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New York State Short Term Rental Laws & Airbnb Regulations

New York State is a great short-term rental market outside of NYC.

New York State Short Term Rental Laws & Airbnb Regulations

Key takeaways

New York State Short Term Rental Laws & Airbnb Regulations

Home to the most visited US city and the 7th most visited city worldwide - NYC, New York State seems to have everything that’s required to make for the perfect location for investing in Airbnb. However, because of the influx of domestic and international tourists and the disturbance that they have caused to the housing market and local communities, it has forced New York authorities to impose severe restrictions on vacation rentals on both the state and the city level. Indeed, New York State short-term rentals are arguably the most restrictive nationwide.

Still, there are profitable opportunities to benefit from an Airbnb New York investment property as long as you are familiar with the legal and regulatory environment and know how to navigate it. In this article, we will introduce you to the statewide New York vacation rental laws and the rules governing five of the top tourist locations there. You will learn everything you need to know in order to run a legal Airbnb business in New York State.

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New York State’s Definition of a Short Term Rental

New York State defines short-term rentals as the renting of dwellings for less than 30 consecutive days. However, for tax purposes they are defined as stays of fewer than 90 consecutive days.

The primary law which regulates New York short-term rentals at the state level is the New York State Multiple Dwelling Law. This law distinguishes between two main types of multiple dwelling types:

  • “Class A” multiple dwelling includes tenements, flat houses, maisonette apartments, apartment houses, apartment hotels, bachelor apartments, studio apartments, duplex apartments, kitchenette apartments, and all other multiple dwellings except “Class B” (defined below), which basically means all residential multifamily buildings. “Class A” multiple dwellings are allocated for permanent residence only, which refers to occupancy of 30 consecutive days or more. Short-term rentals are prohibited.
  • “Class B” multiple dwelling includes hotels, lodging houses, rooming houses, boarding houses, boarding schools, furnished room houses, lodgings, and other dwellings designed as private dwellings but occupied by one or two families with five or more transient boarders, roomers, or lodgers in one household. “Class B” multiple dwellings are occupied transiently, as temporary lodging with or without meals.

The Multiple Dwelling Law basically means that New York short-term rentals in residential multifamily buildings - “Class A” are not allowed. However, it might be possible to rent out a room within such a dwelling if the permanent resident is present throughout the stay and paying guests have access to all rooms in the apartment. Owner-occupied short-term rentals might be an option.

Starting a Short Term Rental Business in New York State

Starting a New York Airbnb business does not cause any specific procedures as short-term rental licenses and permits are issued at the city/town level. So, all that future Airbnb hosts need to do is to follow through the standard procedures for starting a business in New York State. The good news is that New York is open for businesses and has established a straightforward process for getting started.

The steps include:

  • Forming an entity. You don’t need to set up an LLC in order to operate a vacation rental in New York State.
  • Getting a Federal Tax ID, also known as an Employer Identification Number (EIN). This is done on the IRS website.
  • Registering as a New York State Sales Vendor by applying for a sales tax Certificate of Authority at the NYS Department of Taxation and Finance.
  • Setting up a NY.Gov ID.

Short Term Rental Licensing Requirement in New York State

New York does not have statewide requirements for short-term rental licenses and permits. This is like the regulations in most other US states, like the California, Colorado, and Hawaii short-term rental laws, to name a few. A major exception to this general rule are the Florida short-term rental laws, where a license needs to be obtained from the state authorities.

Like most states, New York has left the regulation of the vacation rental industry to local county and city authorities. As a result, to counteract the negative impact of the extreme growth of the Airbnb New York industry on housing availability and affordability and on communities’ safety and lifestyle, most cities and towns across the Empire State have enacted strict requirements for licensing vacation rentals.

Required Documents for New York State Short Term Rentals

Short-term rental property owners in New York State do not need any special documents when setting up their business. The documentation they require is related to forming a legal entity, getting an EIN, and getting a state sales tax license. The needed documents vary depending on the type of legal entity, so investors need to check the requirements for their chosen business model.

In addition, they will need various documents in order to apply for a short-term rental license or permit in their city. The necessary documents are different by city but include an application form, proof of ownership/permanent residence, site plan, floor plan, proof of safety regulations compliance, contact person information, and others.

New York State Short Term Rental Taxes

Operating an Airbnb New York rental business requires paying several different taxes. These include:

  • New York State sales tax at a rate of 4%
  • Local sales tax
  • Local lodging/hotel/occupancy tax

The local taxes vary by county and the city. Importantly, for tax NY short-term rentals are considered those rented out for less than 90 consecutive days.

In most cases, vacation rental listing platforms like Airbnb and Vrbo do not collect and remit lodging taxes on behalf of hosts throughout New York.

New York Vacation Rental Tax Deductions

Per federal regulations, if you rent out a second home for 14 or more days in a calendar year and use it for personal reasons for 14 or fewer days in a calendar year, you qualify for tax deductions.

In specific, you can claim the following short-term rental tax deductions:

  • Mortgage interest
  • Mortgage insurance premium
  • Property tax and other taxes
  • Depreciation
  • Property maintenance
  • Utilities
  • Guest supplies
  • Cleaning, accounting, legal, and other business services
  • Costs for travel related to running your rental business
  • Home office expenses

It’s important to take advantage of all available tax benefits because this helps you enhance your cash flow and maximize your Airbnb cap rates.

Statewide Short Term Rental Rules in New York State

According to the New York State Multiple Dwelling Law, short-term rentals are illegal in “Class A” multiple dwellings, which includes virtually all residential multifamily buildings. Some exceptions like owner-occupied rentals of part of a property might be workable, as long as guests have access to all rooms in the dwelling and there are no internal door locks.

Airbnb rentals are legal in “Class B” multiple dwellings, which include hotels and other temporary residence buildings.

Although New York cities and towns have enacted their own regulations to curtail the further negative effect of the short-term rental industry, these statewide laws have to be applied in all locations across NYS.

Short Term Rental Rules By New York State City

Besides the statewide rules, most New York cities and towns have introduced their own short-term rental laws by city in order to take into consideration the local housing market and community needs and interests. Overall, cities across New York State have restrictive regulations, similar to the California short-term rental laws.

New York City Short Term Rental Laws

New York City Administrative Code defines a short-term rental as a rental of a dwelling unit or a part of it or housing accommodations within a building for occupancy of fewer than 30 consecutive days. As per the New York State Multiple Dwelling Law, renting out an apartment in a “Class A” multiple dwelling, which refers to a building with three or more permanent residential units, is not allowed for less than 30 consecutive days.

In NYC it is prohibited to rent out an entire apartment or home on a short-term basis, so non-owner occupied short-term rentals are not workable. Hosts must be present throughout short term guest stays and can host only two paying guests at a time. Every guest needs to have free, unobstructed access to every room and every exit within the apartment. Internal doors cannot have key locks as they can create barriers in case of emergency.

New York City short-term rental properties need to be maintained in a safe and code-compliant condition.

A new Short Term Rental Registration Law will go into effect in January 2023 in NYC. According to the new law, vacation rental hosts will need to register with the City, and they will prevent short-term rental platforms like Airbnb from processing transactions unless the registration information matches the City database. This does not refer to “Class B” multiple dwellings and “Class B” multiple dwellings units within mixed-use buildings.

Being issued a short-term rental registration or renewal requires:

  • The applicant to be a natural person who is a permanent occupant and is the owner or a tenant who certifies that the lease agreement does not prohibit applying for a short-term rental registration.
  • The applicant to describe the units that short-term occupants will be allowed to occupy.
  • The applicant certifies that they understand and agree to comply with applicable codes, resolutions, laws, and other legal requirements.
  • The administering agency determines that occupants of the dwelling unit will not be endangered.
  • The administering agency to verify the occupancy classification of the building or the unit.
  • The administering agency verifies that the building does not appear on the prohibited buildings list.
  • The applicant provides booking service information for all listings on a booking service.
  • Payment of application or renewal fee ranging between $20 and $100.

Illegal operations of New York City short term rentals will face a fine from $1,000 to $7,500.

Besides state sales tax, NYC hosts have to pay 5.875% City hotel room occupancy tax, $1.50 per unit per day City hotel unit fee, and 8.875% City sales tax.

Considering the existing New York short-term rental laws, the Big Apple is not a good market for buying a vacation rental property. Although demand is guaranteed to be high because of the large number of tourists visiting NYC each year, non-owner occupied short-term rentals are not allowed.

Lake Placid Short Term Rental Laws

The Village of Lake Placid and the Town of North Elba share the same short-term rental laws and regulations. The two entities define a short-term rental as a dwelling unit rented in whole or in part for less than 30 consecutive nights. This includes any residential building, apartment, single family dwelling, two family dwelling, condo, townhouse, guest house, cottage, cabin, or accessory dwelling as well as rooming house and boarding house but excludes timeshares.

According to the Lake Placid short-term rental laws, starting an Airbnb business requires a short-term rental permit.

Applying for a permit requires:

  • Information about all property owners.
  • Signed and notarized affidavit by the property owner(s) certifying compliance with requirements related to smoke detectors, fire extinguishers, a carbon monoxide detector, exterior doors, electrical systems, fireplaces, and others.
  • Statement of the number of rooms meeting standards.
  • Statement of the number of parking spaces meeting standards.
  • Site plan.
  • Septic inspection report issued and dated within 90 days if the property is served by a private septic system.
  • Contact person’s information who is to be within 60 minutes by car and be available 24/7.
  • House number visible from the street.
  • Provisions made for weekly garbage removal.
  • Bedrooms being at least 70 square feet in size.
  • Applicant statement that they comply with all standards and regulations.
  • Registration with the Occupancy Tax Program administered by the Essex County Treasurer’s Office.
  • Permit fee. Owner-occupied short-term rentals rented out for up to 14 days in a calendar year are exempt from paying this.

They can issue only one permit per property, so if a property has over one dwelling unit, they can permit only one of them for use as a short-term rental property. Permits are valid for two years and are not transferable to new property owners.

In the Village of Lake Placid, a short-term rental property can be rented out for only 90 days per calendar year, while this limit extends to 120 days for properties outside the corporate limits of the Village.

Failure to adhere to vacation rental regulations in Lake Placid will cause a fine of $350-$1,000, while a second offense will be subject to a fine of $1,000-$3,000.

Most recently, in October 2022 the Village of Lake Placid and the Town of North Elba introduced a moratorium placing a hold on all new applications for short-term rental permits.

Meanwhile, a special committee has been formed to study the local Airbnb market and propose changes to the existing law. The committee has recommended prohibiting unhosted short-term rentals in residential districts, with some exceptions, and allowing unhosted short-term rentals in the village center, the gateway corridor, the Old Military Road corridor, and the rural countryside district. The committee has proposed hosted short-term rentals, where the host is on site, to be allowed anywhere in Lake Placid and North Elba. They have recommended to lift the limit on the permitted number of days for renting out per year.

The local occupancy tax equals 5%, while the Lake Placid sales tax amounts to 8%.

The situation with Airbnb Lake Placid is dynamic, and new changes can be expected to take place soon. Thus, investors should monitor the most up-to-date Airbnb laws and regulations before buying a vacation rental property in this part of New York State.

Albany Short Term Rental Laws

There are no Albany short-term rental laws at the city level. This means that the rules available regulate Airbnb Albany rental properties at the New York State level.

Albany County does not collect a hotel occupancy tax from short-term rental property owners or online marketplaces. There has been discussion among the local authorities to collect this tax for the economic benefits.

Before deciding on buying an Albany vacation rental, we advise investors to check for new laws. Cities across New York State are reviewing existing short-term rental laws and introducing new ones in response to the impact of the quickly spreading Airbnb industry.

Rochester Short Term Rental Laws

The City of Rochester in New York State does not regulate short-term rentals at the local level. This means that Airbnb properties need to comply with the rules imposed by statewide laws and codes.

In terms of taxes, Rochester short-term rental property owners need to pay a 6% hotel room occupancy tax to Monroe County besides an 8% sales tax: 4% to New York State and 4% to Monroe County.

Because of the overall lack of vacation rental rules, investing in an Airbnb property in Rochester could be a good idea.

Buffalo Short Term Rental Laws

The City of Buffalo Common Council enacted a new shared housing ordinance in October 2019, which regulates short-term rentals. According to the ordinance, property owners have to register at the Department of Permits and Inspection Services through a business license application.

The City of Buffalo differentiates between two types of short-term rentals:

  • Owner occupied short-term rental: This refers to both single and multifamily properties outside the N-4-30 and N-4-50 zones. They prohibit short-term rentals in apartment buildings and townhouse condos whose HOAs prevent this. The following fees apply: $25 or $50 per year for joining the registry, $150 in the first year and $75 in subsequent years for certificate application, and $75 for property inspection.
  • Non-owner occupied short-term rental: They face more regulations in the N-4-30 and N-4-50 zones, and a special permit is required for properties in the N-2R and N-3R zones. The following fees apply: $25 or $50 per year for joining the registry, $250 in the first year and $150 in subsequent years for certificate application, and $75 for property inspection.

Buffalo short term rentals in the N-4-30 and N-4-50 - comprising single family residential homes - zones are not entirely prohibited, they require a zoning variance which means a public hearing and input from the community.

Submitting a business license application for an Airbnb property in Buffalo requires:

  • Government-issued photo ID
  • Two pieces of mail showing residency
  • Exit plan
  • Application form
  • License affidavit
  • Signed Council Notification form
  • Short-term rental dwelling information
  • Owner’s information
  • Agent’s information
  • Second local contact person’s information
  • Presence of safety items
  • Application or renewal fee

Buffalo short-term rental property owners need to pay a 3% Erie County hotel tax and a 8.75% sales tax combining the New York State rate and the Erie County rate.

Operating a vacation rental in Buffalo is workable, but it faces zoning restrictions. Before buying an investment property to rent out on a short-term basis, investors need to check the zoning regulations of the property’s exact location.

Takeaway

New York State looks like the ideal location for starting a vacation rental business. The state attracts millions of tourists and other visitors every year, and many prefer to stay in comfortable and affordable Airbnbs rather than traditional hotels. However, New York State short-term rental laws by city are some of the strictest and most restrictive nationwide. Thus, investors need to study the local regulations carefully before buying a vacation rental in any of NY cities or towns.

*If after reading this article, you need help, keep in mind that Awning offers full-service vacation rental management. This includes navigating the legal work and assuring compliance with local legislative requirements, for an industry-low fee of 15% of revenue.

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