Hennepin County, Minnesota Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Hennepin County, Minnesota?

Short-term rentals like Airbnb and VRBO have become increasingly popular in Hennepin County, Minnesota. However, hosts must navigate a patchwork of state, county, and local regulations. Here's an overview of the key rules and requirements for operating a short-term rental business in the county.

Starting a Short-Term Rental Business in Hennepin County

At the state level, the Minnesota Department of Revenue requires short-term rental hosts to collect and remit sales taxes on rentals of less than 30 days. Hosts are exempt from this requirement if renting is an isolated incident not done in the normal course of business.

Hennepin County itself does not appear to have any county-wide ordinances specifically regulating short-term rentals. However, many cities within the county have their own rules:

• In Minneapolis, hosts must obtain a short-term rental registration, which requires submitting a management plan, carrying liability insurance, notifying neighbors, posting a floor plan in the unit, and including the registration number in online listings. Hosts are limited to one short-term rental property in addition to their primary residence. No more than 10% of units in a building with 20+ units can be short-term rentals.
• The city of Hopkins allows short-term rentals in any neighborhood zoning district, subject to obtaining a conditional use permit. Units may also require a lodging license from the county.
• St. Paul requires all short-term rental hosts to obtain a license, and non-owner occupied properties must also obtain a fire certificate of occupancy. Hosts pay a 3% local lodging tax administered by the state.

According to discussions on Reddit, enforcement of these regulations can be inconsistent. One host reported operating without any license or registration for years without issues in Minneapolis. However, the city did recently implement a cap on the number of non-owner occupied short-term rentals an investor can own, upsetting some hosts.

Before starting a short-term rental business, property owners should carefully review the specific requirements in their municipality. Consulting with an experienced local real estate attorney is also advised to ensure compliance with all applicable laws and regulations at the state, county, and city level. With proper planning and due diligence, short-term rentals can be a profitable venture in Hennepin County.

Short-Term Rental Licensing Requirements in Hennepin County

While Hennepin County itself does not appear to have county-wide short-term rental licensing requirements, many cities within the county regulate short-term rentals through their own ordinances and licensing processes. Here is an overview of the requirements in several Hennepin County cities:

Minneapolis

1. Hosts must obtain either a short-term rental registration ($46 fee) for a homesteaded property or a rental license ($70-$175 fee based on tiers) for non-homesteaded properties.
2. Applications require a management plan, proof of insurance, neighbor notification, and a pre-inspection checklist.
3. Licenses are valid for 1 year and must be renewed annually.
4. Failure to obtain a license can result in fines and required appearances in housing court.

Hopkins

1. Short-term rentals are allowed in any neighborhood zoning district subject to obtaining a conditional use permit.
2. Rentals may also require a lodging license from Hennepin County.
3. No more than 6 adults and their dependent children may occupy a short-term rental unit.

Maple Grove

1. All residential rental properties, including short-term rentals, must obtain a rental license from the city before renting.
2. Licenses require an application, fees, and passing a city rental inspection.
3. Licenses are valid for 3 years.
4. Renting without a license is a punishable crime.

Excelsior

1. Hosts must obtain a short-term rental license from the city on an annual basis.
2. License applications require property details, maximum occupancy, proof of insurance, and passing a building inspection.
3. Licenses automatically terminate upon sale or transfer of the property.

To apply for a short-term rental license, hosts should contact their city's permitting/licensing department and submit the required application materials and fees. Processing times vary but may take several weeks. Operating a short-term rental without the proper license can result in significant fines and legal penalties.

In summary, while Hennepin County does not directly license short-term rentals, many of its constituent cities have established strict licensing requirements. Hosts are responsible for understanding and complying with all local regulations before listing their property for short-term rental. Consulting with the city and an experienced local attorney is advised to ensure full compliance.

Required Documents for Hennepin County Short-Term Rentals

While Hennepin County itself does not require specific documents for short-term rentals, many cities within the county have their own requirements as part of the licensing process. Here are some of the commonly required documents, their purpose, and how to obtain them:

1. Rental License Application: This is the main form to apply for a short-term rental license with the city. It collects key information about the property, owner, and short-term rental operations. Obtain the application from the city's permitting/licensing department, often available online.
2. Management Plan: A written plan detailing how the short-term rental will be managed, including contact information, guest policies, parking arrangements, etc. The purpose is to show the city that the rental will be operated responsibly. Templates may be provided by the city.
3. Proof of Insurance: A certificate proving the property is covered by liability insurance. This protects the city and neighbors from potential damages. Obtain this from your insurance provider.
4. Neighbor Notification Letter: A letter notifying adjacent property owners of your intent to operate a short-term rental. The city may provide a template. The purpose is to keep neighbors informed and allow them to voice any concerns.
5. Floor Plan: A basic floor plan of the rental unit showing room layout, exits, and fire extinguishers. This helps verify compliance with occupancy limits and fire codes. Create the plan yourself or hire a professional.
6. Inspection Checklist: A self-assessment of the rental's safety and code compliance. The city will also conduct an official inspection before issuing a license. Obtain the checklist from the city and complete any necessary repairs.
7. Lodging License: Certain cities may require an additional license from Hennepin County for "lodging" uses. Contact the county's Environmental Health Department for applications and requirements.
8. Conditional Use Permit: Some cities, like Hopkins, require a conditional use permit before allowing short-term rentals in residential areas. This involves a more extensive review process and may require a public hearing.

Keep in mind that requirements vary significantly between cities. Always check with your local city hall for the most accurate and up-to-date information on required short-term rental documents. Incomplete applications can delay the licensing process.

Hennepin County Short-Term Rental Taxes

Short-term rental hosts in Hennepin County are subject to various state and local taxes. Here's a breakdown of the key taxes that apply:

State Sales Tax: The Minnesota state sales tax rate is 6.875% and applies to all short-term rentals of less than 30 days, or 30 days or more without a written lease requiring advance termination notice. This tax is collected on the full rental price, including any fees charged by an accommodations intermediary like Airbnb.

Hennepin County Sales Tax: Hennepin County levies an additional 0.15% sales tax on short-term rentals on top of the state sales tax.

Hennepin County Transit Sales Tax: The county also imposes a 0.5% transit sales tax on lodging to fund transportation projects.

City Lodging Taxes: Some cities within Hennepin County have their own lodging taxes. For example:

1. Minneapolis charges a 3% lodging tax on accommodations with more than 50 rooms.
2. Minneapolis also has a 3% entertainment tax that applies to short-term rentals citywide.
3. Downtown Minneapolis has additional 3% liquor and restaurant taxes that may apply to food and beverage sales by lodging facilities.

In total, the maximum combined city tax rate on lodging in Minneapolis is capped at 6.5%.

Transit Sales Taxes: The Minneapolis-St. Paul metro area charges a 0.25% sales tax for housing and a 0.75% transportation sales tax that apply to short-term rentals.

Altogether, the total tax rate on short-term rentals in Minneapolis can reach as high as 14.525% (6.875% state + 0.15% county + 0.5% county transit + 6.5% city + 0.25% housing + 0.75% transportation).

Hosts should consult with a tax professional to determine which taxes apply to their specific situation. Proper registration and filings with state and local tax authorities are required.

Possible Write-Offs and Deductions

Not all short-term rental income may be taxable. Hosts can often deduct expenses like:

1. Rent or mortgage payments
2. Cleaning fees
3. Rental commissions
4. Insurance
5. Utilities
6. Repairs and maintenance
7. Depreciation

The portion of expenses that can be deducted depends on factors like whether the host owns or rents the property, how many nights it was rented, and their overall rental income. Consulting a tax advisor is recommended to properly structure and report deductions.

Minnesota-Wide Short-Term Rental Rules

In addition to local regulations in Hennepin County and its cities, short-term rental hosts must also comply with state-level laws and requirements in Minnesota:

1. Sales Tax Collection: The Minnesota Department of Revenue requires short-term rental hosts to collect and remit state sales taxes of 6.875% on rentals of less than 30 days. Hosts are exempt from collecting taxes only if the rental is an isolated incident not done in the normal course of business.
2. Lodging License: Many short-term rentals may require a lodging license from the Minnesota Department of Health (MDH). Hosts should contact MDH to determine if their property needs this license and undergo the necessary inspections.
3. Property Taxes: Short-term rentals are generally classified as commercial properties for tax purposes in Minnesota. Hosts should ensure their property tax payments reflect this status.
4. Landlord-Tenant Laws: While focused on longer-term rentals, some provisions of Minnesota's landlord-tenant laws may still apply to short-term rentals, such as requirements around property maintenance, repairs, and evictions.
5. Building and Fire Codes: All rentals must comply with applicable state building and fire safety codes, including having working smoke detectors, carbon monoxide alarms, and fire extinguishers.
6. Homeowners Association Rules: If the rental property is part of a homeowners association (HOA), hosts must follow any HOA bylaws or covenants restricting or prohibiting short-term rentals.
7. Insurance: Hosts should verify their insurance policy covers short-term rental activities and consider additional coverage like commercial liability insurance to protect their business.

Hosts can face fines, penalties, and legal action for violating these state-wide rules. While enforcement may vary, it's crucial for hosts to understand and comply with all relevant laws at both the state and local levels. Consulting with a local attorney specializing in landlord-tenant law and short-term rental compliance is advised.

Does Hennepin County Strictly Enforce STR Rules?

Based on discussions in online forums like Reddit, enforcement of short-term rental regulations appears to be inconsistent and lax in Hennepin County, especially compared to other major cities. Many hosts report operating without proper licenses or registrations for extended periods without facing any penalties.

One Redditor shared their experience living in a Minneapolis apartment building where half the units were operated as short-term rentals by a company called Sonder. Despite numerous issues like unauthorized access, drug use, property damage, and disruptive guests, the company seemingly faced no repercussions from the city. Residents had to complain directly to council members to finally prompt action.

Another discussion thread criticized the city's new ordinance limiting hosts to one short-term rental property in addition to their primary residence. Several commenters felt the law was misguided and that the city should allow the free market to regulate the industry instead of intervening.

This suggests that, until recently, Minneapolis and Hennepin County have taken a relatively hands-off, Airbnb-friendly approach. Hosts could operate multiple properties with minimal oversight. The new ordinance may signal stricter enforcement going forward, but it remains to be seen how proactively the city will identify and penalize violators.

Ultimately, while Hennepin County has established short-term rental regulations on the books, actual enforcement seems to be spotty and reactive rather than proactive. Many hosts continue to operate despite the rules, either out of ignorance or intentional non-compliance, with limited consequences. The county appears to be more Airbnb-friendly than peer cities with more aggressive crackdowns on illegal listings. However, the regulatory landscape is evolving, and hosts should not assume they can skirt the law forever without facing penalties.

How to Start a Short-Term Rental Business in Hennepin County

• Research local regulations: Thoroughly review the short-term rental ordinances and zoning codes for your specific city within Hennepin County. Requirements vary significantly between municipalities. Contact your city's permitting department for the most up-to-date information on license applications, fees, occupancy limits, and other restrictions. Don't assume rules are the same countywide. Cities like Minneapolis, Hopkins, and Maple Grove each have their own unique regulations.
• Determine your rental type: Identify whether you will rent a portion of your primary residence (like a spare bedroom) or a separate investment property. Different rules apply based on the type of rental. In Minneapolis, for example, renting a homesteaded property requires just a short-term rental registration, while non-homesteaded properties need a full rental license. Consider starting with a rental in your primary residence to test the waters before investing in additional properties.
• Prepare your property: Ensure your rental unit is safe, clean, and well-maintained. Install smoke detectors, carbon monoxide alarms, and fire extinguishers as required by building codes. Create a floor plan showing exits and room layouts. Make any necessary repairs or upgrades to meet rental inspection standards. Put yourself in your guests' shoes. Provide ample amenities, comfortable furnishings, and thoughtful touches to earn positive reviews.
• Obtain proper insurance: Contact your insurance provider to verify your existing policy covers short-term rental activities. Consider adding commercial liability coverage or a separate short-term rental policy to fully protect yourself and your property. Typical policies range from $1-5 million in coverage. Some hosting platforms like Airbnb provide limited insurance, but it's best to have your own coverage as well.
• Register for taxes: Apply for a Minnesota Tax ID Number to collect and remit the required state and local taxes on your rental income. This includes the 6.875% state sales tax, 0.15% Hennepin County sales tax, 0.5% transit tax, and any applicable city lodging taxes. Consult a tax professional to ensure proper compliance.
• Obtain required licenses and permits: Submit your short-term rental license application to your city, along with all required documents like a management plan, neighbor notification letter, floor plan, and inspection checklist. Pay the applicable license fees. Post your rental license number in all online listings once approved. Apply for your rental license well in advance of your intended launch date, as the process can take several weeks.
• Create a management plan:Outline your rental's house rules, guest screening process, parking arrangements, maintenance schedule, and other key operational details. Designate a local contact person to respond to any issues that may arise. Share this plan with your city as part of your license application. Use a third-party tool to automate guest communication, cleaning coordination, and other routine management tasks.
• List your rental: Once licensed, create listings on popular short-term rental platforms like Airbnb and VRBO. Craft an enticing description, take high-quality photos, and set competitive rates. Be responsive to inquiries and booking requests. Provide clear check-in instructions and house rules to guests. Consider hiring a professional photographer to showcase your rental in the best light. Great photos can make a huge difference in attracting bookings.

By following these steps and staying compliant with all applicable regulations, you can successfully launch and operate a short-term rental business in Hennepin County. As always, it's recommended to consult with a local attorney specializing in real estate and hospitality law to ensure you've covered all your bases before welcoming your first guests.

Who to Contact in Hennepin County about Short-Term Rental Regulations and Zoning?

For the most up-to-date and accurate information on short-term rental regulations in Hennepin County, it's best to contact the specific city where your property is located, as rules vary significantly between municipalities. Here are key contacts for several cities in the county:

Minneapolis

• For questions about short-term rental licenses and requirements, contact Minneapolis Regulatory Services at 612-673-3000 or RegulatoryServices@minneapolismn.gov.
• For zoning inquiries, contact Minneapolis Community Planning and Economic Development (CPED) at 612-673-5095.

Hopkins

• Contact the City of Hopkins Rental Housing Inspections department at 952-548-6330 with any questions about rental licenses.
• For zoning questions, contact the Planning & Economic Development department at 952-548-6342 or planning@hopkinsmn.com.

Minnetonka

• For rental registration questions, contact the City of Minnetonka Housing & Zoning Enforcement division at 952-939-8200.
• Zoning is handled by the Community Development department, reachable at 952-939-8290.

In addition to city contacts, several online communities are great resources for Hennepin County short-term rental hosts to discuss regulations, get advice, and share experiences:

• The Hennepin County Airbnb Hosts Facebook group has over 1,000 members actively discussing STR topics in the area.
• Bigger Pockets, a real estate investing forum, has a dedicated section for short-term and vacation rentals with many threads related to Minnesota and the Twin Cities.
• The /r/AirBnB subreddit is an active community for hosts worldwide to share knowledge, with occasional posts specific to Minneapolis and Hennepin County.
• The Minnesota Vacation Rental Association (MSVRA) is a non-profit organization dedicated to promoting and protecting the vacation rental industry in the state. They offer educational resources and advocacy for hosts.

By utilizing both official city channels and the collective wisdom of experienced hosts in online forums, short-term rental operators in Hennepin County can stay informed of the evolving regulatory landscape and ensure compliance. Open communication with local officials and neighbors is key to operating a successful and sustainable short-term rental business in the county.

What Do Airbnb Hosts in Hennepin County on Reddit and Bigger Pockets Think about Local Regulations?

Discussions on online forums provide insight into how Airbnb hosts in Hennepin County feel about navigating local short-term rental regulations:

On Reddit, a thread titled "New regulations on short term rentals in Minneapolis (Airbnb, HomeAway, etc)" sparked debate when the city council passed an ordinance limiting hosts to one rental property in addition to their primary residence in 2017. Some commenters felt the rules were too restrictive, with one saying "Let the free market decide, not the city council." Others supported the change, arguing it would help preserve housing stock for long-term residents.

A Bigger Pockets user looking to start an Airbnb in Excelsior on Lake Minnetonka asked about the viability of short-term renting in the off-season. Respondents noted that while summer is prime time, there is still demand in the winter, especially around holidays and events. However, they cautioned that some cities like Excelsior have strict rental restrictions that limit Airbnb activity.

In an /r/AirBnB thread, a guest asked for advice on booking a shared space rental in Minneapolis. Hosts chimed in with their experiences renting out private rooms in their homes. One noted "I rent individual rooms. Three bed/one bath. Guests share the kitchen, living room, bathroom, office, and outdoor space including my sauna." They mentioned that clear communication of the setup in the listing is key.

A property manager on Bigger Pockets shared their challenges with Airbnb's co-hosting feature when trying to operate through an LLC. Airbnb requires co-hosts to act as individuals, not companies, which limits liability protection. Other hosts chimed in with similar frustrations about Airbnb's lack of flexibility for property management companies.

Finally, a Minneapolis Airbnb Superhost did an "Ask Me Anything" on /r/JobProfiles, sharing their experience managing a single listing. They emphasized the importance of researching local regulations before starting, noting "Not all rentals can be Airbnbs, so check on your city's rules and regulations before buying a vacation/rental property."

Overall, these forum discussions paint a picture of Hennepin County hosts working hard to comply with an evolving patchwork of local short-term rental regulations. Many express frustration with rules that feel overly burdensome on hosts just trying to earn extra income. However, most seem committed to operating legally and being good neighbors, even if it means jumping through some hoops. Clear and consistent regulation across the county would likely be welcomed by the host community.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.