New year, new short-term rental rules

Cities and states were busy in 2020 creating new regulations for the short-term rental industry. Several of these laws take effect this month across the country.

A Wyoming law, effective January 1, imposes a 5% statewide tax on all short-term lodging, except for lodging offered at state and county campgrounds. The measure also allows local governments to impose lodging taxes of up to 2%.

Previously, short-term accommodations in Wyoming were subject to state and local sales taxes, local lodging taxes, and resort district taxes in certain areas. The new lodging taxes are added to existing taxes.

Short-term rental hosts are required to register with the Wyoming Department of Revenue for a sales tax license, collect taxes from guests, and file regular tax returns. Both Airbnb and Vrbo collect state and local short-term rental taxes on behalf of hosts when guests pay for their rentals. Hosts are responsible for any taxes that aren’t collected for them.

For more on lodging taxes in Wyoming, see our state Vacation Rental Tax Guide.

In New Mexico, short-term rental operators in Santa Fe and Taos have new rules to follow this month.

In Santa Fe, a new law went into effect on January 1. It allows only one vacation rental permit per person in residential zones and limits the number of short-term rental permits in residential zones to 1,000 citywide. The number of short-term rental units within multi-unit buildings is also capped, and vacation rental homes must be located at least 50 feet away from each other.

Short-term rentals must have a local agent who can arrive at the rental within an hour to respond to issues, and hosts are required to keep records for three years that the city can view upon request. 

Santa Fe’s short-term rental rules already required vacation rental operators to obtain an annual permit. Under the new law, permits can only be issued to people, not to business entities, and permit numbers must be included in all advertisements. Short-term rental platforms such as Airbnb and Vrbo must remove listings with invalid permit numbers.

Meanwhile, Taos has updated its law to limit the number of short-term rentals to 120, effective January 1. Currently, between 160 and 180 vacation rentals are operating in Taos. All short-term rentals must have a city permit, and property owners need to reapply for their short-term rental permits this month.

Under the new ordinance, Taos vacation rentals are prohibited in historic districts, historic and hotel overlay zones, and the Central Business District. In addition, hosts may not offer stays within 24 hours of a previous rental. Hosts must also follow parking and noise rules, observe occupancy limits, and have insurance coverage with $1 million minimum liability coverage.

All New Mexico short-term rental hosts are required to pay the state’s gross receipts tax, which they can pass on to guests. Short-term rental hosts in Santa Fe and Taos must also collect local lodgers’ tax. In Taos, payment of lodgers’ tax is no longer available online, and hosts must pay in person or by mail.

Airbnb and Vrbo collect New Mexico gross receipts tax and local lodgers’ tax for Santa Fe and Taos hosts. For more on short-term rental taxes in New Mexico, see our state Vacation Rental Tax Guide. 

In Riverside County, California, three cities have passed new short-term rental regulations.

As of December 31, 2020, Palm Desert extended its ban on vacation rentals in residential neighborhoods to more areas of the city. The city banned short-term rentals in neighborhoods zoned R-1 and R-2 in 2017. Now they’re also prohibited in planned residential (PR) areas, including Shepherd Lane, Hovley Lane West, The Grove, and North Deep Canyon. Short-term rentals are allowed in these areas if hosts are present on-site during guests’ stays.

Rancho Mirage now bans all short-term rentals, except where permitted by local homeowners associations. The ban went into effect January 1. Vacation rental hosts in Rancho Mirage are required to register with the city, abide by limits on noise and other rules, and designate an emergency contact that can respond to complaints within 45 minutes.

And in La Quinta, vacation rental platforms such as Airbnb and Vrbo are now prohibited from booking stays for properties that don’t have valid city vacation-rental permits. The new city ordinance also requires hosts to cease rental operations and notify the city when ownership of a vacation rental changes hands or when they construct or convert new bedrooms.

Under a regional stay home order from California Governor Gavin Newsom, all lodging businesses in Riverside County are currently only allowed to offer stays for COVID-19 mitigation and containment measures or to provide accommodation for essential workers or housing solutions. The order went into effect December 7, 2020.

Short-term rental operators in Palm Desert, Rancho Mirage, and La Quinta are required to collect occupancy tax from guests and file monthly occupancy tax returns with their respective cities.

While Airbnb collects transient occupancy tax (TOT) in Rancho Mirage and Palm Desert, it doesn’t do so in La Quinta. Vrbo doesn’t collect TOT for hosts in any of the three cities. Hosts whose platforms don’t collect on their behalf are solely responsible for TOT compliance.

For more on lodging taxes in California, see our state Vacation Rental Tax Guide.

MyLodgeTax can help automate and simplify tax compliance for short-term rental hosts. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.