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Merced Short Term Rental Regulation: A Guide For Airbnb Hosts

Merced, California

Starting a Short Term Rental Business in Merced

Operating a short-term rental (STR) business in Merced, California requires understanding and complying with the city's regulations. According to the Merced County Zoning Code, short-term rentals are allowed in certain residential and commercial zones with an Administrative Permit4616.

In residential zones (R-R, R-1, R1-5000, R-2, R-3, R-4, M-H), a short-term rental may be allowed on a lot with the approval of an Administrative Permit1416. The property must be the primary residence of the owner16. In commercial zones (C-P, C-1, C-2, C-3, C-T, C-C), a short-term rental may be allowed in an existing single-family dwelling, also with an Administrative Permit520.

Short-term rentals in Merced do not include county-approved hotels, motels, hostels, and timeshares5. The city attracts visitors due to its proximity to Yosemite National Park, UC Merced, and the historic downtown. Peak season is from June to September, with a drop in winter except for UC Merced events and holiday festivities15.

Hosts should be aware that Merced appears relatively strict in enforcing its STR regulations compared to some other cities. While some may operate without proper permits, Merced is generally not considered particularly Airbnb-friendly due to the permitting requirements and associated costs191216. BiggerPockets and Reddit users have expressed frustration with the city's stringent rules, lengthy permit process, and fees that can make operating an STR legally quite difficult and less profitable1912.

Short Term Rental Licensing Requirement in Merced

Merced requires all short-term rental operators to obtain a business license and an Administrative Permit specifically for short-term rentals. Hosts must register with the city and obtain the business license from the Finance Department151118.

The Administrative Permit application process involves submitting documentation and receiving approval from the Planning Department31118. This permit is required whether the short-term rental is operated in a residential or commercial zone51416.

To apply for the Administrative Permit, the property owner or authorized agent must submit:

  • Completed Planning Permit Application form
  • Operational Plan detailing rules, parking, noise control, etc.
  • Site Plan showing property layout, parking spaces, etc.
  • Proof of property ownership or owner authorization
  • Application fee313

Once the Administrative Permit is approved, the STR operator must also:

  • Obtain a Business License from the Finance Department
  • Register for a Transient Occupancy Tax Certificate
  • Ensure the property is up to building, fire, health & safety codes13511

Required Documents for Merced Short Term Rentals

To summarize, the key documents needed to legally operate a short-term rental in Merced include:

  • Administrative Permit from the Planning Department
  • Business License from the Finance Department
  • Transient Occupancy Tax (TOT) Certificate
  • Proof of primary residence for the owner
  • Detailed site plan of the property
  • Operational plan for guest rules and management
  • Compliance with applicable building and safety codes135111318

The property must also maintain adequate insurance coverage for the rental operation. Hosts should carefully review their policy or consult their insurance agent to ensure proper liability protection.

Merced Short Term Rental Taxes

Short-term rental operators in Merced are required to collect and remit Transient Occupancy Tax (TOT) to the city. The current TOT rate is 10% of the rental amount161019.

Hosts must register with the City's Finance Department to obtain a TOT certificate as part of the Administrative Permit process. The collected tax is then remitted to the city on a quarterly basis:

  • 1st quarter (Jan-Mar) due by April 30
  • 2nd quarter (Apr-Jun) due by July 31
  • 3rd quarter (Jul-Sep) due by October 31
  • 4th quarter (Oct-Dec) due by January 313618

Late TOT payments are subject to penalties and interest. Failing to collect and remit the tax can result in fines and legal action against the STR operator.

Merced-wide Short Term Rental Rules

In addition to zoning and permitting requirements, Merced has established some general regulations for short-term rentals that hosts must follow13561618:

  • The STR property must be the primary residence of the owner
  • Maximum occupancy limits based on the number of bedrooms
  • Designated off-street parking requirements (1 space per unit)
  • Compliance with noise ordinances and "quiet hours"
  • Prohibition of special events, parties, weddings, etc.
  • Posting the STR permit number on all listings and advertisements
  • Providing a local contact person to respond to any issues 24/7
  • Maintaining a guest register with names and dates of stay

Failure to abide by these operating requirements can result in fines, permit revocation, and potentially being barred from STR activity. The city has a short-term rental hotline for neighbors to report issues.

Specific development standards may apply based on the zoning district. For example, minimum parcel sizes, setbacks, and density limits vary between residential and commercial zones5141620. Hosts should carefully review the zoning code and consult with the planning department to ensure their property meets all applicable standards before applying for an STR permit.

How to Start a Short Term Rental Business in Merced

To legally operate a short-term rental in Merced, follow these steps:

  • Verify that your property's zoning allows short-term rentals with an Administrative Permit.
  • Obtain a business license from the City of Merced Finance Department.
  • Apply for an Administrative Permit for short-term rentals with the Planning Department, providing all required documentation.
  • Register for a Transient Occupancy Tax certificate with the Finance Department.
  • Ensure your rental complies with all applicable codes, including parking, occupancy limits, and noise ordinances.
  • Maintain proper insurance coverage for your short-term rental operation.
  • Collect and remit Transient Occupancy Taxes as required.
  • Renew your permits and licenses as needed.

Who to contact in Merced about Short Term Rental Regulations and Zoning

For questions about short-term rental regulations, zoning, permits, and taxes in Merced, hosts can contact the following city departments381113:

Merced Planning Department

  • Zoning, Administrative Permits, Land Use
  • Phone: (209) 385-6858
  • Email: planning@cityofmerced.org
  • Address: 678 W 18th St, Merced, CA 95340

Merced Finance Department

Merced Building Division

Merced Fire Department

Merced County Health Department

The city's website also provides resources on zoning, permits, applications, and municipal codes that hosts should carefully review381113. Consulting directly with these departments helps ensure hosts receive the most accurate and current information for their specific property and situation.

What do Airbnb hosts in Merced on Reddit and Bigger Pockets think about local regulations?

On BiggerPockets and Reddit, several Airbnb hosts have expressed frustration with Merced's short-term rental regulations, which they find overly restrictive, costly, and challenging to navigate1912.

One BiggerPockets user commented, "Merced's STR regulations are quite strict. The permitting process is lengthy and the fees really add up. It's made operating an Airbnb legally much less profitable."1They added, "Many hosts choose to fly under the radar, but you risk hefty fines if caught. The city has definitely made it difficult to run an STR by the book."1

Another host on Reddit shared, "I tried to get an Administrative Permit for my Merced property but the process was so convoluted that I gave up. The city seems to really discourage STRs in residential areas."9A different Reddit user noted, "Merced is cracking down on unpermitted STRs. They're not as lenient as some neighboring cities. If you want to operate legally, be prepared to jump through a lot of hoops."9

However, some hosts recognize the potential benefits of full compliance, despite the obstacles. A BiggerPockets member wrote, "While Merced's rules are strict, I've found that being fully permitted and above board gives guests peace of mind and helps avoid issues down the line. It's a selling point for my listing."12They continued, "Yes, it's a headache and cuts into profits, but I sleep better knowing I'm operating legally. And I think it's only a matter of time before the city goes after the illegal operators."12

Overall, the sentiment among many hosts is that Merced's STR regulations are overly burdensome, making it difficult and less profitable to operate legally. The city is seen as unfriendly to STRs compared to other markets, with complex zoning rules, permit requirements, and high fees.

However, some hosts believe that full compliance, while challenging, provides long-term benefits and peace of mind. They caution that operating illegally carries serious risks as the city ramps up enforcement against unpermitted STRs.

Prospective Airbnb hosts in Merced should carefully weigh these considerations and decide if they are willing to follow all the city's rules and requirements. While the path to legal operation is difficult, it may be the wisest choice to avoid fines and build a sustainable business. Hosts must crunch the numbers on all the related costs to determine if the potential profits justify the significant investment of time and money to obtain permits and remain compliant in Merced.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.