Pawcatuck, Connecticut Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Pawcatuck

If you're considering starting a short-term rental business in Pawcatuck, Connecticut, it's important to be aware of the local regulations that govern this type of activity. The town of Stonington, which includes the village of Pawcatuck, recently passed an ordinance regulating short-term rentals.

The purpose of the ordinance is to allow property owners to rent their residential dwellings on a short-term basis while establishing measures to mitigate potential challenges to neighborhoods and the community. Key requirements include:

• Registering annually with the town and obtaining a permit
• Providing guests with information on maximum occupancy, noise restrictions, waste management, emergency contacts, and a statement about not disrupting neighbors
• Having the owner or owner's agent available to respond to complaints within 60 minutes, 24/7

Renting or offering to rent a short-term rental without complying with the registration requirement is prohibited. The ordinance went to a town meeting vote on February 27, 2023.

The ordinance was the result of a resident-driven process that included community conversations to gather input from various stakeholders. While Stonington's Planning and Zoning Commission decided in 2017 that the zoning code would not regulate short-term rentals, residents were told they could propose a municipal ordinance to be voted on.

Concerns were raised about the rapid growth of short-term rentals in Stonington and their potential impact on housing affordability. However, the economic benefits of short-term rentals for local businesses and property owners were also acknowledged. The final ordinance focused on registration to ensure a responsible party is available if rentals become a nuisance or safety issue.

Pawcatuck is one of at least 12 towns in Connecticut that have expressly regulated short-term rentals, either by ordinance or zoning codes. Hosts must be aware of and comply with these local regulations, in addition to any state requirements.

By understanding and following the short-term rental ordinance, hosts in Pawcatuck can operate their businesses responsibly while contributing positively to the local community and economy. The registration process will also provide the town with valuable data to assess the true impact of short-term rentals over time.

Short-Term Rental Licensing Requirement in Pawcatuck

According to the ordinance regulating short-term rentals in Stonington, CT, which includes the village of Pawcatuck, all short-term rental owners are required to register annually with the town and obtain a permit. The key requirements for registration include:

1. Providing the name of the property owner(s) and address of the short-term rental
2. Contact information for the owner and, when applicable, the owner's agent who has the authority and responsibility to respond to complaints in person, over the phone, or text, 24 hours a day, 7 days a week, within 60 minutes of being contacted

The registration must be completed through a platform specified by the town. The ordinance does not mention any specific fees associated with the registration process.

Renting or offering to rent a short-term rental without complying with the registration requirement is prohibited. The ordinance does not specify any fines or penalties for operating without a permit. However, it does state that when requested by a police officer, fire district official, town official, or appointee of the town, the owner or owner's agent whose name appears on the registration must be on the premises or responsive over the phone or text within 60 minutes of receiving a request.

The ordinance was passed through a town meeting vote on February 27, 2023. It is part of an effort by the town to allow property owners to rent their residential dwellings on a short-term basis while establishing measures to mitigate potential challenges to neighborhoods and the community.

The registration process will provide the town with valuable data to assess the true impact of short-term rentals over time. Pawcatuck is one of at least 12 towns in Connecticut that have expressly regulated short-term rentals, either by ordinance or zoning codes.

Required Documents for Pawcatuck Short-Term Rentals

According to the ordinance regulating short-term rentals in Stonington, CT, which includes the village of Pawcatuck, the following documents and information are required when registering a short-term rental:

1. Proof of Residency: Owners must provide at least two of the following documents to prove residency: motor vehicle registration, driver's license, state identification card, voter registration, tax documents, or a utility bill. This requirement ensures that the property owner is a resident of the town.
2. Contact Information: The name, phone number, and email address of the owner or owner's agent who has the authority and responsibility to respond to complaints in person, over the phone, or text, 24 hours a day, 7 days a week, within 60 minutes of being contacted. This person could be a property manager or co-host. This ensures that there is a designated contact person available to address any issues that may arise during a short-term rental stay.
3. Sworn Statement: A sworn statement from the owner that the short-term rental will contain operating smoke and carbon monoxide detectors at all times. This is a safety requirement to protect the health and well-being of renters.
4. Listing URL: The URL of the short-term rental listing. This allows the town to verify the listing and ensure that it complies with the ordinance requirements.
5. Owner's Agreement: An owner's agreement that they will use their best efforts to assure that use of the premises by short-term rental occupants will not disrupt the neighborhood or interfere with the rights of neighboring property owners to the quiet enjoyment of their properties. This agreement helps to maintain the peace and tranquility of residential neighborhoods.

These documents must be submitted annually as part of the short-term rental registration process through a form or platform specified by the town. The town will provide a short-term rental registration number for each registered property, which must be included in any listings.

Pawcatuck Short-Term Rental Taxes

When operating a short-term rental business in Pawcatuck, Connecticut, it's important to understand the various taxes that apply to your rental income. Here's a breakdown of the key taxes you should be aware of:

Room Occupancy Tax

Connecticut charges a statewide room occupancy tax of 15% on short-term rentals, which includes properties rented through booking platforms like Airbnb and Vrbo. This tax applies to the total payment received for occupancy of the room or rooms for up to 30 consecutive calendar days. Beginning on the 31st consecutive day of occupancy by the same person, the tax no longer applies.

Short-term rental facilitators, such as Airbnb and Vrbo, are required to collect and remit the room occupancy tax on behalf of hosts if they facilitate at least $250,000 in retail sales during the prior 12-month period. However, hosts should verify with their platform to ensure the tax is being collected and remitted properly.

Sales Tax

In addition to the room occupancy tax, short-term rentals in Pawcatuck may be subject to state sales tax. The minimum combined 2024 sales tax rate for Pawcatuck, Connecticut, is 6.35%. This includes the state sales tax rate, as there are no additional county or city sales taxes in Pawcatuck.

It's important to note that the sales tax may apply to certain services, accommodations, and amenities provided by the host in conjunction with the rental. Hosts should consult with a tax professional to determine which aspects of their rental are subject to sales tax.

Income Tax

Income generated from short-term rentals is generally considered taxable income and must be reported on your federal and state income tax returns. The specific tax rate will depend on your overall income and tax bracket.

Possible Deductions and Write-Offs

To offset some of the tax liability, short-term rental hosts may be able to claim certain expenses as tax deductions. These can include:

1. Mortgage interest
2. Property taxes
3. Utilities
4. Cleaning and maintenance costs
5. Supplies and amenities provided to guests
6. Insurance premiums
7. Advertising and platform fees
8. Depreciation of furniture and equipment used in the rental

It's crucial to keep accurate records of all income and expenses related to your short-term rental business. Consult with a qualified tax professional to ensure you are claiming the appropriate deductions and complying with all tax requirements.

As the regulatory landscape for short-term rentals continues to evolve in Connecticut, it's important for hosts in Pawcatuck to stay informed about any changes to tax laws and local ordinances. By understanding and complying with these tax obligations, hosts can operate their short-term rental businesses responsibly and avoid potential penalties.

Connecticut Wide Short-Term Rental Rules

While there is no comprehensive statewide legislation specifically regulating short-term rentals in Connecticut, hosts in Pawcatuck must be aware of several state-level requirements that impact their operations.

One key obligation is the state room occupancy tax, which applies to all short-term rentals in Connecticut. Hosts must collect a 15% tax on the total payment received for occupancy of the room or rooms for up to 30 consecutive calendar days. This tax no longer applies beginning on the 31st consecutive day of occupancy by the same person.

Short-term rental facilitators, such as Airbnb and Vrbo, are required to collect and remit the room occupancy tax on behalf of hosts if they facilitate at least $250,000 in retail sales during the prior 12-month period. However, hosts should verify with their platform to ensure the tax is being collected and remitted properly.

In addition to the room occupancy tax, short-term rentals in Pawcatuck may be subject to the state sales tax of 6.35%. Hosts should consult with a tax professional to determine which aspects of their rental are subject to sales tax.

It's important to note that while there is no comprehensive statewide legislation, Connecticut lawmakers are currently considering a bill (Bill 335) that would grant municipalities more authority in regulating short-term rental properties. This bill aims to address concerns that have arisen in various communities regarding noise, parking, and safety issues related to short-term rentals.

If passed, the bill would allow municipalities to establish ordinances governing short-term rental properties, including potential measures such as zoning restrictions, guest occupancy limits, and parking requirements. The bill would give municipalities the option to change their short-term rental policies but would not require towns to take action.

As the regulatory landscape for short-term rentals continues to evolve in Connecticut, it's crucial for hosts in Pawcatuck to stay informed about any changes to state laws and local ordinances. By understanding and complying with these obligations, hosts can operate their short-term rental businesses responsibly and avoid potential penalties.

Does Pawcatuck Strictly Enforce STR Rules?

Based on discussions in real estate investing forums like BiggerPockets and local Connecticut subreddits, it appears that Pawcatuck and the surrounding areas of Stonington are not particularly Airbnb-friendly compared to some other cities and regions. In March 2023, Stonington voters rejected a proposed short-term rental ordinance by a more than 2-1 margin that would have required STR owners to register with the town, meet safety regulations, and conform to other restrictions.

However, this does not mean there are no rules or enforcement. Connecticut has no statewide legislation regulating short-term rentals, so it falls to municipalities to set their own policies through zoning or ordinances. Stonington's Planning and Zoning Commission decided in 2017 that the zoning code would not regulate STRs, putting the onus on residents to propose a municipal ordinance instead.

The recently rejected ordinance was the result of a three-year resident-driven process to find a balance between allowing STRs and mitigating potential negative impacts on neighborhoods. Its failure suggests the town is still grappling with how best to oversee the growing STR market.

On the BiggerPockets forums, one investor noted they could likely get much higher returns on their Stonington property with short-term vs long-term renting, implying a lack of strict controls. However, another Connecticut poster on the AirBnB_Hosts subreddit warned that several towns are passing ordinances to limit STRs through permitting, zoning restrictions, and even bans.

So while Pawcatuck and Stonington may not have an STR-specific ordinance on the books currently, hosts should be aware the regulatory landscape is evolving. Officials spent three years trying to craft STR rules before the ordinance was voted down, indicating there is motivation to revisit the issue.

Compared to cities with stronger restrictions and enforcement mechanisms, Pawcatuck appears to be relatively Airbnb-friendly for the time being. But with local sentiment divided and the STR market rapidly growing, hosts should stay informed and engaged to avoid potential compliance issues down the road. Operating responsibly, maintaining open communication with officials and neighbors, and advocating for fair and balanced policies will be key.

How to Start a Short-Term Rental Business in Pawcatuck

Starting a short-term rental business in Pawcatuck, Connecticut, can be a rewarding venture. Here's a step-by-step guide to help you get started:

1. Research local regulations: Before investing in a property or listing your existing home, thoroughly research the short-term rental regulations in Pawcatuck and the surrounding areas of Stonington. While Stonington voters recently rejected a proposed ordinance that would have required STR owners to register with the town and meet certain requirements, it's important to stay informed about any future changes to local laws.
2. Crunch the numbers: Determine your budget and use that to plan out your finances, vision, and goals. Consider start-up costs, furnishing expenses, unexpected repairs, and operating expenses such as booking fees, utilities, and supplies. Decide whether you want to purchase a property, engage in rental arbitrage, or become a property manager for an owner.
3. Choose a property: Select a property that aligns with your target guests and budget. Consider factors like location, size, amenities, and local competition. If purchasing a property, ensure it is zoned for short-term rental use and complies with any HOA or lease restrictions.
4. Prepare your rental: Invest in decorating, furnishing, and stocking your rental to attract bookings. Check out local listings to see what amenities competitors are offering. Create a checklist of essential items and consider hiring professionals for cleaning and maintenance.
5. Set up your business: Register your business with the state and obtain any necessary licenses and permits, such as a general business license and a short-term rental license (if required). Consider forming a business entity for liability protection.
6. Comply with tax requirements: Register with the Department of Revenue Services (DRS) for room occupancy tax if you plan to make sales directly to customers. If you use a short-term rental facilitator like Airbnb or Vrbo, they may collect and remit the tax on your behalf.
7. Create a compelling listing: Craft an attractive and informative listing on popular platforms like Airbnb and Vrbo. Highlight your property's unique features, include high-quality photos, and set competitive rates based on market research and seasonality.
8. Implement a management system: Utilize vacation rental software to streamline operations, manage listings across multiple platforms, and deliver quality service to guests. Decide whether to outsource tasks like cleaning and maintenance or hire in-house staff.
9. Prioritize safety and security: Protect your guests and property with smart home security features like doorbell cameras, sensors, and recording devices. Ensure your rental meets all safety standards, including fire extinguishers and smoke detectors.
10. Continuously improve and adapt: Stay informed about changes in local regulations, market trends, and guest preferences. Seek feedback from guests and make necessary improvements to your property and services. Be prepared to adjust your strategy as needed to remain competitive in the evolving short-term rental industry.

By following these steps and staying committed to providing a high-quality rental experience, you can build a successful short-term rental business in Pawcatuck. Remember to prioritize compliance with local regulations, guest satisfaction, and adaptability in this dynamic market.

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

If you have questions or need assistance regarding short-term rental regulations and zoning in Pawcatuck, Connecticut, here are some key contacts and resources:

Stonington Planning and Zoning Department: For inquiries related to zoning regulations and permitting for short-term rentals, contact the Stonington Planning and Zoning Department.

Phone: (860) 535-5095
Email: jgroh@stonington-ct.gov
Address: 152 Elm Street, Stonington, CT 06378

Stonington First Selectman's Office: For general questions about the proposed short-term rental ordinance and its status, reach out to the First Selectman's Office.

Phone: (860) 535-5050
Email: firstselectman@stonington-ct.gov
Address: 152 Elm Street, Stonington, CT 06378

Stonington Economic & Community Development: For information on how short-term rentals fit into the town's economic development plans, contact the Economic & Community Development Director.

Phone: (860) 535-5093
Email: scullen@stonington-ct.gov

Connecticut Department of Revenue Services: For questions about registering for and remitting room occupancy taxes, contact the Department of Revenue Services.

Phone: (860) 297-5962
Website: https://portal.ct.gov/DRS/Businesses/Room-Occupancy-Tax/Room-Occupancy-Tax

In addition to these official contacts, connecting with other local hosts and participating in online communities can be valuable for sharing experiences, advice, and support. Some options include:

1. Greater Mystic Airbnb Hosts Facebook Group: https://www.facebook.com/groups/2285727158347780/
2. Connecticut Short-Term Rental Alliance: https://ctstra.org/
3. Connecticut Vacation Rental Owners and Managers (CTVROM) Facebook Group: https://www.facebook.com/groups/CTVROM/

Remember that while online communities can offer helpful insights, always verify information with official sources and seek professional advice for your specific circumstances. By staying informed and engaged with local authorities and industry groups, hosts in Pawcatuck can navigate the evolving short-term rental landscape with greater confidence.

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

Based on discussions in real estate investing forums and local Connecticut subreddits, it appears that Airbnb hosts in Pawcatuck and the surrounding areas have mixed feelings about short-term rental regulations. Here are a few relevant threads and comments:

In a post on the BiggerPockets forum titled "Short term rentals in CT", one user noted that they could likely get much higher returns on their Stonington property with short-term vs long-term renting, implying a lack of strict controls in the area. This suggests that some hosts view the current regulatory environment as favorable for operating STRs.

On the Airbnb Community forum, a host started a thread called "Zoning Regulation in Mystic CT" with the intention of forming a group of Airbnb owners in Mystic, Groton, and Stonington to "help" the zoning commission on regulating STRs. This indicates that some hosts are proactively engaging with local officials to shape STR policies in a way that balances their interests with community concerns.

In the Connecticut subreddit, a user asked about Airbnb prices in the state, mentioning that some places on the Cape go for $10k/week. Another user expressed curiosity about the specific listing, hinting at the potential for high earnings in desirable coastal areas like Pawcatuck. This exchange suggests that hosts are aware of the significant income potential of STRs, which may influence their views on regulations.

However, a comment on the Connecticut subreddit warned that several towns are passing ordinances to limit STRs through permitting, zoning restrictions, and even bans. This indicates that the regulatory landscape is evolving, and hosts need to stay informed and engaged to navigate potential changes.

While these discussions provide some insight into the perspectives of Airbnb hosts in Pawcatuck and nearby communities, it's important to note that individual experiences and opinions can vary. The general sense seems to be that hosts are aware of the income potential of STRs in this attractive coastal area but also recognize the need to work with local officials to develop fair and balanced regulations. Staying proactive, informed, and compliant will be key for hosts as the STR landscape continues to evolve in Connecticut.

Disclaimer: While we here at BNBCalc strive to keep all of our city 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 city 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.