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

Starting a Short-Term Rental Business in Dakota County

Before launching a short-term rental business in Dakota County, Minnesota, it's crucial to understand the local regulations and ordinances governing this type of operation. Dakota County has specific rules outlined in its Shoreland and Floodplain Management Ordinance 50.

The purpose of this ordinance is to regulate the use and orderly development of shorelands to ensure public health, safety, and welfare, as well as to protect, preserve, and enhance natural resources. It applies to shoreland and floodplain areas located in the 13 unincorporated townships of Dakota County.

To start a short-term rental, you'll need to obtain the necessary permits and licenses. The requirements may vary depending on the specific location of your property within the county. It's essential to review the zoning codes and planning codes to ensure your property is eligible for short-term rental use.

Many Minnesota cities and towns have short-term rental laws that require property owners to obtain a rental license. These licenses ensure compliance with local building and fire codes. You'll also need to review local zoning codes to confirm short-term rentals are permitted in your property's location.

Short-Term Rental Licensing Requirements in Dakota County

To operate a short-term rental in Dakota County, property owners must adhere to the licensing requirements set forth by their respective cities. While Dakota County itself does not have a countywide STR ordinance, individual cities within the county have established their own regulations.

For example, in the City of Eagan, the rental licensing ordinance was adopted on March 21, 2023, with the goal of ensuring safe housing for tenants and long-term maintenance of the city's housing stock. The annual licensing fees for multi-unit rentals are $190 per building plus $18 per unit, while single-unit rentals are charged $145 per unit. Additional fees include a $25 application fee associated with background checks and a one-time $290 conversion fee for properties transitioning from owner-occupied to rental status.

To apply for a rental license in Eagan, property owners must submit their application online, providing a written lease agreement, criminal background checks for rental managers, and a commitment to attend regular training provided by the city. Inspections are scheduled after the license application is approved and occur approximately once every three years or upon complaint. Licenses are issued annually and are non-transferable.

Similarly, the City of Inver Grove Heights requires rental properties to be rented for a period of 30 days or more, effective April 1, 2025. However, owner-occupied homes are exempt from this requirement. The rental license application process involves submitting a Bureau of Criminal Apprehension (BCA) background check for property managers, a crime-free lease addendum, a completed rental housing application, and payment of the rental license fee. Certain properties, such as hospitals, state-licensed residential care facilities, and accessory dwelling units, are exempt from needing a rental license.

In Roseville, the short-term rental licensing ordinance (Chapter 909) aims to ensure that non-owner-occupied STRs are conducted, operated, and maintained to prevent nuisance, blight, and deterioration in the surrounding neighborhood. Every host engaging in STRs must secure an annual license, with a mandated fee of $525.30 per rental unit. The licensing process requires submitting a completed application, proof of property ownership, a property management plan, and a maximum occupancy certification.

Failure to comply with these licensing requirements can result in fines, penalties, and the suspension or revocation of the rental license. For instance, in Roseville, any license not renewed after expiration, with continued short-term renting of the property, is considered a violation of the ordinance. Renters are not allowed to occupy a property if the renewal license is not issued within 5 days after expiration.

To obtain more information about the specific licensing requirements and processes in each city within Dakota County, property owners should contact their local city offices or visit the respective city websites. It is crucial for STR hosts to understand and adhere to these regulations to ensure the safety of their guests, maintain the quality of the surrounding community, and avoid potential legal consequences.

Required Documents for Dakota County Short-Term Rentals

To operate a short-term rental in Dakota County, property owners must submit the following documents to their respective city:

• Rental License Application: Each property requires a completed, owner-signed rental license application. This form collects essential information about the property, owner, and property manager. Applications are typically submitted online through the city's website.
• Bureau of Criminal Apprehension (BCA) Background Checks: Landlords must request background checks on all currently employed property managers. The BCA background check must be dated within 24 months of the application date. This requirement ensures the safety and security of guests.
• Crime-Free Lease Addendum: As a condition of the license, landlords must use the Minnesota Crime-Free Lease Addendum or its equivalent as part of their leases. This addendum helps maintain a safe and crime-free environment in rental properties.
• Proof of Liability Insurance: Property owners must provide proof of liability insurance coverage suitable for the commercial liability of the short-term rental. A "Rental Endorsement" or other "occasional rental use" acknowledgment should be identified on the insurance document.
• Minnesota Department of Health (MDH) Lodging License: Proof of a valid MDH Lodging License or acknowledgment that a review is currently in process is required. This license ensures compliance with state health and safety regulations for lodging establishments.
• Property Tax Documentation: Owners must provide proof that there are no past-due property taxes on the rental property.
• Septic System Compliance or Sewer Connection: For properties with septic systems, owners must demonstrate that the system is fully compliant and adequately sized. Properties connected to a central sanitary sewer system must provide proof of connection.
• Neighbor Notification Letter: Some cities, like Minneapolis, require hosts to send a notification letter to neighbors informing them of the short-term rental. A template is usually provided in the application packet.
• Floor Plan: In Minneapolis, hosts must post a floor plan of the rental unit that includes the location of fire extinguishers, gas shut-off valves, fire exits, and pull fire alarms.

These documents are typically submitted to the city's community development, housing, or licensing department, either online, by mail, or in person. Processing times and fees vary by city. It's essential to check with your specific city for detailed requirements and instructions.

Failure to obtain the necessary permits and licenses can result in fines, penalties, and the shutdown of the short-term rental operation. By adhering to these documentation requirements, hosts can ensure a safe, compliant, and successful short-term rental business in Dakota County.

Dakota County Short-Term Rental Taxes

Short-term rental hosts in Dakota County are subject to various state and local taxes. Understanding these taxes is crucial for compliance and proper accounting. Here's a breakdown of the key taxes that apply:

1. 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.
2. Local Sales and Special Taxes: Dakota County levies an additional 0.5% to 3.0% sales tax on short-term rentals on top of the state sales tax, depending on the specific location within the county. These taxes apply to reservations of 29 nights or shorter.
3. Lodging Taxes: Some cities within Dakota County may have their own lodging taxes. For example, Minneapolis charges a 3% lodging tax on accommodations with more than 50 rooms, as well as a 3% entertainment tax that applies to short-term rentals citywide. Hosts should check with their specific city for any additional lodging taxes.

In total, the combined tax rate on short-term rentals in Dakota County can range from 7.375% to 9.875% or more, depending on the exact location and applicable local taxes.

Hosts are responsible for collecting these taxes from guests and remitting them to the appropriate state and local tax authorities. Failure to comply can result in fines, penalties, and legal action.

Tax Collection by Airbnb and Other Platforms

In some cases, short-term rental platforms like Airbnb may collect and remit certain taxes on behalf of hosts. For example, Airbnb collects and remits the Minnesota state sales tax and some local sales and special taxes for reservations made through their platform.

However, hosts are still responsible for registering with tax authorities and filing regular tax returns. They must also ensure all applicable taxes are being collected and remitted, even if a platform is handling some of the tax collection.

Possible Write-Offs and Deductions

Short-term rental hosts may be able to deduct certain expenses from their rental income to reduce their tax liability. Deductible expenses may include:

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

Hosts should keep detailed records of all rental-related income and expenses to support any deductions claimed on their tax returns. Consulting with a tax professional is recommended to ensure compliance and maximize allowable deductions.

By understanding and complying with Dakota County's short-term rental tax requirements, hosts can avoid costly penalties and maintain a successful rental business. Staying informed about tax obligations and seeking professional advice when needed are key steps in navigating the complex world of short-term rental taxation.

Minnesota-Wide Short-Term Rental Rules

In addition to the specific regulations in Dakota 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, or 30 days or more without a written lease requiring advance termination notice. Hosts are exempt from collecting taxes only if the rental is an isolated incident not made 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.

By adhering to these Minnesota-wide regulations in addition to Dakota County's specific ordinances, hosts can operate their short-term rentals legally and responsibly, avoiding potential legal and financial consequences.

Does Dakota County Strictly Enforce STR Rules?

Based on discussions in online forums like Reddit and BiggerPockets, Dakota County appears to have a relatively friendly stance towards short-term rentals compared to some other major cities and counties. While the county does have regulations in place, many hosts report being able to operate their Airbnbs without facing strict enforcement or penalties, as long as they make good faith efforts to comply.

On a Reddit thread discussing Airbnb regulations across Minnesota, one user shared their experience operating a short-term rental in Dakota County: "I've been running an Airbnb in Eagan for over a year now without any major issues. As long as you're respectful of your neighbors, keep things tidy, and don't cause problems, the county seems to take a pretty hands-off approach. Just make sure you've got your rental license squared away."

Similarly, in a BiggerPockets forum focused on investing in the Minneapolis-St. Paul area, a member asked about the viability of Airbnb in Dakota County. Several responses indicated that the regulatory environment is more relaxed compared to the cities of Minneapolis and St. Paul. One host noted, "Dakota County is definitely more Airbnb-friendly than the twin cities proper. I know quite a few hosts operating multiple properties down there without running into enforcement problems. The key is being proactive about getting licensed and following the rules."

This sentiment was echoed by another BiggerPockets member, who stated, "I've found Dakota County to be pretty reasonable when it comes to short-term rentals. They're not out there actively hunting down Airbnb hosts or anything. If you do your due diligence on the regulations and make an effort to be compliant, you should be fine. It's a different story in Minneapolis, where they've really cracked down in recent years."

While these anecdotes suggest a more lenient approach to enforcement in Dakota County, it's important to note that hosts are still expected to comply with all applicable regulations, including obtaining proper licenses and permits, paying required taxes, and adhering to any occupancy or zoning restrictions. Failure to do so could result in fines or other penalties if violations are reported or discovered.

Overall, Dakota County appears to be relatively Airbnb-friendly compared to some other jurisdictions in Minnesota, with hosts generally able to operate without facing overly strict enforcement, as long as they follow the rules and maintain positive relationships with neighbors and local authorities. However, it's always advisable for hosts to thoroughly research and understand the specific regulations in their area before launching a short-term rental business.

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

Starting a short-term rental business in Dakota County requires careful planning and adherence to local regulations. Follow these steps to successfully launch your venture:

1. Research local regulations: Familiarize yourself with Dakota County's specific short-term rental ordinances, as well as any additional rules in your city or township. Understand the licensing requirements, zoning restrictions, and occupancy limits that apply to your property.
2. Obtain necessary permits and licenses: Apply for the required short-term rental permits and licenses with your local city or township. This process may involve submitting a rental license application, proof of liability insurance, a property management plan, and other documentation. Be prepared to pay any associated fees. Start the licensing process early, as it may take several weeks to receive approval.
3. Prepare your property: Ensure your rental property meets all local building and safety codes, including fire safety requirements. Consider making upgrades or renovations to make your space more appealing to guests. Develop a detailed property maintenance plan to keep your rental in top condition. Invest in high-quality furnishings and amenities to attract more bookings and positive reviews.
4. Determine your pricing strategy: Research the rates of similar short-term rentals in your area to establish a competitive pricing structure. Consider factors like seasonality, events, and demand when setting your nightly rates. Don't forget to account for cleaning fees, taxes, and other expenses. Use dynamic pricing tools to automatically adjust your rates based on market conditions.
5. Create a compelling listing: Craft an attractive and informative listing on popular short-term rental platforms like Airbnb or Vrbo. Include high-quality photos, a detailed description of your property and its amenities, and information about the surrounding area. Highlight any unique features that set your rental apart. Hire a professional photographer to capture stunning images of your property.
6. Develop a guest communication plan: Establish clear communication channels with your guests, including check-in instructions, house rules, and local recommendations. Be responsive to inquiries and maintain a friendly, professional demeanor throughout their stay. Use automated messaging tools to streamline guest communication and provide timely responses.
7. Implement a cleaning and sanitization protocol: Develop a thorough cleaning checklist and ensure your property is spotless between guest stays. Hire a professional cleaning service to maintain a consistent level of cleanliness.
8. Promote your listing: Utilize various marketing channels to promote your short-term rental, such as social media, targeted online ads, and local tourism websites. Encourage satisfied guests to leave positive reviews, as this can significantly boost your visibility and credibility. Offer special promotions or discounts during slower periods to attract more bookings.
9. Comply with tax requirements: Register with the Minnesota Department of Revenue and obtain a Minnesota Tax ID number. Collect and remit the appropriate state and local sales taxes, as well as any applicable lodging taxes, on your short-term rental income. Use a tax management software to automate tax calculations and filings.
10. Monitor your performance and adapt: Regularly review your booking and revenue data to identify areas for improvement. Stay up-to-date with changes in local regulations and market trends, and adapt your strategy accordingly. Continuously gather feedback from guests and implement changes to enhance their experience. Attend local short-term rental workshops or join online host communities to learn from experienced operators.

By following these steps and maintaining a commitment to providing exceptional guest experiences, you can build a successful short-term rental business in Dakota County. Remember to prioritize compliance with local regulations and maintain open communication with your guests and the surrounding community.

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

To get the most accurate and up-to-date information about short-term rental regulations and zoning in Dakota County, it's best to contact the relevant city offices directly. Here are some key contacts:

Dakota County Office of Planning and Analysis

1. Phone: (651) 438-4441
2. Email: planning@co.dakota.mn.us
3. Address: 1590 Highway 55, Hastings, MN 55033

City of Eagan (Rental Licensing Division)

1. Phone: (651) 675-5685
2. Email: rentalhousing@cityofeagan.com
3. Address: 3830 Pilot Knob Road, Eagan, MN 55122

City of Burnsville (Licensing and Code Enforcement Division)

1. Phone: (952) 895-4440
2. Email: licensing@burnsvillemn.gov
3. Address: 100 Civic Center Parkway, Burnsville, MN 55337

City of Inver Grove Heights (Community Development Department)

1. Phone: (651) 450-2545
2. Email: communitydevelopment@invergroveheights.org
3. Address: 8150 Barbara Avenue, Inver Grove Heights, MN 55077

City of Rosemount (Community Development Department)

• Phone: (651) 322-2020
• Email: communitydevelopment@ci.rosemount.mn.us
• Address: 2875 145th Street West, Rosemount, MN 55068

In addition to contacting these official sources, connecting with other short-term rental hosts in Dakota County can provide valuable insights and support. Here are some online communities and resources to check out:

• Minnesota Vacation Rental Owners (MVRO): This Facebook group is a great place to connect with other vacation rental owners and managers in Minnesota, including those in Dakota County. Members share tips, ask questions, and discuss local regulations. https://www.facebook.com/groups/mnvacationrentalowners/
• Airbnb Hosts Forum - Minnesota: This forum on the Airbnb Community Center is dedicated to hosts in Minnesota. You can find discussions about local regulations, hosting tips, and more. https://community.withairbnb.com/t5/Minnesota/bd-p/mn
• BiggerPockets Short-Term Rental & Airbnb Investing Forum: While not specific to Dakota County, this forum is a great resource for connecting with other short-term rental investors and hosts across the country. You can ask questions, share experiences, and learn from others in the industry. https://www.biggerpockets.com/forums/530

By reaching out to these official contacts and engaging with the short-term rental community, you can stay informed about the latest regulations and best practices for operating a successful rental business in Dakota County.

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

To gain insights into how Airbnb hosts in Dakota County feel about local short-term rental regulations, we searched through relevant threads and forums on Reddit and Bigger Pockets. Here are some real-life experiences and opinions shared by hosts:

On the Airbnb subreddit, a user posted about their experience operating a short-term rental in Eagan, Minnesota. They mentioned that while Dakota County doesn't have specific countywide regulations, the city of Eagan recently implemented a rental licensing ordinance. The host shared, "I had to apply for a rental license, pay the fees, and undergo an inspection. It was a bit of a hassle, but I understand the need for some oversight. As long as I keep my property well-maintained and avoid noise complaints, I haven't had any issues with the city."

In a Bigger Pockets forum thread titled "Minnesota Short-Term Rental Regulations," a host from Burnsville, Dakota County, shared their thoughts on the regulatory landscape. They wrote, "Dakota County seems to be relatively hands-off when it comes to short-term rentals, leaving it up to the individual cities to set their own rules. In Burnsville, I had to get a rental license and make sure my property met all the safety requirements. It's important to stay on top of any changes in local regulations and maintain open communication with the city."

Another host chimed in on the same Bigger Pockets thread, stating, "I operate a short-term rental in Rosemount, and I haven't had any major issues with local regulations. The city requires a rental license and an inspection, but as long as you follow the rules and keep your property in good shape, they seem pretty reasonable. It's always a good idea to attend city council meetings and stay informed about any proposed changes to short-term rental ordinances."

On a Facebook group for Minnesota Airbnb hosts, a member shared their experience in West St. Paul, Dakota County. They commented, "West St. Paul has been pretty welcoming to short-term rentals so far. I had to get a rental license and make sure my property was up to code, but the process was straightforward. The city seems to recognize the benefits of short-term rentals for the local economy, as long as hosts are responsible and respectful of their neighbors."

These experiences suggest that while Dakota County itself may not have extensive short-term rental regulations, hosts must navigate the specific requirements set by individual cities within the county. By obtaining necessary licenses, maintaining their properties, and staying informed about local ordinances, hosts can successfully operate short-term rentals in Dakota County while remaining compliant with city-level regulations.

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.