Indianapolis Short Term Rental Regulation: A Guide For Airbnb Hosts

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Starting a Short Term Rental Business in Indianapolis

Indianapolis, the vibrant capital city of Indiana, has seen a significant surge in the short-term rental market in recent years. The growing popularity of platforms like Airbnb and VRBO has made it easier for travelers to find unique and affordable accommodations, while also providing an attractive opportunity for entrepreneurs looking to start a short-term rental business. With a thriving tourism industry, a central location that makes it a convenient stopover for travelers, and a diverse array of attractions, Indianapolis presents a promising market for those interested in tapping into the short-term rental industry.

However, before diving into the world of short-term rentals, it's crucial to understand the local regulations and requirements for operating a short-term rental (STR) in Indianapolis. The city has implemented a set of rules and guidelines to ensure that short-term rentals are operated responsibly and do not negatively impact the quality of life for long-term residents.

By familiarizing yourself with these regulations and taking the necessary steps to comply, you can set your STR business up for success in this dynamic market.

Discover the best Airbnb properties, For more insights and tips on Airbnb, check out our comprehensive guide to short-term rentals in nearby cities in Indianapolis ,Indiana.

Short Term Rental Licensing Requirement in Indianapolis

To legally operate a short-term rental in Indianapolis, property owners must first obtain a permit from the city. This requirement applies to any property that is rented out for periods of less than 30 consecutive days. The permit application process involves submitting several documents, including proof of ownership, a detailed floor plan of the rental space, and contact information for the owner and any local representatives. The city reviews each application to ensure compliance with zoning regulations and safety codes6.

Indiana Code section 36-1-24-13 sets a cap on permit fees at $150, which is relatively affordable compared to some other cities. Permits are valid for one year from the date of issuance and must be renewed annually. However, the renewal process is free of charge as long as the permit was not previously revoked for cause.

It's important to note that operating a short-term rental without a valid permit can result in significant fines, with penalties of up to $500 per rental occurrence5.

Required Documents for Indianapolis Short Term Rentals

In addition to the permit application, Indianapolis STR operators must provide several documents to the city to demonstrate compliance with local regulations. These documents include6:

  • Proof of ownership: This can be a deed, property tax statement, or other official document showing that you are the legal owner of the property.
  • Detailed floor plan of the rental space: The floor plan should clearly show the layout of the rental unit, including the location of bedrooms, bathrooms, and any common areas.
  • Contact information for the owner and any local representatives: You must provide your name, address, phone number, and email address, as well as the contact information for any local representatives who will be responsible for managing the property in your absence.
  • Business permit from the state of Indiana: In addition to the city permit, you must also obtain a business permit from the state of Indiana to operate legally9.

It's also a good idea to maintain accurate records of all lease agreements, inspection reports, and insurance policies related to your short-term rental. These documents may be requested by the city or the IRS for compliance purposes12.

Indianapolis Short Term Rental Taxes

Short-term rentals in Indianapolis are subject to several taxes, which can add up to a significant portion of your rental income. As an STR operator, it's your responsibility to collect these taxes from your guests and remit them to the appropriate authorities. The taxes that apply to short-term rentals in Indianapolis include234:

  • State sales tax: The current state sales tax rate in Indiana is 7%. This tax applies to all short-term rental transactions.
  • County innkeeper's tax: Each county in Indiana has the authority to impose an innkeeper's tax on short-term rentals. The rate varies by county and ranges from 2% to 10%. In Marion County, which includes Indianapolis, the innkeeper's tax rate is currently 10%.
  • Local property taxes: As a property owner in Indianapolis, you are also responsible for paying local property taxes on your rental property. These taxes are based on the assessed value of your property and are used to fund local services like schools, roads, and public safety.

It's important to note that most short-term rental platforms, including Airbnb and VRBO, do not collect and remit taxes on behalf of hosts in Indiana. This means that you are solely responsible for ensuring that you are collecting the correct amount of taxes from your guests and remitting them to the appropriate authorities in a timely manner.

Failure to comply with your tax obligations can result in significant penalties and interest charges5.

Indianapolis-wide Short Term Rental Rules

In addition to the licensing and tax requirements, Indianapolis has several city-wide regulations that apply to all short-term rentals. These rules are designed to promote responsible STR ownership and minimize the impact of short-term rentals on neighboring properties. Some of the key regulations include189:

  • Age requirement for principal renter: The person signing the rental agreement and staying in the property must be at least 21 years old.
  • Posting of owner contact information: The owner's name and contact information must be prominently displayed inside the rental unit and provided to all contiguous neighbors.
  • Access for law enforcement: The Indianapolis Metropolitan Police Department (IMPD) must have immediate access to the owner's contact information in case of emergency or complaint.
  • Mandatory inspections: All short-term rentals must undergo regular inspections to ensure compliance with safety codes and other regulations. These inspections are conducted at the owner's expense.
  • Restrictions on new permits in residential areas: In an effort to preserve the character of residential neighborhoods, the city has prohibited the issuance of new STR permits in certain residential zones.
  • Non-transferability of permits: STR permits are tied to the owner and the property, and cannot be transferred to a new owner if the property is sold.
  • Occupancy limits: The maximum number of guests allowed in a short-term rental is determined by the size and capacity of the property, as established by the city.
  • Prohibited activities: Certain activities, such as large parties, food trucks, and the use of recreational vehicles or trailers, are prohibited at short-term rental properties.
  • Minimum stay requirement: To discourage the use of short-term rentals for partying or other disruptive activities, the city has implemented a two-night minimum stay requirement for all STRs.
  • Compliance with local ordinances: STR operators must comply with all local ordinances related to noise, trash, parking, and other quality-of-life issues.

Does Indianapolis strictly enforce STR rules?

The level of enforcement of short-term rental regulations can vary significantly from city to city. Based on discussions in real estate investing communities like BiggerPockets, Indianapolis is generally considered to be relatively STR-friendly compared to some other major cities. The city has established clear enforcement mechanisms, including regular inspections and penalties for non-compliance, but many hosts report being able to operate successfully while navigating the regulations101112.

However, it's important to note that some Indianapolis residents have raised concerns about the impact of short-term rentals on their neighborhoods. Common complaints include increased noise, parking congestion, and safety concerns. In response to these concerns, the city has taken steps to address the most pressing issues, such as prohibiting new STR permits in certain residential areas and requiring a two-night minimum stay to discourage party houses810.

Overall, while Indianapolis does have a set of regulations in place for short-term rentals, the city is generally seen as more welcoming to Airbnb and other STR platforms compared to some other markets. Hosts who take the time to understand and comply with the rules can find success in Indianapolis' growing STR industry.

However, it's important to be a responsible operator and to prioritize positive relationships with neighbors and city officials to ensure the long-term viability of your business101112.

How to Start a Short Term Rental Business in Indianapolis

If you're interested in starting a short-term rental business in Indianapolis, there are several key steps you should follow to ensure compliance with local regulations and set yourself up for success4:

1. Research the Indianapolis STR market and regulations: Before investing in a property or listing your existing home on a short-term rental platform, it's essential to thoroughly research the local market and regulations. This includes understanding the licensing requirements, zoning restrictions, and tax obligations for STRs in Indianapolis. You should also assess the demand for short-term rentals in your target neighborhood and evaluate the competition to ensure that your property will be able to generate sufficient rental income.

2. Obtain necessary permits and licenses: Once you've confirmed that your property is eligible for use as a short-term rental, you'll need to obtain the necessary permits and licenses. This includes a short-term rental permit from the city of Indianapolis and a business permit from the state of Indiana. Be sure to submit all required documents, including proof of ownership, a detailed floor plan, and contact information for yourself and any local representatives69.

3. Prepare your property for guests: To attract bookings and provide a positive experience for your guests, it's important to ensure that your property is clean, safe, and well-equipped with amenities that travelers expect. This may include investing in high-quality furnishings, linens, and kitchenware, as well as providing essential amenities like Wi-Fi, cable TV, and toiletries. You should also ensure that your property meets all applicable safety standards, such as having working smoke detectors and fire extinguishers4.

4. List your property on popular STR platforms: Once your property is ready for guests, it's time to create a listing on popular short-term rental platforms like Airbnb and VRBO. Be sure to create an attractive listing with high-quality photos and a detailed description of your property and its amenities. You should also set competitive rates based on the local market and your target audience4.

5. Establish processes for managing your STR: Running a successful short-term rental business requires a significant amount of time and effort. To streamline your operations and provide a consistent experience for your guests, it's important to establish clear processes for managing bookings, communicating with guests, handling check-in and check-out, and cleaning between stays. You may also want to consider investing in technology solutions like keyless entry systems and automated messaging to make your business more efficient4.

6. Comply with all applicable taxes and regulations: As an STR operator in Indianapolis, it's your responsibility to collect and remit all applicable taxes, including state sales tax, county innkeeper's tax, and local property taxes. You must also comply with all city-wide regulations related to occupancy limits, minimum stay requirements, and prohibited activities. Failure to comply with these obligations can result in significant fines and penalties234.

7. Promote your listing and encourage positive reviews: To attract a steady stream of bookings and build a positive reputation in the market, it's important to actively promote your listing and encourage satisfied guests to leave positive reviews. This may include running targeted marketing campaigns, offering special promotions or discounts, and providing exceptional customer service to ensure that your guests have a memorable stay4.

8. Consider partnering with a property management company: If you're new to the short-term rental industry or don't have the time to manage your property on a day-to-day basis, you may want to consider partnering with a reputable STR property management company in Indianapolis. These companies can handle all aspects of your rental business, from listing creation and guest communication to cleaning and maintenance, allowing you to earn passive income without the hassle of being a hands-on operator15.

Find your perfect Airbnb investment in our in-depth purchasing guide for Indianapolis breaks down the top neighborhoods and provides expert tips for buying the perfect short-term rental.

Or if you're looking to explore accommodation options beyond Indianapolis , be sure to check out our comprehensive guide to short-term rentals in Indianapolis .

Who to contact in Indianapolis about Short Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations or zoning requirements in Indianapolis, there are several key resources available to help you:

  • Indianapolis Department of Business and Neighborhood Services: This department is responsible for enforcing the city's short-term rental regulations and can provide information on licensing requirements, inspections, and compliance issues. You can contact them by phone at (317) 327-8700 or by email at bnsenforcement@indy.gov2.
  • Indianapolis Department of Metropolitan Development, Division of Planning: This division is responsible for administering the city's zoning ordinance and can provide information on zoning classifications, permitted uses, and any special exceptions or variances that may be required for short-term rentals. You can contact them by phone at (317) 327-5155 or by email at planning@indy.gov2.
  • Indiana Department of Revenue: For questions related to state sales tax and other tax obligations for short-term rentals, you can contact the Indiana Department of Revenue2.

In addition to these official resources, there are also several online communities where Indianapolis STR hosts share information and advice. These include forums on BiggerPockets, a popular real estate investing platform, and local Facebook groups for Airbnb and VRBO hosts. By connecting with other operators in the market, you can stay up-to-date on regulatory changes, get tips on best practices, and troubleshoot any challenges you may encounter101112.

What do Airbnb hosts in Indianapolis on Reddit and BiggerPockets think about local regulations?

On forums like Reddit and BiggerPockets, Indianapolis Airbnb hosts share a range of experiences and opinions on local short-term rental regulations. Here are some common themes that emerge from these discussions:

  • Many hosts find the city's rules to be manageable compared to other markets, though some express frustration with the permit process and restrictions on where STRs can operate. For example, one host on BiggerPockets noted that while the licensing requirements can be time-consuming, they are ultimately achievable for most operators who are committed to running a legitimate business101112.
  • Some hosts have formed advocacy groups, like the Indiana Short-Term Rental Alliance, to lobby for fair regulations and promote responsible STR ownership. These groups work to educate policymakers and the public about the benefits of short-term rentals and to ensure that the industry is not unfairly targeted by overly restrictive regulations10.
  • Hosts consistently emphasize the importance of understanding and complying with local rules to avoid penalties and maintain positive relationships with neighbors and city officials. Many operators stress the need to be a good neighbor and to take proactive steps to address any concerns that may arise from nearby residents1011.
  • While opinions vary, many hosts believe that Indianapolis remains a viable market for short-term rentals despite the regulations. They cite strong demand from travelers, particularly those visiting for events like the Indy 500 or NCAA tournaments, as well as the city's business-friendly environment and relatively affordable real estate prices1012.

Overall, the sentiment among Indianapolis STR hosts on these forums is that while the local regulations can be challenging at times, they are not insurmountable for operators who are committed to running a professional and compliant business. By staying informed about regulatory changes, connecting with other hosts in the market, and prioritizing positive community relations, many hosts have found success in this growing industry.

In conclusion, starting a short-term rental business in Indianapolis requires careful planning, attention to local regulations, and a commitment to responsible hosting. By obtaining the necessary permits, complying with tax obligations, and adh.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.