Avalara MyLodgeTax > Blog > State and Local News > Bozeman bans new STRs unless they’re owner occupied

Bozeman bans new STRs unless they’re owner occupied

  • Jan 16, 2024 | Jennifer Sokolowsky

All new short-term rentals (STRs) in Bozeman, Montana, must be occupied by their owners under a city law that recently went into effect.

Bozeman’s STR ordinance, passed in 2017, created different categories of short-term rentals:

  • Type 1: A short-term rental of one or more bedrooms in a host’s primary residence with the host occupying the same dwelling unit for the entire short-term rental period
  • Type 2: A short-term rental of a dwelling unit with the host not occupying the dwelling unit during the entire short-term rental period
  • Type 3: A short-term rental that is not owner-occupied

Under the latest amendment, Type 3 STRs are banned. However, around 100 STRs that were licensed and compliant before the law went into effect on December 14, 2023, are exempt from the owner occupation requirements and can continue operating.

The law also divides Type 2 rentals into two categories. A unit that is a primary residence but rented for short terms when the owner is away is considered a 2A STR. A short-term rental of an accessory dwelling unit (ADU) on the same lot as the host’s primary residence, or of no more than one additional dwelling unit in the same building as the host’s primary residence, is categorized as 2B.

The requirements for primary residence status are stricter under the new rules. Previously, the owner was required to live in the STR 50% of the year. Now, the owner must live in the residence for 70% of the year for it to qualify as owner occupied.

The city received approximately 50 applications for STR permits from when the rules were passed in October up to the effective date.

This past summer, the city passed a separate STR law focused on short-term rental marketplaces such as Vrbo and Airbnb. The measure required all Bozeman listings on the marketplaces to have city-issued permit numbers. Marketplaces must also share listings data with the city.

Bozeman isn’t the only Montana city cracking down on STRs. Whitefish recently voted to hire a new official to work on enforcing the city’s short-term rental laws. It’s estimated that about 780 STRs operate within city limits, with more than 500 of those lacking required permits.

All STRs in Montana are subject to state and lodging facility use tax, and hosts are required to register with the Montana Department of Revenue. Whitefish STRs are also subject to the city’s resort tax.

While Airbnb and Vrbo automatically collect the state tax for bookings on their sites, they don’t collect the resort tax in Whitefish, which means hosts are solely responsible for local lodging tax compliance.

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 vacation rental properties, drop us a line and we’ll get back to you with answers. For more on lodging taxes in Montana, see our state vacation rental tax guide.

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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