3 Reasons why you should Legalize your Airbnb! New regulation, New rules.
New regulation, New rules.
People usually don't look into short term rental regulations before they start renting there on home sharing sites like Airbnb and VRBO.com. It's easy enough to get started after you upload your property onto any of the STR (short term rental) platforms.
Most lawyers advise that you set up a company and properly register as a STR corporation and make sure your property meets local requirements. As it avoids potential disputes and liability issues that will protect you from massive fines or potentially the city placing a lean against your property. Now more so than ever due to the additional risk COVID 19 has brought to our industry.
- Avoid astronomical fines: Fines ranging from $500 - $1,500 daily which are not disputable by any means. We have seen hosts fined $8,500 on their first offense which crippeled the profitability for that rental year. The worst part is that you won't be able to register your home as a LEGAL rental until said fines have been paid.
- Avoid accidental liability: Hosting involves a lot of foot traffic hosting several groups monthly. If someone or a child is hurt at your property and that group decides to sue you due to negligence, the chances of them winning judgement against you is high. If you're not properly insured or meet the safety requirements set by the city the chances of your losing in court or your property by not being able to pay for the judgment is incredibly high. DON'T LET THIS BE YOU
- TAXES: Hosting sites like Airbnb pays taxes to the state for every rental on your behalf, BUT other sites that can drastically help increase your rental income like booking.com or VRBO do not do so on your behalf. Meaning your marketing ability will be limited.. Let's say you decided to rent on this platform regardless. If you're able to activate your listing and take a reservation from a site that sends you taxes charged to travelers you'll now be responsible for paying that amount. Which you will not be able to do without being registered. Which in turn creates a big issue when you go to file your annual tax there will be discrepancy which will result in IRS issues.
IMPORTANT:
If you have decided to become a Airbnb host, it is imperative for you to understand how the STR ( short term rental) rules and regulations work in your city.
Some cities have laws that restrict your ability to host travelers for short periods. These laws are often part of the city’s zoning and code enforcement. In most cities, you are required to register with state, county and then you can seek to obtain a permit, or obtain a license before you list your property or accept paying travelers.
The rules can be very confusing. We recommend working with someone that is familiar or can clarify these rules so that everyone has a clear understanding of what the laws are.
There are companies that can help you do this the right way: legalbnb.org