Zoning! Restrictions on Vacation Rentals
There are many things to consider when purchasing a vacation rental home; one very important issue to consider is if the property is zoned for short term rentals. If the property is not zoned for short term rentals, you will not be able to rent it on a weekly basis and your vacation rental home will become a long term rental property. We know of many homeowners who have been notified by local zoning authorities to cease short term rental activities. This can be a devastating financial event for homeowners who factor in rental revenue when making the decision to purchase their property.
Most resort towns welcome tourists and have zoning laws which permit the daily or weekly rental of single family homes or condos. There are some areas, however, that prohibit the short term rental of any property which is residentially zoned. Some towns/counties will allow short term rentals in some residential areas but not in other residential areas.
The definition of ‘short term’ varies by town, city or county. In most places, however, short term is defined as anything less than a month. If the property is within city limits, then it is governed by the city's zoning ordinances. If the property is not within any city or town limits (i.e. in an unincorporated part of the county), then it is governed by the county's zoning ordinances.
The permitted uses of a type of property also vary by town, city or county. For example, a property which is zoned R-1 (Residential-1) in one town may be permitted to rent on a short term basis, but a property zoned R-1 in a different town may not be permitted to short term rent. The best way to determine the permitted uses of a property is to check with the planning and zoning department where the property is located - before you purchase the property.
Some of the biggest zoning battles are brewing in popular vacation spots such as parts of Hawaii, Arizona, Nevada and Florida. In some of these locations, short term rentals have been prohibited in residential areas for years. In other areas, however, short term rental restrictions are new. Recent law changes are typically driven by year-round residents who don't want vacationers rotating in and out of their neighborhood.
If you purchase a property where short term rentals are prohibited, your options are very limited. In some cases, you may be able to obtain a special non-conforming use permit from the zoning department in order to legally short term rent your property. In other cases, your only option may be to attempt to change the actual zoning of the property. Both of these options are typically time consuming and expensive and there is no guarantee that you'll be successful.
Enforcement of these zoning rules varies, but in many areas, because of a lack of resources, zoning officers usually don't search for zoning violators. Most enforcement actions result from a disgruntled neighbor reporting a violation to the zoning department. That action will most likely include an order to cease and desist short term renting the property immediately or incur daily fines.
Keep in mind that the zoning laws are different and separate from tax laws. If zoning rules prohibit short term renting, but you choose to "take your chances" and short term rent, you will still be liable for sales and lodging taxes. Additionally, "short term" is usually defined differently in the zoning ordinances than in the tax ordinances. In Florida, for example, zoning ordinances typically define short term as anything less than thirty consecutive days, but tax laws define short term as anything less than or equal to six consecutive months. So you may rent "long term" as defined by zoning laws, but still owe sales and lodging taxes if you're renting "short term" as defined by tax laws.
If you've already purchased a property and are not sure if you're permitted to short term rent it, you should check with your local planning and zoning office to determine how your property is zoned and if short term rentals are permitted in that type of zoning.
HotSpot Tax Services offers a low cost, effective, guaranteed solution for sales and lodging tax compliance specifically for vacation rental homeowners throughout the U.S. Although HotSpot does not provide zoning research services, but we are familiar with many potential zoning issues in areas throughout the U.S. HotSpot does not ensure that your property is properly zoned for short term rentals. If you register for HotSpot's tax and licensing services, HotSpot will notify you of potential zoning issues that they are aware of or that arise during the tax research and licensing process. Call HotSpot at 877-589-0207 to learn more about sales and lodging tax requirements in your area.