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Louisville, Kentucky, tightens STR rules

  • Sep 26, 2023 | Jennifer Sokolowsky

Louisville, Kentucky, has amended its short-term rental (STR) ordinance, focusing on STRs in residential areas.

The new regulations require prospective STR hosts to live on a property for at least six months before applying for STR registration with the city. The amendments also increase the annual STR registration fee from $100 to $250 and limit the number of occupants per STR to 12 adults, among other rules. 

“What we are really trying to do is protect neighbors from investors who are coming in and buying up properties,” Councilman Ben Reno-Weber said. “So we’ve added some restrictions in residential zoning and tightened the restrictions for getting exceptions to the residential zoning, but basically, on your own property, you can have maximum freedom to do short-term rentals, if you live there.”

These amendments are in addition to the existing law, which was last updated in 2019. STRs that are already registered are exempt from the new amendments.

The regulations require non-owner-occupied STRs to be located at least 600 feet away from each other in residential areas. Formerly, potential STR owners were able to apply to the city to have the density requirement waived. Under the new rules, waivers aren’t allowed if two or more STRs with waivers are already located within 600 feet of each other, with some exceptions.

Vacation rental hosts must keep their registrations active in order to keep their STR permits. The city’s planning director can revoke STR permits of properties that are the subject of two or more substantiated civil or criminal complaints in one year. Under the new amendments, new registrations are prohibited for properties that have received a citation for unlawful short-term rental activity within the past 12 months.

Fines for violations of the law start at $125 for a first offense, $250 for a second offense, $500 for a third offense, and a $1,000 fine for any additional offense.

The ordinance also prohibits short-term rental hosts from advertising unlicensed short-term rentals on STR platforms such as Airbnb and Vrbo. The city can ask hosting platforms to remove listings and to provide general monthly data, such as how many properties were rented out on the platform.

Hosts must also comply with lodging tax rules. They’re required to register with the Louisville Metro Revenue Commission, collect transient room tax from guests, and file monthly tax returns. While STR platforms may collect and pay taxes on behalf of their hosts, hosts are still required to register and file returns with the city. Airbnb collects the local transient room tax for Louisville listings, but Vrbo does not.

Short-term rental hosts must also register with the Kentucky Department of Revenue and collect state lodging taxes. However, hosts who book STRs exclusively through a marketplace that collects and pays lodging taxes on their behalf do not need to register with the state. 

MyLodgeTax can help short-term rental hosts automate and simplify city and state lodging tax compliance, from registration to tax return filing. If you have tax questions related to Kentucky vacation rental properties, drop us a line and we’ll get back to you with answers. See our Kentucky Vacation Rental Tax Guide for more on short-term rental taxes in the state.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.
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