As technology progresses, so does access to short term rentals. Just like any other income-producing business, the more money there is to be made means the more rules and regulations there are to be enforced. The question shouldn’t be how to avoid them, but rather how to make sure you’re running the most successful and legal STR business in Minneapolis.
Account for everything
Before diving into Minneapolis specific regulations, you may be wondering about potential rules within higher-level jurisdiction such as State and County. Although there is technically no restrictive legislation at the State and County levels, both will charge sales tax to your rentals. Minnesota charges a base Sales Tax rate of 6.875% which STR’s are applicable to be charged with based on accommodation fares. On top of the 6.875%, Hennepin County charges a base .15% sales tax and .25% Transit Improvement sales tax. Therefore, State and County account for a total tax rate of 7.275%.
Staying sharp in the 612
As we approach the City level of jurisdiction, rules and regulations become more enforceable and more specific – For these reasons, it’s important to recognize what they are and how to abide by them. Picking back up on taxes, Minneapolis charges an additional .5% base rate sales in addition to a 3% Entertainment tax in which STR’s are applicable. These rates bring our total tax burden up to a hefty 10.775%. In the case you have 50 or more STR units in one building, Minneapolis charges a 2.625% Lodging tax. You may find more on taxes here.
According to the city of Minneapolis, there are 3 types of short term rental units. In order to qualify, the unit cannot be rented out for more than 30 consecutive days or it becomes a long term rental. These can be defined as:
- A short-term rental property registration or rental license is not required for an owner who lives at the property, rents a room and stays at the property during the rental period.
- Short-Term Rental property registration is required for an owner who lives at the property, rents out an entire unit and leaves the property during the rental period.
- A rental license is required for the owner of a non-occupied rental property that rents out an entire unit.
What’s Next?
In order to get up and running, you’ll need to fill out a Minneapolis Rental property application found here, and another application-specific to Short-Term rentals found here. Applying only costs $50, a worthy investment as STR’s can be extremely lucrative. After the applications are processed, it’s smooth sailing!