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Bloomington Short Term Rental Regulation: A Guide For Airbnb Hosts

Bloomington, Indiana

Starting a Short Term Rental Business in Bloomington

Bloomington, Indiana is an attractive location for short-term rentals due to its proximity to Indiana University, vibrant downtown scene, and natural attractions like Lake Monroe and Hoosier National Forest3. The peak season runs from August to November, coinciding with the university's fall semester and football games. Spring also sees increased tourism for events like the Little 500 bike race3.

However, Bloomington has specific regulations in place that short-term rental hosts must follow123. These include:

  • Obtaining a rental occupancy permit from the Housing and Neighborhood Development (HAND) department913
  • Limiting occupancy based on the number of legal bedrooms in the unit13
  • Providing sufficient off-street parking for all guest vehicles13
  • Complying with noise, trash, and other nuisance ordinances13
  • Collecting and remitting state sales tax (7%) and county innkeeper's tax (5%)61214

Before starting a short-term rental business, it's crucial to research the local market conditions, zoning laws, and permit requirements to ensure your property is eligible and set up for success13. This may involve working with the city's Planning and Transportation Department to verify zoning compliance10.

Once you've determined your property meets the criteria, the next steps are registering with the HAND department, scheduling inspections, making any necessary repairs or upgrades, and obtaining a rental occupancy permit91113. You'll also need to register with the state and county to collect and remit the required taxes1214.

When you're ready to launch, create enticing listings on popular platforms like Airbnb and Vrbo, or consider working with a local property management company to handle marketing, bookings, cleaning, and guest communication35. Providing top-notch amenities, thoughtful touches, and excellent customer service can help your short-term rental stand out in the competitive Bloomington market35.

Short Term Rental Licensing Requirement in Bloomington

All rental properties, including short-term rentals, located within Bloomington city limits must be registered with and inspected by the Housing and Neighborhood Development (HAND) department891113. Failure to register a rental property can result in fines of up to $100 per day1113.

The process to obtain a rental occupancy permit involves91113:

  • Registering the property by filling out the required form and submitting it to HAND
  • Scheduling an interior and exterior inspection with a HAND inspector
  • Making any necessary repairs or upgrades cited in the inspection report within 60 days
  • Scheduling a re-inspection to verify compliance
  • Paying the permit and inspection fees to receive an occupancy permit valid for 3-5 years

Permit and inspection fees vary based on the number of bedrooms and type of unit13. For example, a studio or one-bedroom unit has a $105 permit fee, while a four-bedroom unit is $19013. Re-inspection fees are $77 per visit if additional inspections are needed to confirm repairs13.

The city conducts regular inspections of registered rentals every 3-5 years to ensure ongoing compliance with housing codes and safety standards1013. During the inspection, a HAND inspector will assess the interior and exterior of the property, checking for issues like working smoke detectors, proper egress, handrails, moisture intrusion, and structural integrity13.

Short-term rental hosts must display the issued permit somewhere visible inside each rental unit810. Property files, including registration forms, inspection reports, and permits, are considered public record and can be reviewed by anyone at the HAND office810.

Operating a short-term rental without a valid permit is considered a violation of Bloomington's municipal code and is subject to fines starting at $2,500 for the first offense, and up to $5,000 for subsequent offenses within the same year17. The city has the authority to revoke a rental occupancy permit for repeated noncompliance1.

In addition to the rental occupancy permit, short-term rental hosts in Bloomington must also register with the state to collect and remit sales and innkeeper's taxes11214. This involves obtaining a Registered Retail Merchant Certificate from the Indiana Department of Revenue112.

Required Documents for Bloomington Short Term Rentals

To register a short-term rental and obtain a rental occupancy permit from the Bloomington Housing and Neighborhood Development (HAND) department, hosts must submit the following81113:

  • A completed rental registration form, which includes the property address, owner's contact information, number of units and bedrooms, and the name and contact info of the property manager if different from the owner
  • A pre-inspection checklist confirming the property has working smoke detectors in each bedroom and hallway, carbon monoxide detectors if there are fuel-burning appliances, fire extinguishers, and that all bedrooms have proper egress in case of emergency
  • Proof of payment for the permit and inspection fees, which vary based on the number of bedrooms ($105 for a studio/1-bed, $135 for a 2-bed, $165 for a 3-bed, $190 for a 4-bed)13

The rental registration form and pre-inspection checklist are available on the HAND website or can be picked up at their office in City Hall13. Completed forms and payment can be submitted in person, by mail, or via email to the HAND department13.

Once issued, the rental occupancy permit must be prominently displayed inside each short-term rental unit, typically near the main entrance or in a common area where guests can see it810. The permit will have the owner's name, property address, number of legal bedrooms, maximum occupancy, and the permit expiration date810.

In addition to the HAND rental occupancy permit, short-term rental hosts in Bloomington must also register with the Indiana Department of Revenue to collect and remit state sales tax (7%) and Monroe County innkeeper's tax (5%)11214. This requires obtaining a Registered Retail Merchant Certificate (RRMC) from the state1214.

To apply for a RRMC, hosts need to submit their personal information, business name and location, Federal Employer Identification Number (FEIN) or Social Security Number (SSN), and projected monthly tax collection to the Indiana Department of Revenue either online via INTIME or by mail/in-person using Form BT-112.

Once registered, short-term rental hosts are responsible for collecting the 7% state sales tax and 5% Monroe County innkeeper's tax from guests, filing monthly tax returns, and remitting the taxes to the appropriate agencies (Indiana Department of Revenue for state sales tax, and Monroe County Treasurer for innkeeper's tax)1214.

Proper documentation is key to running a compliant short-term rental business in Bloomington. Hosts should keep organized records of their permit, inspection reports, tax registration, returns, and payment receipts. These documents may need to be presented to city or state officials upon request to demonstrate compliance with local regulations.

Bloomington Short Term Rental Taxes

Short-term rentals in Bloomington are subject to both state and local taxes on stays less than 30 consecutive days161214:

  • Indiana's 7% sales tax11417
  • Monroe County's 5% innkeeper's tax6121417

Hosts are responsible for collecting these taxes from guests and remitting them to the proper authorities61214. The 7% state sales tax is paid to the Indiana Department of Revenue, while the 5% innkeeper's tax goes to the Monroe County Treasurer's Office1214.

To collect and remit taxes, short-term rental hosts must first register with the state and obtain a Registered Retail Merchant Certificate (RRMC)1214. This can be done online through the INTIME system or by mail/in-person using Form BT-112. The application requires personal information, business details, and projected monthly tax collection amounts12.

Once registered, hosts must add the 7% sales tax and 5% innkeeper's tax to their nightly rates and collect these from guests1214. For example, if a host charges $100 per night, they would need to collect an additional $7 for state sales tax and $5 for Monroe County innkeeper's tax, for a total of $112 per night1214.

Hosts are required to file monthly tax returns and remit the collected taxes to the state and county1214. State sales tax is reported and paid online via INTIME or by mail using Form ST-10312. Innkeeper's tax can be paid to the Monroe County Treasurer's Office by check or in person14.

Proper record-keeping is essential to ensure accurate tax collection and reporting12. Hosts should maintain detailed records of rental income, nights rented, taxes collected, and returns filed12. These records may be requested by tax authorities to verify compliance12.

As of 2018, Airbnb collects and remits the 7% state sales tax and 5% Monroe County innkeeper's tax on behalf of its hosts for reservations made through the Airbnb platform17. However, hosts are still responsible for collecting and remitting taxes for any bookings made outside of Airbnb, such as through Vrbo, booking.com, or direct reservations17.

Failure to comply with state and local tax requirements can result in penalties, interest, and legal issues1214. The Indiana Department of Revenue can impose fines of $500 for each instance of not registering to collect sales tax, and 10-25% penalties for filing late returns or underpaying taxes owed12. Similarly, the Monroe County Treasurer's Office can assess 10% penalties for late innkeeper's tax payments and charge 1% monthly interest on unpaid balances14.

To avoid potential problems, short-term rental hosts in Bloomington should educate themselves on the applicable tax laws, keep accurate records, and file/pay taxes on time. Consulting with a tax professional can help ensure full compliance and minimize audit risks.

Bloomington-wide Short Term Rental Rules

In addition to obtaining a permit and collecting taxes, short-term rentals in Bloomington must adhere to city-wide regulations aimed at preserving neighborhood character and quality of life1237. These rules cover areas like occupancy limits, parking, noise, and guest behavior123.

Key requirements include:

  • Occupancy Limits: The number of guests allowed in a short-term rental is capped based on the number of legal bedrooms in the unit13. Per Bloomington Municipal Code 16.03.010, occupancy is limited to 3 adults (age 18+) per bedroom, plus 1 additional adult per unit20. So a 2-bedroom rental could host a maximum of 7 adult guests (3 per bedroom, plus 1 extra)20. Children under 18 are not counted toward these limits20.
  • Parking: Short-term rentals must provide at least 1 off-street parking space per bedroom rented13. These spaces can be in a driveway, garage, carport, or designated parking pad, but not on the lawn or street13. Hosts are responsible for ensuring guests park only in the approved off-street spaces to avoid overcrowding neighborhood streets13.
  • Noise and Nuisance: Short-term rental guests must comply with Bloomington's noise ordinance (BMC 14.09), which prohibits unreasonable noise that disturbs the peace and quiet of surrounding residents1320. Quiet hours are from 10pm to 7am on weekdays and 11pm to 7am on weekends20. Guests cannot host parties, play loud music, or engage in disruptive behavior at any time13. Hosts are ultimately responsible for their guests' actions and any nuisance violations13.
  • Trash and Recycling: Hosts must provide adequate trash and recycling receptacles for guests and ensure proper disposal according to the city's waste management guidelines13. Trash and recycling containers cannot be left at the curb outside of designated pick-up times13. Overflowing bins or litter on the property is considered a nuisance violation13.
  • Signage: Short-term rentals cannot have any signage identifying the property as a vacation rental13. This includes yard signs, window displays, or other exterior advertising13. The only signage allowed is the address numbers required for emergency responders13.
  • Safety Equipment: All short-term rentals must have working smoke detectors in each bedroom and hallway, carbon monoxide detectors if there are fuel-burning appliances, fire extinguishers on each floor, and an emergency evacuation plan posted in a visible location81113. Bedrooms must also have proper egress windows or doors for escape in case of fire81113.
  • Guest Information: Hosts are required to provide guests with a copy of Bloomington's short-term rental rules, including occupancy limits, parking restrictions, noise ordinance, trash guidelines, and emergency contact information for the host or property manager13. Many hosts create a welcome book or binder with this information and leave it in a prominent place inside the rental unit3.

Violations of any of these rules can result in fines, permit suspension, or revocation17. Initial offenses carry a $2,500 fine, while subsequent offenses within the same year jump to $5,000 per violation7. Hosts who rack up multiple violations may have their rental occupancy permit revoked by the city, forcing them to cease operations1.

To avoid problems, short-term rental hosts in Bloomington should carefully review the city's regulations and take proactive steps to educate guests, monitor compliance, and address any issues promptly. Open communication with neighbors and city officials can also help identify and resolve potential concerns before they escalate.

By following Bloomington's short-term rental rules, hosts can minimize negative impacts on surrounding residents while still providing a welcoming experience for guests. This balance is key to the long-term success and sustainability of the short-term rental industry in the city.

Does Bloomington strictly enforce STR rules?

Historically, Bloomington has taken a relatively hands-off approach to enforcing its short-term rental regulations, despite the rules being on the books for several years126. As of 2018, the city estimated that over 200 short-term rentals were operating without the required permits, out of around 400 total listings16.

City officials have cited limited resources and competing priorities as reasons for not cracking down more aggressively on non-compliant operators12. With only a handful of code enforcement officers and a lengthy list of housing and zoning violations to address, short-term rental enforcement has often taken a backseat12.

However, this lax enforcement stance may be changing as the short-term rental market continues to grow and generate more complaints from residents and traditional lodging providers126. In 2016, the city proposed an ordinance to strengthen its short-term rental regulations, including higher permit fees, occupancy limits, parking requirements, and steep fines for violations714.

While that specific proposal was ultimately tabled after pushback from hosts, it signaled a shift in the city's attitude toward short-term rentals and a willingness to take a more active role in regulation1714. Since then, Bloomington has maintained its legal authority to enforce its existing rules and has indicated that it may revisit the issue in the future12.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.