Airbnb Rules in Vermont | Airbnb Laws, Taxes, and Regulations

Airbnb Rules in Vermont | Airbnb Laws, Taxes, and Regulations

Vermont is home to the beauty and calmness of the mountains, narrow alleys, dazzling white ski trails, blazing red maple trees along a stone wall, and much more. According to Vermont, it is been known to be one of tourism’s largest industry welcoming over 13 million visitors each year. Hence, many Vermonters and out-of-state residents who own a property convert their homes to short-term rentals for an income.

If you are looking to expand or invest in Airbnb in Vermont, generally short-term rental regulations are visible; however, some regulations may be hard to find and understand. For a better understanding and ultimately to grow your Airbnb vacation rental business, below is a detailed and updated Airbnb law, regulations, and taxes in Vermont.

In a nutshell, this article will guide you through:

  • What is a Short-term rental in Vermont?
  • Airbnb laws in Vermont
  • Short-term Rental Regulations
  • How does Occupancy Tax Collection and Remittance by Airbnb work in Vermont?
  • Frequently Asked Questions (FAQs)

What Is A Short-term Rental In Vermont?

All or part of a furnished dwelling unit that is available for the use of accommodations offered to the public for less than thirty consecutive days or rented for more than two weeks per calendar year, wherein guests pay a fee are considered as a short-term rental.

Airbnb Laws In Vermont

Is a license required?

Yes! Furthermore, the Vermont law states that short-term rental operators are required to include their Vermont meals and room tax account number with any advertisements and shall post within the unit the following:

  • Business license
  • Contact details responsible for the maintenance of the unit
  • Contact details for both the Vermont Department of Health and the Vermont Division of Fire Safety

What Are The Registration Requirements Required For A Short-term Rental?

Below are the necessary and updated requirements:

  1. It is required to register with the Department and hold a valid certificate of compliance when operating or maintaining a short-term rental.
  2. Shall register with the Commissioner by completing forms published by the Department and pay a registration fee.
  3. The short-term rental must comply with the following:
  4. The unit complies with relevant State and fire safety, life safety, zoning laws, and rules
  5. Guest rooms are free from any evidence of insects, rodents, and other pests
  6. All water from a private water supply system meets Vermont’s water supply standards
  7. All sewage is disposed of through an approved facility
  8. Occupancy taxes required under 32 V.S.A chapter 225 are paid promptly
  9. Shall submit the registration application to the Department not less than 14 days.
  10. The initial Certificate of Compliance will be granted upon the completion of the registration application and registration fee.
  11. Certificates shall be displayed in a manner for the public to view.

Are There Building And Fire Code Requirements On Short-term Rentals?

In obtaining approval from the State Marshall, a complete inspection is vital including emergency exit windows, installed smoke and carbon monoxide alarms, stairways, and handrails. If the short-term rental does not meet the code requirements from the State Fire Marshall, resulting in damages to guests and possible accountability to the property owner. For more details, check out: Code Information & Hot Topic Fire Safety Sheets

What Are The Residency Requirements?

All or part of the dwelling unit should not be offered as a short-term rental unless the said person has occupied the unit as his or her primary residence:

  • 270 days or the preceding year
  • Owned or leased the unit for less than a year with more than 70% of the days

Inspection

The Commissioner may inspect through his or her duly authorized officers, inspectors, agents, or assistants at all reasonable times, a short-term rental, and the operator’s records related to the short-term rental.

Collection And Reporting

When listing your vacation rental on booking platforms or direct booking websites, it is required to collect and file additional reporting on all transactions that occurred on the platform. Here are the required following:

  • 1 year of all rental transactions of persons acting as hosts or operators through the booking platform
  • All transaction data will need to be separated by the individual property

Such or any additional information the Department may require may be requested by the Vermont Department of Taxes.

Short-term Rental Regulations

Killington

Currently, Killington ranks as number 1 for the most Airbnb properties in the entire state with 16.6% of short-term rental properties listed. With that said, regulations remain the same as the Killington Planning Committee has no plan to add further regulations.

Burlington

Burlington has been facing key challenges in the housing crisis due to strict regulations, resulting in high rent prices and out-of-reach affordable housing for the community. To protect the city’s housing supply, Burlington proposed a policy reform goal for short-term rentals including stages for different types of rentals, and discourage the impactful uses.

The new reform seeks in limiting the number of housing units that can be converted to short-term rentals like Airbnb that help reduce impacts on long-term housing availability. And at the same time, balancing some flexibility for hosts to use their homes and earn an income while benefiting the Burlington economy. To learn more, please visit: Regulatory Framework for Short-term Rentals

Stowe

Stowe regulations state:

  • Homes, condos, apartments, or even bed & breakfast are considered as short-term rentals that are rented for one week or longer are permitted.
  • Less than a week rental is considered a ‘lodging facility require may and allowed in certain zoning districts.
  • Any house with the approval may be converted to bed & breakfast as long as it is registered and the property owner resides.
  • Short-term rentals are subject to safety inspections by the State Fire Marshall.

How Does The Occupancy Tax Collection And Remittance By Airbnb Work In Vermont?

State of Vermont

Airbnb collects and remits these taxes to the Vermont Department of Taxes for listings on the platform under a single meals and rooms tax ID number: MRT-10126712.

Meals and Room Tax

9% of the listing price including any cleaning fees and guest fees for reservations 29 nights and shorter.

Local Option Tax

1% of the listing price including any cleaning fee and guest fees for reservations 29 nights and shorter in the following municipalities: Brandon, Brattleboro, Colchester, Dover, Killington, Manchester, Middlebury, Montpelier, Rutland Town, St. Albans Town, South Burlington, Stowe, Stratton, Williston, Wilmington, Winhall, and Woodstock. For more information, check out: Local Option Sales Tax.

Selling Merchandise

Merchandises such as homemade soap or candles, etc. that are sold to your guest are required to be charged 6% Vermont Sales Tax. Furthermore, if you additionally purchase items made online or in a state and no sales tax is charged, you must remit the applicable 6% Vermont Use Tax. For more details, please visit: Sales and Use Tax.

Burlington

Guests who book Airbnb listings that are located in Burlington, VT will pay the following taxes as part of their reservation:

  • City of Burlington Restaurant, Hotel, Amusements, and Admissions Tax: 2% of the listing price including any cleaning fee for all reservations. For detailed information, please visit City of Burlington Clerk/Treasurer’s website.

Rutland

Guests who book Airbnb listings that are located in the City of Rutland, VT will pay the following taxes as part of their reservation:

Rooms, Meals, and Entertainment Tax: 1% of the listing price including any cleaning fees for reservations 29 nights and shorter. For detailed information, please visit the City of Rutland Rooms, Meals, and Entertainment Taxes website.

Frequently Asked Questions (FAQs)

Do short-term rentals affect my homestead tax status?

Yes! It can affect your homestead tax status if your house/dwelling is being rented part of the year. Although, if it is let out for more than 182 days out of the calendar year, properties are considered non-residential, hence not a homestead. With that said, it is important every year to declare the percentage of your house that is let out on your homestead declaration, resulting in a decrease in your homestead tax rate. For more details, please visit: Homestead Declaration.

Is there a limit to the number of bedrooms you can rent out?

All houses are approved for a certain number of rooms. Whether it is on the town sewer and water system or a private well and septic system, it is not permitted to rent out more bedrooms than your approved system regulated by the Vermont Department of Environmental Conservation. It is a violation if guidelines are not being followed and can result in the failure of your septic system. For more details, check out: Wastewater Systems and Portable Water Supplies.

Is an inspection required from the Vermont Health Department?

If 3 or more units are booked regularly or if food is provided through bed and breakfast, a lodging license from the Vermont Health Department is compulsory. For more details, check out: Lodging Establishments.

Is Insurance required?

Depending on individual cities in Vermont that are slowly recognizing the reasons for hosts to secure appropriate insurance for their short-term rentals may or may not be required. Generally, all homeowner’s policies carry a ‘business activity exclusion’ meaning any claim could rightfully be denied. To cover the damage and liabilities when having guests, some companies like Airbnb offers some form of additional insurance. Otherwise, contact your insurance agent in discussing your insurance needs when you have any type of guests.

Related Article: Vacation Rental Insurance Guide

What if you have a Tax liability?

Host/property managers are responsible for collecting and remitting all taxes applicable to your business. If failure to do so, you may be accountable for up to seven years of tax, interest, and penalty. Although, if you voluntarily come forward to the Department’s Voluntary Disclosure Program, it may reduce to three years. Check out: Voluntary Disclosure Program

Tip: Maintain records of your short-term rental business, including dates of rental, names of tenants, the amount charged for the rental, and tax charged and collected.

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