Avalara MyLodgeTax > Blog > mylodgetax > Federal judge rules in favor of New Orleans STR regulations

Federal judge rules in favor of New Orleans STR regulations

  • Mar 20, 2024 | Jennifer Sokolowsky

New Orleans, Louisiana, can now enforce its short-term rental (STR) ordinance after U.S. District Judge Ivan Lemelle ruled the law is constitutional. The city resumed taking applications for STR permits March 8.

“We appreciate the court’s ruling today, as it brings certainty to the ability of the City to regulate STRs. This Council will work with the Department of Safety & Permits and the STR Regulatory Office to ensure that our existing rules are implemented swiftly and that all illegal STRs are shut down as soon as possible,” said Councilmember J.P. Morrell.

In March 2023, the City Council approved the law, which only applies to STRs in residential zones of the city, after the 5th Circuit Court of Appeals invalidated key parts of the city’s previous ordinance.

A group of short-term rental operators filed a lawsuit challenging the constitutionality of the new law in May of 2023, and Lemelle granted the group a temporary restraining order on August 31. On September 1, the city suspended all applications for residential and commercial STRs.

Law requires permits, limits number of STRs per square

The new rules require all STR operators to have a city-issued permit and limits STRs to one property owner per city square. In cases where the number of applicants exceed the limits, the rules call for a lottery to determine which owners would be eligible for a permit. The first drawing for the lottery was held August 14. After the temporary restraining order was granted, the city canceled a second lottery that was scheduled for October 2.

Other provisions of the residential STR law upheld by the judge include:

  • Each operator can have only one STR permit.
  • Permits are limited to “natural persons.” Corporate entities aren’t eligible.
  • Operators must live on the same lot as the STR unit.
  • Up to two more STR permits per city square may be issued to operators who individually apply for a special exemption, requiring neighbor notification and comment as well as City Council approval.
  • Short-term rental platforms such as Airbnb and Vrbo are prohibited from posting listings without a valid permit number from the city.

In the latest ruling, the judge said that inheritance trusts and other types of non-business entities could be considered “natural persons,” not corporate entities, and could qualify for STR permits.

Operators who violate the rules can be fined a minimum of $500 per offense, with each day considered a separate offense, and their permits can be revoked. Hosts with “sustained violations” can be banned from operating a short-term rental for four years.

How to comply with New Orleans lodging tax rules

New Orleans vacation rentals are also subject to lodging taxes that include Louisiana state sales tax and several city taxes, including sales tax, a short-term rental occupancy fee, occupancy privilege tax, and a short-term rental equalization occupancy tax. STR operators in New Orleans are required to register and file lodging tax returns with city and state tax authorities.

Airbnb collects both city and state taxes on behalf of its hosts. Vrbo also collects city taxes for hosts in New Orleans, but doesn’t collect Louisiana state taxes. Hosts are required to collect and pay taxes that are not taken care of by their platform. Operators must register and file lodging tax returns even if taxes are being collected on their behalf.

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

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.
Avalara logo featuring a globe surrounded by colorful lines and swirls

Learn more about LA lodging tax rules