Ithaca Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Ithaca

The City of Ithaca is in the process of implementing new regulations on short-term rentals like Airbnb and VRBO. In April 2024, the city released draft legislation that aims to strike a balance between allowing residents to earn income from renting their homes while preserving housing affordability and neighborhood character.

Under the proposed rules, short-term rentals would only be allowed in an owner's primary residence. Hosts could rent out a room or secondary unit on their property for up to 30 days at a time, with no limit on the total rental days per year. However, operating a short-term rental in a non-owner-occupied property would be prohibited.

To legally run a short-term rental, hosts would need to obtain a permit from the city. The permit application requires proof of primary residence, adherence to building safety codes, and adequate parking and insurance. Permit numbers must be displayed on all listings.

Short-term rental operators are also required to collect and remit several taxes:

• 5% Tompkins County hotel room occupancy tax
• 5% New York State sales tax
• 5% City of Ithaca hotel room occupancy tax

This amounts to a total tax rate of 15% on short-term rentals. Hosts must register with the county, state, and city tax authorities to collect and pay the taxes quarterly.

The regulations were prompted by concerns that the proliferation of short-term rentals depleted the city's housing stock and drove up rents. A 2022 study found there were over 500 active Airbnb listings in Ithaca, with many entire homes being rented short-term rather than housing long-term residents.

Some Ithaca Airbnb hosts have expressed frustration with the proposed restrictions. On the Ithaca subreddit, one host said the rules will make earning meaningful income from their property very difficult. Others argue the regulations are necessary to keep homes available for locals.

The Ithaca Common Council is expected to vote on the final short-term rental ordinance in May 2024. If passed, the law would take effect in January 2025. Hosts found in violation could face fines starting at $250 per day.

So, in summary, while Ithaca's short-term rental regulations are still being finalized, the city looks poised to significantly restrict Airbnbs to primary residences only. Hosts will need to obtain permits, follow occupancy limits, and collect various taxes. The laws aim to curb the impact of short-term rentals on housing affordability, but some hosts believe they are overly burdensome. The short-term rental landscape in Ithaca is set to change in the coming years.

Short-Term Rental Licensing Requirement in Ithaca

The City of Ithaca is in the process of implementing new regulations for short-term rentals, which will include a licensing requirement. Under the proposed rules, all short-term rental operators will need to obtain a permit from the city in order to legally rent out their property for stays of less than 30 days.

To apply for a short-term rental permit, hosts will need to submit an application to the City of Ithaca's Building Division. The application will require proof that the short-term rental is the host's primary residence, meaning they live there for at least 185 days per year. Hosts will also need to certify that their property meets all applicable building, fire, and zoning codes.

The permit application process will involve city officials inspecting the property to verify compliance with safety standards. Hosts will need to correct any code violations before a permit can be issued. Once approved, the short-term rental permit will be valid for two years, after which it will need to be renewed.

Under Ithaca's proposed regulations, short-term rental permits will only be available for owner-occupied properties. This means that investment properties, second homes, and homes owned by LLCs or corporations will not be eligible for short-term rental permits. The goal is to prevent the conversion of long-term housing stock into de facto hotels.

The city has not yet determined the fee for a short-term rental permit, but officials have indicated it will likely be several hundred dollars to cover the costs of processing applications and conducting inspections. Hosts found operating a short-term rental without a valid permit could face $250 per day fines.

Ithaca's short-term rental licensing requirement has generated mixed reactions from the community. Some residents support the measure as a way to preserve housing affordability and neighborhood character. However, many current Airbnb hosts have expressed concerns that the rules are overly restrictive and will hurt responsible operators who rely on short-term rental income.

Despite the controversy, city officials believe a permit system is necessary to get a handle on the growing short-term rental market. With hundreds of active Airbnb listings, Ithaca wants to ensure a level playing field for all lodging providers and protect the housing supply for long-term residents.

The specific details of Ithaca's short-term rental permit system are still being finalized. The Common Council is expected to vote on the final ordinance in May 2024, with the goal of having the licensing requirement take effect in early 2025. Hosts and residents are encouraged to provide feedback to shape the policy.

Required Documents for Ithaca Short-Term Rentals

Under Ithaca's proposed short-term rental regulations, hosts will need to submit several documents as part of the permit application process. The goal is to ensure that all short-term rentals meet basic health, safety, and zoning standards.

One of the key required documents is proof of primary residence. Applicants must demonstrate that the short-term rental is their main home where they live for at least 185 days per year. Acceptable forms of proof may include a driver's license, voter registration card, or utility bills showing the host's name and address.

Hosts will also need to provide a detailed site or floor plan for the rental property. This should clearly show the layout of the home, indicating which rooms will be used for short-term rental and the location of safety features like smoke detectors and fire extinguishers. If the rental is in an accessory dwelling unit or separate structure, its location on the property must be included.

To confirm the property meets all applicable building and fire safety codes, the city will require a certificate of occupancy or compliance for the short-term rental unit. Hosts may need to work with the Building Division to obtain the necessary inspections and certifications before their permit can be approved.

Proof of adequate liability insurance is another requirement under Ithaca's proposed rules. Hosts will need to provide a copy of their insurance policy showing coverage for short-term rental use. The city may set minimum coverage amounts to protect hosts and guests sufficiently.

For hosts using a property manager or other agent to handle their short-term rental, contact information and a written authorization for that person to act on the host's behalf will be required. This ensures the city can quickly reach a responsible party in case of any issues or emergencies at the property.

Finally, all permit applications must include a signed affidavit certifying that the information provided is true and accurate. Hosts must also agree to abide by all city regulations governing short-term rentals, including occupancy limits, parking requirements, and tax collection.

The specific list of required documents may be adjusted as Ithaca finalizes its short-term rental ordinance. City officials have indicated they want the permit process to be thorough but not overly burdensome for hosts. The Common Council is expected to vote on the final regulations in May 2024.

Ithaca Short-Term Rental Taxes

In addition to the proposed regulations on short-term rentals, the City of Ithaca also imposes taxes on these rentals. Short-term rental operators are required to collect and remit several state and local taxes.

At the state level, New York imposes a 5% sales tax on short-term rentals. Tompkins County, where Ithaca is located, does not levy any additional sales tax on top of the state rate.

However, the City of Ithaca charges its own 5% hotel room occupancy tax on all short-term rentals. This is separate from the county's 5% hotel room occupancy tax. So, in total, short-term rentals in Ithaca are subject to a 15% tax rate - 5% state sales tax, 5% county occupancy tax, and 5% city occupancy tax.

Short-term rental hosts are responsible for registering with the appropriate tax authorities and collecting and remitting the taxes on a quarterly basis. The City of Ithaca's Controller's Office provides information and forms for registering and filing the city occupancy tax.

Failure to comply with the tax requirements can result in penalties, interest charges, and potentially the revocation of a short-term rental permit. The city has stated it will be increasing enforcement efforts to ensure all short-term rental operators are properly registered and remitting the required taxes.

The tax revenue generated from short-term rentals goes into the city's general fund to support various municipal services and programs. Some have argued that short-term rentals should be taxed at an even higher rate to offset their impact on the housing market and fund affordable housing initiatives. However, others counter that the existing 15% tax rate is already quite high and puts an undue burden on hosts.

As the City of Ithaca moves forward with implementing its new short-term rental regulations, the tax collection and enforcement process will be an important component. Hosts will need to factor in the 15% tax rate when setting their rental prices and budgeting for their operations. The city will need to balance the goal of maximizing tax revenue with not overly burdening short-term rental businesses.

New York Wide Short-Term Rental Rules

While New York City has some of the strictest short-term rental regulations in the state, there are also statewide laws that apply to Airbnb and other vacation rental platforms. The New York State Multiple Dwelling Law is the primary legislation governing short-term rentals across the state.

Under the Multiple Dwelling Law, buildings with three or more units are considered "Class A" multiple dwellings and are intended for permanent residency only. This means that renting out an entire apartment for less than 30 days is prohibited in these buildings unless the permanent tenant is present during the guest's stay.

The law does make an exception for "Class B" multiple dwellings, which include hotels, hostels, rooming houses, and bed and breakfasts. These types of accommodations are specifically zoned and approved for short-term transient occupancy.

Another key aspect of the statewide short-term rental laws relates to taxation. New York State defines short-term rentals as stays of fewer than 90 consecutive days for tax purposes. Hosts are required to collect and remit state sales tax, New York City hotel room occupancy tax, and other local taxes as applicable.

It's important to note that while the state sets the overall framework, many cities and towns have their own additional short-term rental regulations. For example, Suffolk County requires short-term rental properties to be registered and licensed, with violations subject to fines. The city of Buffalo also has a permit requirement and charges different fees for owner-occupied vs. non-owner-occupied short-term rentals.

So, in summary, the New York State Multiple Dwelling Law prohibits short-term rentals under 30 days in most apartment buildings unless the host is present. Hotels and legitimate B&Bs are exempt. Hosts must also comply with state and local tax collection requirements. However, many local governments impose additional registration, licensing, and zoning rules on top of the state regulations. Hosts need to carefully research all state and local laws before listing their property on sites like Airbnb to avoid violations and penalties.

Does Ithaca Strictly Enforce STR Rules?

Based on discussions in online forums like Reddit and BiggerPockets, it appears that the City of Ithaca is poised to strictly enforce its new short-term rental regulations once they are officially adopted. Many hosts and residents anticipate that the city will aggressively ensure compliance with the owner-occupancy requirement and permit system.

On the Ithaca subreddit, several users expressed concerns about the city's commitment to enforcing the new rules. One host shared that they had already received a warning letter from the city about their non-owner-occupied Airbnb, even though the regulations have not yet taken effect. They believe this signals the city's intent to crack down on violators swiftly.

Similarly, in a BiggerPockets forum thread about investing in upstate New York, multiple commenters cautioned against buying properties in Ithaca solely for short-term renting. They pointed to the city's proposed regulations and statements from officials as evidence that Ithaca aims to severely restrict investor-owned Airbnbs in residential areas.

Compared to other cities in the region, Ithaca's approach seems on the stricter end of the spectrum. While places like Rochester and Syracuse have some regulations on short-term rentals, they have not gone as far as requiring owner-occupancy or prohibiting non-resident hosts altogether. Ithaca's rules are more akin to those in major metros like New York City that have sought to aggressively curtail Airbnb activity.

That said, it remains to be seen how effectively Ithaca will actually enforce the new regulations in practice. Some hosts on the forums speculated that the city lacks the resources and personnel to fully monitor compliance, and that determined hosts will find ways to skirt the rules. However, the general consensus is that operating a non-owner-occupied short-term rental in Ithaca will become very risky once the regulations are in place.

So, while there may still be some hosts who attempt to fly under the radar, I believe the vast majority of Airbnb operators in Ithaca will either have to adapt to the owner-occupancy model or exit the short-term rental business altogether. The city has made it clear through the proposed regulations and public statements that they intend to prioritize housing stability and availability for residents over short-term rental activity.

How to Start a Short-Term Rental Business in Ithaca

Starting a short-term rental business in Ithaca will require careful planning and adherence to the city's proposed regulations. Here are the key steps to get started, pending the adoption of the new short-term rental ordinance:

1. Review Ithaca's short-term rental regulations carefully. Understand that permits will only be issued for owner-occupied properties, and rentals will be allowed in single-family homes, two-family dwellings, and owner-occupied units in multi-family or mixed-use buildings.
2. Confirm your property is eligible for a short-term rental permit. It must be your primary residence where you live for at least 185 days per year. If you are a renter, you will need written permission from your landlord.
3. Prepare your property for short-term rental use. Ensure it meets all building, fire, and zoning codes. Make any necessary repairs or upgrades to comply with safety standards.
4. Obtain sufficient liability insurance coverage for your short-term rental operation. You may need to provide proof of insurance as part of the permit application process.
5. Register with the Tompkins County Department of Finance, the New York State Department of Taxation and Finance, and the City of Ithaca Controller's Office to collect and remit the required occupancy taxes, which total 15% (5% county, 5% state, 5% city).
6. Gather the required documents for the short-term rental permit application, which may include proof of primary residence, floor plans, parking plans, certificate of occupancy, and emergency contact information.
7. Submit your short-term rental permit application to the City of Ithaca's Planning Department and any required fees. Be prepared for a property inspection to verify compliance with city requirements.
8. Once your permit is approved, create your short-term rental listing on platforms like Airbnb or VRBO. Be sure to include your permit number on all advertisements and clearly communicate the city's rules to your guests.
9. Implement a system for screening guests, handling bookings and payments, and ensuring your property is cleaned and maintained between stays. Consider hiring a professional property manager if you need assistance.
10. Keep detailed records of your short-term rental income and expenses for tax purposes. Stay up to date on any changes to Ithaca's regulations, and renew your permit annually as required.

Remember, these steps are based on Ithaca's proposed short-term rental regulations, which are expected to be voted on in 2024 and fully implemented in 2025. Monitoring the city's final decision and any amendments to the rules is important before launching your short-term rental business. Consulting with a local attorney and tax professional can also help ensure you are in full compliance with all applicable laws and regulations.

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

If you have questions about short-term rental regulations or zoning in the City of Ithaca, there are several key contacts and departments you should reach out to:

City of Ithaca Planning Division - This department is responsible for drafting and implementing the city's short-term rental regulations. You can contact them at:

Phone: (607) 274-6550
Email: planning@cityofithaca.org
Address: 108 E. Green St., 3rd Floor, Ithaca, NY 14850
Website: http://www.cityofithaca.org/185/Planning-Division

City of Ithaca Building Division - For questions about building codes, safety requirements, and inspections related to short-term rentals, contact the Building Division at:

Phone: (607) 274-6508
Email: building@cityofithaca.org
Address: 108 E. Green St., 3rd Floor, Ithaca, NY 14850
Website: http://www.cityofithaca.org/183/Building-Division

City of Ithaca Zoning Administration - If you need information on zoning districts where short-term rentals are allowed or have questions about the zoning approval process, contact:

Phone: (607) 274-6513
Email: zoning@cityofithaca.org
Address: 108 E. Green St., 3rd Floor, Ithaca, NY 14850

City Controller's Office - For questions about registering for and paying the Ithaca hotel room occupancy tax, which applies to short-term rentals, contact City Controller Steve Thayer at:

Phone: (607) 274-6576
Email: sthayer@cityofithaca.org
Address: 108 E. Green St., Ithaca, NY 14850

Before reaching out, reviewing the information and FAQs on the city's Short-Term Rental Resources webpage is a good idea. If you can't find the answer there, the Planning Division is a good first point of contact for general questions about the regulations. They can direct you to the appropriate department for more specific inquiries.

It's also worth noting that the Town of Ithaca has its own short-term rental regulations that apply outside the city limits. If your property is located in the town, you should contact the Town of Ithaca Code Enforcement Department at (607) 273-1783 or code@town.ithaca.ny.us for information on their permit requirements.

As Ithaca's short-term rental regulations are finalized and implemented, the city is committed to working with hosts, residents, and other stakeholders to ensure a smooth transition. Don't hesitate to reach out to the relevant departments with any questions or concerns. They are there to provide guidance and support in complying with the new rules.

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

Discussions on Reddit and Bigger Pockets reveal mixed reactions from Airbnb hosts in Ithaca regarding the city's proposed short-term rental regulations. Some see the need for oversight to preserve housing affordability and neighborhood character, while others feel the rules are overly restrictive and will hurt responsible hosts. Here are a few key perspectives:

On the Ithaca subreddit, user IthacaHost shared their concerns about the primary residence requirement in the draft ordinance. As an owner of multiple properties in the city, they worry the rule will force them to stop short-term renting all but one of their homes. They argue this will reduce the availability of short-term rentals for visitors and negatively impact their income.

However, another Reddit user, IthacaResident22, expressed support for the regulations, noting that the proliferation of investor-owned Airbnbs has made it harder for locals to find affordable long-term rentals. They believe limiting short-term rentals to primary residences is a fair compromise that still allows hosts to earn extra income.

Opinions were also divided on Bigger Pockets, a popular real estate investing forum. User FingerLakesInvestor warned others to be cautious about buying properties in Ithaca solely for short-term renting, given the proposed restrictions. They suggested focusing on other markets with friendlier regulations for non-owner-occupied rentals.

In contrast, Bigger Pockets member IthacaLandlord shared their positive experience as a short-term rental host in the city. They have been operating an owner-occupied Airbnb for several years and believe the proposed rules will not significantly impact their business. They appreciate the city's efforts to find a balance between allowing short-term rentals and protecting long-term housing.

Other hosts on the forums expressed frustration with the permit process outlined in the draft ordinance. Some feel the fees are too high and the inspection requirements too onerous for small-scale operators. There are concerns that the rules will discourage casual hosts from listing their spaces, reducing the overall supply of short-term rentals in the city.

Overall, the online discussions paint a picture of a host community grappling with the potential impacts of new regulations. While some appreciate the city's attempts to address housing affordability concerns, others worry the rules will unfairly penalize responsible hosts and limit the economic benefits of short-term renting.

As the city continues refining its short-term rental ordinance, engaging with hosts and considering their perspectives will be important. Finding a regulatory approach that balances the needs of different stakeholders - hosts, guests, long-term renters, and the wider community - will be key to the success and sustainability of Ithaca's short-term rental market in the long run.

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.