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Snare Bnb: Learn Local Rules to Avoid Room-Rental Woes

By Ephrat Livni, Esq. on September 09, 2015 | Last updated on March 21, 2019

Airbnb is all the rage for homeowners. If you have some extra space in your house, maybe you're ready to take advantage of the room rental service. Having a room to spare, however, does not make you a hotelier, and you will have to investigate local rental and hospitality industry rules to avoid legal woes.

As room-rental apps rise in popularity, municipalities are increasingly cracking down on individuals turning their homes into businesses. Find out what you need to know about local rental taxation and regulation before your money-making scheme ends up costing you.

Snare BnB
While many cities are still sorting out how to respond to the rise in Airbnb rentals, some have taken action already. Unwary homeowners are getting caught in the snare.

In August, a San Diego woman using Airbnb was fined over $22,000 after neighbors complained about her revolving door. The city investigated and ordered her to cease operating an unlicensed bed and breakfast last year. Although she argued that the regulations did not apply to her as she provided guests with no morning meal -- half of the bed and breakfast formula -- San Diego officials were was unconvinced and ordered imposition of a fine calculated at a rate of $200 per day per infraction.

Regulators React to Apps
San Diego's actions signal what is likely coming across the country. The City Council of Prairie Village, Kansas on Tuesday agreed in principle to require residents using Airbnb to register with the city and pay an annual rental license fee of $77 after some local homeowners complained about neighbors renting out spaces. Meanwhile, Boston is considering regulating rentals arranged through the online application, although it instructed authorities in the Inspectional Services Department not to fine residents using homesharing services yet.

"Right now, this is a completely unregulated industry," state Representative Aaron Michlewitz told The Boston Globe. "People are taking advantage of the situation." He also expressed concern that some landlords and investors are transforming traditional long-term rental properties into spaces leased short-term in the hope of turning a greater profit. Airbnb's spokesman said in a statement that it supports regulation and taxation, making it "easier for regular people to share their homes, pay their bills and contribute to their community."

There is no single approach to homesharing or room-rental services; regulations vary greatly across the country. The only way to know what will work for you is to research local rules. The advance footwork could end up saving you headaches and thousands of dollars.

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