose is to show the city that the rental will be operated responsibly. Templates may be provided by the city.

Proof of Insurance: A certificate proving the property is covered by liability insurance. This protects the city and neighbors from potential damages. Obtain this from your insurance provider.

Neighbor Notification Letter: A letter notifying adjacent property owners of your intent to operate a short-term rental. The city may provide a template. The purpose is to keep neighbors informed and allow them to voice any concerns.

Floor Plan: A basic floor plan of the rental unit showing room layout, exits, and fire extinguishers. This helps verify compliance with occupancy limits and fire codes. Create the plan yourself or hire a professional.

Inspection Checklist: A self-assessment of the rental's safety and code compliance. The city will also conduct an official inspection before issuing a license. Obtain the checklist from the city and complete any necessary repairs.

Lodging License: Certain cities may require an additional license from the county for "lodging" uses. For example, in Mille Lacs County, a lodging license from the Minnesota Department of Health is required.

Septic System Compliance Inspection: In some counties, like Mille Lacs, hosts must provide a septic system compliance inspection report that is less than 3 years old (5 years for a new system).

Record Check Affidavit: In St. Paul, a Record Check Affidavit must be completed by the applicant, officer, or any other person holding a 25% or greater beneficial interest. This form is part of the license application packet.

By gathering these documents and submitting them with the short-term rental license application, hosts demonstrate their commitment to operating legally and responsibly. Cities use this information to ensure the safety of guests, protect the rights of neighbors, and maintain the character of residential areas.

Minnesota Short-Term Rental Taxes

Short-term rental hosts in Minnesota are subject to various state and local taxes. Here's a breakdown of the key taxes that apply:

State Sales Tax: The Minnesota state sales tax rate is 6.875% and applies to all short-term rentals of less than 30 days, or 30 days or more without a written lease requiring advance termination notice. This tax is collected on the full rental price, including any fees charged by an accommodations intermediary like Airbnb.

County Sales Taxes: Some counties levy additional sales taxes on top of the state rate. For example, Hennepin County charges a 0.15% sales tax on short-term rentals.

City Lodging Taxes: Certain cities have their own lodging taxes. Minneapolis imposes a 3% lodging tax on accommodations with more than 50 rooms, as well as a 3% entertainment tax that applies citywide. The maximum combined city tax rate on lodging in Minneapolis is capped at 6.5%.

Transit Sales Taxes: The Minneapolis-St. Paul metro area charges a 0.25% sales tax for housing and a 0.75% transportation sales tax that apply to short-term rentals. Hennepin County also has a 0.5% transit sales tax on lodging.

In total, the maximum tax rate on short-term rentals in Minneapolis can reach as high as 14.525% (6.875% state + 0.15% county + 0.5% county transit + 6.5% city + 0.25% housing + 0.75% transportation).

Hosts are responsible for collecting these taxes from guests and remitting them to the appropriate authorities. However, short-term rental marketplaces like Airbnb and Vrbo are now required to collect and remit all state taxes on behalf of hosts for bookings made through their platforms.

Tax Deductions and Write-Offs

Short-term rental hosts may be able to deduct certain expenses to reduce their tax liability. Potential deductions include:

1. Mortgage interest
2. Property taxes
3. Rental insurance
4. Utilities
5. Cleaning and maintenance costs
6. Supplies for guests
7. Repairs and renovations
8. Depreciation of assets

Hosts should keep detailed records of all rental-related expenses and consult with a tax professional to ensure they are claiming deductions correctly. It's important to allocate costs appropriately if the rental is only a portion of the property.

By understanding their tax obligations and taking advantage of available deductions, short-term rental hosts can operate their businesses in compliance with Minnesota law while maximizing their profits.

Does Minnesota Strictly Enforce STR Rules?

Based on discussions among Airbnb hosts on platforms like Bigger Pockets and Reddit, it appears that enforcement of short-term rental regulations varies across Minnesota, with some cities being more stringent than others. However, the general consensus is that Minnesota is relatively Airbnb-friendly compared to other states.

In Minneapolis, the largest city in Minnesota, hosts report that the city has taken a somewhat hands-off approach to short-term rentals until recently. A 2017 ordinance limiting hosts to one rental property in addition to their primary residence sparked debate on Reddit, with some hosts feeling the rules were too restrictive. One commenter argued, "Let the free market decide, not the city council."

Despite these regulations, many hosts continue to operate short-term rentals in Minneapolis, with some managing multiple properties. A Minneapolis Airbnb Superhost who did an "Ask Me Anything" on Reddit emphasized the importance of researching local rules before starting, noting "Not all rentals can be Airbnbs, so check on your city's rules and regulations before buying a vacation/rental property."

In other parts of Minnesota, like Hennepin County, hosts on Bigger Pockets have discussed the viability of short-term renting in areas like Excelsior on Lake Minnetonka. While demand is high in the summer, some cities have strict rental restrictions that limit Airbnb activity.

Compared to other major cities across the U.S., Minnesota appears to be relatively Airbnb-friendly. While regulations exist, especially in Minneapolis, enforcement seems to be less aggressive than in cities like New York or San Francisco, which have cracked down hard on short-term rentals.

Overall, based on the experiences shared by hosts on Bigger Pockets and Reddit, it seems that many continue to operate short-term rentals in Minnesota despite the rules. The key, as emphasized by the Minneapolis Superhost, is to thoroughly research and understand the local regulations before getting started. With proper due diligence and compliance, hosts can successfully navigate Minnesota's short-term rental landscape.

How to Start a Short-Term Rental Business in Minnesota

Starting a short-term rental business in Minnesota requires careful planning and adherence to local regulations. Follow these steps to successfully launch your venture:

Research local regulations: Familiarize yourself with the short-term rental laws and ordinances in your city and county. Understand zoning restrictions, licensing requirements, and any limits on the number of properties you can operate.

Choose a suitable property: Select a property that meets local zoning requirements and has the potential to attract guests. Consider factors like location, amenities, and parking4. If you plan to rent out a portion of your primary residence, ensure it has a separate entrance and complies with safety codes.

Obtain necessary licenses and permits: Apply for a short-term rental license with your city or county. In Minneapolis, submit your application to the Short-Term Rental Office, along with a management plan, proof of insurance, neighbor notification letter, and floor plan. Pay the applicable fees and complete any required inspections.

Prepare your property: Make any necessary repairs or upgrades to ensure your rental is safe, clean, and attractive to guests. Furnish the space with comfortable furniture, linens, and amenities. Consider hiring a professional photographer to showcase your property in its best light.

Create a detailed listing: Craft an appealing and informative listing on platforms like Airbnb or VRBO. Include high-quality photos, a thorough description of your space and its features, and any unique selling points. Be transparent about house rules, parking arrangements, and other important details.

Set competitive rates: Research similar listings in your area to determine a competitive nightly rate. Consider factors like seasonality, events, and demand when setting prices. Utilize dynamic pricing tools to automatically adjust rates based on market conditions.

Implement a management system: Establish a system for managing bookings, guest communication, cleaning, and maintenance. Consider using property management software like Hospiria to streamline operations and provide a seamless guest experience.

Promote your listing: In addition to listing on major platforms, promote your short-term rental through social media, local tourism websites, and word-of-mouth referrals. Encourage satisfied guests to leave positive reviews, as these can greatly impact future bookings.

Comply with tax obligations: Register for a Minnesota Tax ID Number and collect the required state and local taxes on your rental income. This includes the state sales tax (6.875%), any county or city taxes, and applicable lodging taxes. Use a tax professional to ensure proper compliance.

Maintain your property: Regularly clean and maintain your rental to keep it in top condition. Respond promptly to guest inquiries and address any issues that arise during their stay. Provide exceptional customer service to earn positive reviews and encourage repeat bookings.

By following these steps and staying informed about local regulations, you can successfully launch and operate a short-term rental business in Minnesota. Remember to prioritize guest satisfaction, maintain compliance with laws, and continually adapt to changes in the market to ensure long-term success.

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

For the most up-to-date and accurate information on short-term rental regulations and zoning in Minnesota, it's best to contact the specific city or county where your property is located, as rules can vary between municipalities. Here are key contacts for several cities and counties in Minnesota:

Minneapolis

For questions about short-term rental licenses and requirements, contact the City's Short-Term Rental Office at 612-673-3000 or via email at minneapolis311@minneapolismn.gov.

Plymouth

Contact Grant Fernelius, the Community and Economic Development Director at the City of Plymouth, with inquiries regarding short-term rental regulations and zoning.

1. Phone: (763) 509-5450
2. Email: gfernelius@plymouthmn.gov

Crow Wing County

1. For questions about the Short Term Rental Licensing Ordinance in Crow Wing County, email short.rental@crowwing.gov.
2. To file a complaint about a short-term rental violation, call the 24/7 hotline at 218-824-1132 or fill out the online complaint form on the Crow Wing County website.

In addition to city and county contacts, several online communities and resources are available for Minnesota short-term rental hosts to discuss regulations, get advice, and share experiences:

1. Join the Minneapolis Area Host Club on Facebook to connect with local hosts and stay informed about events and updates.
2. Consult the Minneapolis Short Term Rental Regulation: A Guide for Airbnb Hosts for a comprehensive overview of local ordinances, permit requirements, tax obligations, and zoning laws.
3. Participate in online forums like the Airbnb Community Center or city-specific hosting groups on social media to ask questions and learn from experienced hosts.

By reaching out to the appropriate city or county officials and engaging with the local host community, short-term rental operators in Minnesota can ensure they have the most current and accurate information about regulations and zoning requirements.

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

Discussions on online forums provide insight into how Airbnb hosts in Minnesota feel about navigating local short-term rental regulations:

On Reddit, a thread titled "Minnesota department of health is saying we are a hotel and our hot tub is a public pool and needs to be removed" sparked discussion about the challenges of complying with state regulations. The original poster, a host in Stillwater, MN, received a cease operation letter from the county claiming their short-term rental was operating as a hotel with a public pool. Other hosts chimed in with advice on working with the health department to legalize the hot tub and resume operations.

In the /r/AirBnB subreddit, a post titled "House rules: pass or go?" featured a lengthy list of house rules from a Minnesota host, including quiet hours starting at 10pm, no smoking anywhere on the property, and various fines for violations. Commenters debated whether the rules were reasonable or overly strict, with one noting "Considering the vast majority of airbnbs are single family homes or apartments who have direct wall neighbors I assure you we need more rules than you do." Others felt the host seemed "unreasonable" and likely to "nickle and dime you."

On Bigger Pockets, a real estate investing forum with a dedicated section for short-term rentals, users have discussed the viability of Airbnb hosting in various parts of Minnesota. In a thread about investing in the Minneapolis area, hosts mentioned the impact of the city's 2017 ordinance limiting short-term rentals to one property in addition to a primary residence. While some felt the rules were too restrictive, others argued they were necessary to preserve housing stock for long-term residents.

Another Bigger Pockets thread focused on the potential for short-term renting in Excelsior on Lake Minnetonka. Hosts noted that while summer is prime time for lakefront rentals, strict regulations in some cities can limit Airbnb activity. One host shared, "I have a property in Excelsior and the city is really cracking down on STRs. They require a license and limit the number of days per year you can rent."

These real-life experiences from Minnesota hosts on Reddit and Bigger Pockets highlight the importance of thoroughly researching and complying with local regulations. While opinions vary on the reasonableness of certain rules, most hosts agree that understanding and following the law is essential to running a successful short-term rental business 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.