Short-term rentals in Minneapolis, explained properly.

Section 244.1845(c)(1) is listed among the regulations applicable to all short-term rental dwelling units and says no rental dwelling classified as Tier III by the director is eligible for short-term rental registration or for use as a short-term rental dwelling. The tier classification is made by the director under other provisions of the rental licensing article that were not read. The City's fee page lists Tier 1, Tier 2 and Tier 3 as property condition tiers for the rental license fee.

Applies to: Non-homestead licensed units in buildings with fewer than 20 units

Section 244.1845(e)(5) sets this limit for non-homestead licensed short-term rental dwelling units in buildings with fewer than twenty (20) units. The City's short-term rental page says an owner can have only one short-term rental property besides their home, that this includes limited liability companies and people with more than one LLC, and that other units need a regular rental license. For buildings with twenty or more units, subsection (f)(1) lists the requirements of subsection (e) parts (1) through (4) and does not repeat part (5); the City page also states a maximum of one non-homestead license in those buildings, so the page and the code text differ for large buildings and this page states the code.

Applies to: Non-homestead licensed units in buildings with 20 or more units

Section 244.1845(f)(2) applies this to non-homestead licensed short-term rental dwelling units in buildings with twenty (20) or more dwelling units. The building and use must comply with all applicable zoning requirements (zoning was not read). The City's short-term rental page repeats the 10 percent limit for buildings with 20 or more units and says the percentage does not apply to condo buildings.

Section 244.1845(c)(5) says that unless further restricted by occupancy laws, no short-term dwelling unit may be occupied by more than ten (10) persons, regardless of property size. The City's application packet says the limit of ten is an upper limit and does not mean every property is allowed ten people.

Section 244.1845(c)(4) requires the owner of any short-term rental dwelling unit required to be registered or licensed to maintain liability insurance appropriate to cover the short-term rental use in the aggregate of not less than three hundred thousand dollars ($300,000.00), or to conduct each short-term rental transaction through a short-term rental platform that provides equal or greater coverage. The application asks for the insurer name and policy number.

Section 244.1845(c)(3). A listing platform must also remove a listing that does not include the required registration or license number when the City asks it to (Section 351.100). The City's page says the license number can be used as the registration number on a platform listing, and that someone listing a space that needs no license, such as a spare bedroom, should state that they are exempt.

Section 244.1845(c)(6) lists the postings and subsection (c)(2) the pool sign, which must be posted during the rental period. The City's application packet adds that a Who to Call poster and the short-term rental license certificate must be posted in a conspicuous place within the unit.

Section 244.1845(e)(1) to (4) lists these for buildings with fewer than twenty units, and subsection (f)(1) applies parts (1) through (4) to buildings with twenty or more units. The phone number must be accessible and responsive 24 hours a day. The letter goes to all property owners, tenants and occupants of any property within the subject building or located within fifty (50) feet of the perimeter of the property line in which the unit is located. The application checklist lists the completed management plan, neighbor notification letter and pre-inspection checklist, and the application also asks for an emergency contact if the applicant lives further than 60 miles driving distance from the property or outside the listed metro counties.

Chapter 351 defines a short-term rental hosting platform as a person or entity that participates in the short-term rental business by providing, and collecting or receiving a fee for, booking services through which an owner may offer a dwelling unit, or a portion of one, for tourist or transient use. The annual fee is as listed in the license fee schedule (not read), and the licensing official may set a lesser fee for a platform that lists no more than 150 dwelling units at any given time. A platform whose license is revoked or denied is ineligible for another platform license for five years (Section 351.80(b)). Chapter 351 was adopted by Ordinance 2017-055 (10-20-17) and Section 351.100 was amended by Ordinance 2020-062 (12-4-20).

Section 351.70(c) requires the notice before the user lists the unit. Section 351.70(d) requires a platform that collects rental fees for lodging to collect and remit all required taxes on behalf of the owner or operator and to keep a record that the taxes were remitted to the Minnesota Department of Revenue or another appropriate agency; Section 351.50(d) makes compliance with the Department of Revenue a qualification for the platform license. Section 351.70(e) requires the platform to keep, for not less than three years after the end of the calendar year of the transaction, the owner's name, the unit address, the booking dates and the unit's registration number, and to provide them in response to valid legal process or a lawful request from an authorized City official. Section 351.100 requires removal on request of the director of regulatory services or the licensing official.

Section 244.1845(b)(2) says the annual fee for a short-term rental registration is as established in the license fee schedule. The application packet's fee table lists a short-term registration fee of $58. Rental license fees for non-homestead units are charged by property condition tier, building size and unit count, and the amounts in the packet's table and on the City's license fee page differ, so they are not stated here. The platform license fee is set in the license fee schedule (Section 351.30) and was not read.

Section 244.1845(b)(3) sets the standard, and the hearing takes place under Chapter 2 of the Code following the procedures in Section 259.255. A registered property is subject to lawful inspection by the director and the director's authorized representatives on a schedule the director sets or on complaint (Section 244.1845(b)(2)). For a booking platform, Chapter 351 allows penalties including fines, license conditions, suspension, denial and revocation, after notice of the charges and of the right to a hearing (Sections 351.80 and 351.90). The penalty provisions for owners in the rest of Article XVI were not read.

The Department of Revenue guide says residential short-term rentals (a home, a portion of a home, or any other property used as a temporary place to stay or live) are a form of lodging and related services, and that charges for them are subject to the general rate sales tax and any applicable local and lodging taxes. Revenue Notice 17-06 (published in the State Register on September 25, 2017) says state and local taxes are due on lodging if the lease or rental is for less than 30 days, or for 30 days or more if there is no enforceable written lease agreement that requires the customer to give prior notice of their intention to terminate the lease. The lodging guide's table for tips and service charges lists the state general rate sales tax as 6.875%. Sales of lodging that are isolated and occasional and not made in the normal course of business are exempt from sales tax under Minnesota Statutes section 297A.67, subdivision 23, as the notice states, and the guide adds that the income tax rule for renting out a home for 14 days or less does not carry over to sales tax. The guide says some cities administer their own lodging taxes and the state rate calculator leaves out special local taxes, so city taxes are shown on each place's page and this page does not total state and local taxes. The guide was last updated May 15, 2024.

Revenue Notice 17-06 says that if the residential property is in Minnesota, the owner must register as a retailer to collect, report and remit sales tax and applicable local taxes when both of these apply: the owner regularly furnishes lodging directly to a customer in the normal course of business (for the purpose of profit or producing income), and the customer makes the reservation with and pays the owner. The owner is not required to register or collect when the owner uses an accommodations intermediary to facilitate all sales of lodging at the property, or when the owner's rental is an isolated incident not made in the normal course of business. When an owner who regularly rents directly also uses an intermediary, both have liabilities: the owner collects on sales made without an intermediary, and the intermediary collects on the sales it facilitated. The guide says the owner must keep documentation of who facilitated each sale and was responsible for remitting the tax. It describes an isolated sale as one that happens once and an occasional sale as infrequent and not recurring with some degree of regularity.

Revenue Notice 17-06 says an accommodations intermediary that facilitates the sale of the short-term rental of residential property located in Minnesota must register as a retailer to collect, report and remit the taxes on the full sales price of lodging and related services, whether the intermediary or the renter is in Minnesota or not. Facilitating the sale includes collecting receipts from the customer and transmitting them to the owner, directly or through third parties, whether or not the intermediary deducts fees from those receipts. It does not include mere advertising that directs the customer to contact the owner to reserve and purchase. The full sales price includes all amounts the intermediary charges the customer. Statute section 297A.61, subdivision 47 defines the term accommodations intermediary, as the notice cites. The notice is dated September 2017 and the guide May 15, 2024.

Section 157.16, subdivision 1 says a license is required annually for every person, firm or corporation engaged in the business of conducting a food and beverage service establishment, youth camp, hotel, motel, lodging establishment, public pool or resort. Section 157.15 defines a hotel or motel as a building, structure, enclosure or any part of one used as, maintained as, advertised as or held out to be a place where sleeping accommodations are furnished to the public for periods of less than one week; a lodging establishment as sleeping accommodations furnished to the public as regular roomers for periods of one week or more with five or more beds to let to the public (or the health-care lodging described in the definition); and a resort as a place on or near a lake, stream, skiing or hunting area or other recreational area, held out to the public for recreation stays and having for rent five or more cottages, rooms or enclosures. The Department of Health's rules and guidance were not read, so whether a particular rental needs a state license should be confirmed with the Minnesota Department of Health. City licensing and registration are separate and are shown on each place's page.