Montgomery County, Pennsylvania Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Montgomery County

Starting a short-term rental business in Montgomery County, Pennsylvania requires adherence to several regulations. All short-term rentals must be licensed through the county's Department of Health and Human Services, which includes a $150 licensing fee and a 7% tax on the price of a room. Rentals must also comply with zoning regulations and specific codes. The law states that short-term rentals must be the primary residences for people leasing them, and if the property owner isn't physically present in the residence, it can only be rented for a maximum of 120 days per year.

Short-term rentals are subject to local zoning laws that may restrict their operation to certain zones. It's crucial to verify if your property lies within a permitted zone for short-term rentals. Operators are also required to ensure that safety measures such as smoke alarms, fire extinguishers, and adequate parking are in place.

Enforcement of these regulations can be challenging. Community members have reported violations and expressed concerns about the growing number of unlicensed units. Despite the regulations, enforcement has lagged, and there are ongoing debates about whether short-term rentals impact affordable housing in the county.

An instance highlighting the challenges involves Flats 8300, where companies listed properties on Airbnb without proper licensing, leading to community backlash. Another case involved a Montgomery County resident who rented a unit for $6,000 a month through Airbnb, managed by Churchill Living, demonstrating varying practices and enforcement gaps.

Discussions on platforms like Bigger Pockets show investors debating the best areas to invest in within Montgomery County due to varying tenant experiences and regulatory environments. These insights can be invaluable for new entrants into the short-term rental market.

It's important to note that Montgomery County is experiencing a lack of affordable housing options, with rents increasing significantly in recent years. This has led to concerns about the impact of short-term rentals on housing affordability and availability for long-term residents.

When starting a short-term rental business in Montgomery County, it's essential to thoroughly research and comply with all applicable regulations, obtain necessary licenses and permits, and be aware of the ongoing discussions and potential changes in the regulatory landscape. Engaging with local authorities, property management companies, and community members can provide valuable insights and help navigate the complexities of operating a short-term rental business in the county.

Short-Term Rental Licensing Requirement in Montgomery County

To legally operate a short-term rental in Montgomery County, property owners must obtain a license from the county's Department of Health and Human Services (DHHS). The licensing process involves several requirements, as outlined on the official Montgomery County website:

• Notify immediate neighbors and any applicable homeowners' association or condominium of the intent to rent out the property short-term. A sample notification letter is provided by the county.
• Ensure the property has paid all relevant taxes and complies with zoning restrictions. Short-term rentals are prohibited in certain municipalities within the county.
• Keep a record of all guests who stay at the property.
• Apply for the license online and pay the annual license fee of $150 plus applicable processing fees. Licenses are valid for one year and must be renewed annually.
• Once licensed, property owners must post their license number on all short-term rental listings, such as those on Airbnb or VRBO.
• Property owners must also pay the County's Room Rental-Transient Tax of 7% on the rental price, collected through the Department of Finance, Division of Treasury.

Applications for short-term rental licenses in Montgomery County are submitted online through the county's website. The typical processing time is not specified, but the county recommends applying well in advance of the intended rental start date.

Failure to comply with the short-term rental licensing requirements may result in additional fees, penalties, and possible restrictions on the property. Operating a short-term rental without a valid license is considered a class A violation and may incur $500 in civil fines.

It's important to note that enforcement of these regulations has been challenging for the county. Community members have reported numerous potential violations, with many short-term rentals operating without proper licensing. Despite the penalties, the county has struggled to keep up with the volume of violations and has yet to issue any citations as of November 2019.

Required Documents for Montgomery County Short-Term Rentals

To legally operate a short-term rental in Montgomery County, Pennsylvania, property owners must obtain and submit the following required documents:

1. Zoning Approval - Depending on the property's location, there may be restrictions on the number of units that can be rented in a single building. Contact the local municipality's Planning and Development Department to verify if the property is zoned for short-term rentals.
2. Rental License Application - Property owners must complete and submit a Rental License Application to the local municipality. The application must be fully completed to be considered for approval. In some areas like Norristown, a Rental License Application fee may apply.
3. Inspection Report - As part of the licensing process, the property may be subject to an inspection by the local Code Enforcement Department to ensure it meets minimum property maintenance standards. If violations are found, they must be corrected and the property re-inspected before a license is issued.
4. Proof of Payment - After passing inspection, property owners are sent an invoice for the rental license fee. Proof of payment, such as a receipt, is required before the rental license is officially issued.
5. Room Rental-Transient Tax - Short-term rental owners must apply for and pay Montgomery County's Room Rental-Transient Tax of 7% on the rental price. This is done through the Department of Finance, Division of Treasury.

While some details are specific to certain municipalities like Norristown, the general requirements of zoning approval, license application, property inspection, license fee payment, and transient tax appear to be consistent across Montgomery County. It's best to contact your local municipality for the most up-to-date and location-specific requirements for legally operating a short-term rental.

Montgomery County Short-Term Rental Taxes

Short-term rental operators in Montgomery County, Pennsylvania are subject to several types of taxes at the state and county level:

1. Pennsylvania Hotel Occupancy Tax (State Tax) - This tax applies to room rental charges for periods of less than 30 days by the same person. The tax rate is 6%, the same as the state sales tax rate.
2. Montgomery County Room Rental-Transient Tax (County Tax) - Every provider, including homeowners, who offers sleeping accommodations for compensation for 30 days or fewer, is liable for paying this tax. The tax rate is 7% of the total room rental collected, including any fees charged by online brokers like Airbnb or VRBO.

To collect these taxes, short-term rental operators must first register for a Sales, Use, and Hotel Occupancy Tax License with the Pennsylvania Department of Revenue. In Montgomery County, operators must also apply for a Room Rental-Transient Tax Account. Registration and tax filing for the county tax can only be done online through the county's website.

It's important to note that even if you use an online booking platform like Airbnb that collects and remits taxes on your behalf, you are still responsible for ensuring the proper taxes are paid. You should provide the county with proof that the online broker is submitting the tax directly to them.

In addition to these short-term rental specific taxes, any income earned from renting out your property is subject to federal and state income taxes. This income should be reported on Schedule C of your Pennsylvania Personal Income Tax return.

As for potential tax write-offs, short-term rental operators may be able to deduct certain expenses related to their rental business. These can include:

1. Mortgage interest
2. Property taxes
3. Rental insurance
4. Utilities
5. Cleaning and maintenance costs
6. Supplies for guests
7. Platform service fees (e.g. Airbnb fees)
8. Depreciation of furniture and equipment used in the rental

It's best to consult with a tax professional to determine which deductions apply to your specific situation and to ensure proper reporting of your short-term rental income and expenses. Keeping detailed records throughout the year will make tax filing easier and help support any deductions you claim.

Pennsylvania Wide Short-Term Rental Rules

While Pennsylvania does not have a comprehensive statewide law regulating short-term rentals, there are a few state-level requirements that Montgomery County hosts should be aware of.

First, short-term rental operators in Pennsylvania must collect and remit the state Hotel Occupancy Tax of 6%, the same rate as the state sales tax. This applies to all stays of less than 30 consecutive days. Hosts are required to register for a Hotel Occupancy Tax License with the Pennsylvania Department of Revenue before they can begin collecting this tax from guests.

In addition to the state occupancy tax, short-term rental income is subject to state income taxes. Hosts must report their rental income on their annual Pennsylvania income tax return. For rentals less than 30 days, income and expenses are reported on PA Schedule C. Longer rentals use PA Schedules E.

Beyond these taxation requirements, the state leaves the regulation of short-term rentals primarily up to local governments. This means that the specific rules hosts must follow depend on where their property is located within Montgomery County.

For example, some municipalities in the county require short-term rental operators to obtain a permit or license before they can legally rent out their property. These permits often involve an application process, fees, and periodic renewals. Failing to secure the proper permit can result in fines.

Many areas also have zoning restrictions that limit where short-term rentals can operate. Rentals may be prohibited in certain residential zones or require a special exception from the local zoning board.

Safety is another area where local rules come into play. Some municipalities have specific requirements for smoke detectors, carbon monoxide alarms, fire extinguishers and emergency contact postings in short-term rentals to ensure guest safety. Regular inspections may be mandated.

As a short-term rental operator in Montgomery County, it's critical to research and understand all state and local requirements that apply to your specific property. Contacting your municipal government offices is often the best starting point. Consulting with a local lawyer well-versed in Pennsylvania real estate and tax law can also help you ensure full compliance as you launch and grow your short-term rental business.

Does Montgomery County Strictly Enforce STR Rules?

Based on discussions in online real estate investing communities like Bigger Pockets and Reddit, Montgomery County appears to have a reputation for being relatively strict in enforcing its short-term rental regulations compared to many other jurisdictions. While the county is not outright hostile to Airbnb and other STR platforms, it has put in place a fairly comprehensive regulatory framework that it does make efforts to enforce.

As noted in a previous section, Montgomery County requires STR operators to obtain a license, restricts rentals to primary residences only, caps rentals at 120 days per year when the owner is absent, and imposes limits on the number of guests allowed. Hosts are required to collect the 7% county room rental tax and clearly post their license number on all listings.

While some hosts undoubtedly operate under the radar, Montgomery County residents have a clear process to report unlicensed or problem STRs to the Department of Health and Human Services. And the county does appear to investigate complaints and take enforcement actions against non-compliant operators. There are anecdotal reports on Reddit of the county following up on resident complaints, though the final outcome of those enforcement efforts is not always clear.

That said, as with many jurisdictions, proactive enforcement seems to be limited and complaint-driven. So while the rules are on the books, not every single violator is caught. But the county does appear to be more active than many other areas in responding to issues with STRs when reported.

Overall, while it's certainly possible to operate an Airbnb in Montgomery County, hosts should be prepared to fully comply with the county's registration, tax collection, and operational requirements. Those looking to skirt the rules are more likely to face enforcement issues in Montgomery County than in some more hands-off jurisdictions. For hosts willing to operate above board and be good neighbors, the market still presents opportunities, but the county's tighter regulations do constrain the STR market compared to more laissez-faire cities.

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

Starting a short-term rental business in Montgomery County, Pennsylvania requires careful planning and adherence to local regulations. Here are the key steps to get started:

1. Research zoning laws and regulations

• Check with your local municipality to ensure short-term rentals are permitted in your property's zone.
• Familiarize yourself with any restrictions on rental duration, occupancy limits, parking requirements, and other rules.
• If your property is part of a homeowners' association (HOA), review their bylaws for any additional restrictions.

2. Obtain necessary licenses and permits

• Apply for a short-term rental license through Montgomery County's Department of Health and Human Services.
• Pay the annual license fee of $150 plus applicable processing fees.
• Ensure your property meets all safety requirements, such as smoke detectors, fire extinguishers, and emergency contact information posting.
• Obtain a general business license if required by your municipality.

3. Register for taxes

1. Apply for a Sales, Use, and Hotel Occupancy Tax License with the Pennsylvania Department of Revenue to collect the state's 6% hotel occupancy tax.
2. Register for a Room Rental-Transient Tax Account with Montgomery County to collect and remit the county's 7% room rental tax.
3. Consult a tax professional to ensure compliance with all applicable federal, state, and local income tax requirements.

4. Prepare your property

1. Ensure your rental space is clean, well-maintained, and adequately furnished for guest comfort.
2. Consider your target audience (families, business travelers, etc.) when decorating and equipping your rental.
3. Invest in quality linens, towels, and basic amenities to enhance guest experience.
4. Install smart home technology for added security and convenience, such as keyless entry, surveillance cameras, and noise monitoring devices.

5. Create a compelling listing

1. Take high-quality photos that showcase your property's best features and amenities.
2. Write an accurate, detailed description that highlights your rental's unique selling points and local attractions.
3. Be transparent about house rules, occupancy limits, and any additional fees or deposits.
4. Set competitive rates based on your property's size, amenities, and location.

6. List your property on popular platforms

1. Create accounts on popular short-term rental platforms like Airbnb, VRBO, and Booking.com.
2. Ensure your listing is complete, accurate, and optimized for search visibility.
3. Respond promptly to inquiries and maintain a high response rate to boost your listing's ranking.
4. Encourage satisfied guests to leave positive reviews to build trust and credibility.

7. Manage your rental effectively

1. Establish a reliable cleaning and maintenance routine between guest stays.
2. Communicate clearly with guests before, during, and after their stay to ensure a smooth experience.
3. Consider hiring a professional property management company if you lack the time or expertise to manage the rental yourself.
4. Monitor your rental's performance regularly and adjust your pricing, amenities, or marketing strategy as needed to optimize occupancy and revenue.

By following these steps and staying compliant with Montgomery County's short-term rental regulations, you can successfully launch and grow your short-term rental business. Remember to prioritize guest satisfaction, maintain open communication with your local authorities, and continually adapt to changes in the market to ensure long-term success.

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

For questions about short-term rental regulations and licensing in Montgomery County, contact the Department of Health and Human Services:

• Phone: 240-777-3986
• Address: 2425 Reedie Drive, 9th floor, Wheaton, MD 20902

For zoning-related questions, reach out to your local municipality's Planning and Development Department. You can find contact information for each municipality on the Montgomery County website.

Some key contacts for the most populous municipalities:

• Norristown Planning & Municipal Development: 610-270-0451
• Lower Merion Building & Planning Department: 610-645-6200
• Abington Township Planning & Zoning: 267-536-1010
• Upper Merion Township Zoning Officer: 610-265-2600

For general inquiries, you can also contact Montgomery County at 610-278-3000 or submit questions through their online contact form at https://www.montgomerycountypa.gov/FormCenter/Contact-Us-2/Contact-Us-37.

In addition to official channels, connecting with other short-term rental hosts in Montgomery County can provide valuable insights and support. Some online communities to check out:

• Bigger Pockets Montgomery County Forum: https://www.biggerpockets.com/forums/742/topics/273459-montgomery-county-re-information
• Montgomery County Subreddit: https://www.reddit.com/r/montco/
• Vacation Rental Hosting Forums: https://www.hostfully.com/blog/vacation-rental-forums-and-groups/

These forums and groups allow you to ask questions, share experiences, and learn from seasoned hosts who have navigated the regulatory landscape in Montgomery County. Participating in these communities can help you stay informed about any changes to short-term rental policies and connect with potential mentors or collaborators.

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

Based on discussions in local online communities, Airbnb hosts in Montgomery County have mixed feelings about the local short-term rental regulations. Here are some key insights from real host experiences shared on Reddit and Bigger Pockets:

• Strict enforcement concerns: In a Reddit thread about renting in Montgomery County, one user mentioned that the county has a reputation for being relatively strict in enforcing its STR regulations compared to other jurisdictions. Hosts express concerns about the county's active enforcement efforts in response to resident complaints.
• Costly licensing and taxes: On Bigger Pockets, a host looking to get into Airbnb arbitrage in the Philadelphia area noted that Montgomery County's licensing fees and room rental taxes can add significant costs for operators. Some hosts feel these requirements make it harder to achieve profitability.
• Zoning restrictions and HOA rules: In a Montgomery County subreddit discussion, hosts shared stories of navigating complex zoning laws that limit where STRs can operate. Those in homeowners' associations also face additional restrictions. Hosts emphasize the importance of thorough due diligence before purchasing a property for STR use.
• Challenging regulatory landscape: A Bigger Pockets thread on the best Airbnb locations in Philadelphia highlighted the trade-offs hosts face in the region. While properties further out in Montgomery County may be more affordable, hosts worry about the impact of the county's tighter regulations compared to the city itself.
• Advice for new hosts: Across multiple forums, experienced Montgomery County hosts stress the importance of fully complying with local registration, tax collection, and operational requirements to avoid enforcement issues. They recommend carefully researching applicable laws, securing necessary permits, and maintaining open communication with local authorities.

Overall, while Montgomery County hosts acknowledge the challenges posed by local regulations, many continue to operate successful STRs in the area. The key, according to host experiences shared online, is to thoroughly understand and comply with all legal obligations, be a good neighbor, and adapt to the evolving regulatory landscape.

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.