New law prohibits banning vacation rentals
A dreamy St. Germain vacation offering from VRBO
In the onslaught of local governments attempting to ban the use of personal residences for short-term vacation rentals of less than 30 days, the right-to-rent law protects homeowners who wish to rent their homes or other vacation-friendly properties for seven day stays or longer.
The ability to rent is particularly advantageous in resort areas for those wanting to purchase a second home who wish to use rental income to help finance expenses.
According to an article published on the Wisconsin Realtors Association’s (WRA) website, “lawmakers feared these bans would negatively impact both the tourism industry and second-home real estate markets. The new law encourages local governments to regulate short-term rental activity rather than ban the activity altogether.”
The new law also allows for the communities to set standards governing the ability to rent, however, not to effectively ban by excessive regulations that might hinder such rentals.
Acknowledging that neighboring homeowners have the right to protection of their right to privacy and noise limitations, the law does allow towns and other governing community bodies to regulate such issues.
The law also fine tunes the language to define residential versus commercial rental use. A property can be available for a maximum of six months with a minimum of a seven-day rental. Anything less or more is considered a commercial rental. Local governments, towns, cities, counties, etc. can regulate but cannot ban short-term rentals of seven days or more in any area of the community.
Local communities can require local permits that are not overly restrictive. The permits are to be, “more administrative in nature and contain objective and reasonable standards.” Privately imposed deed restrictions and subdivision rules may still prohibit vacation rental all together or impose rules and regulations on property rental.
Another area a local community can regulate rentals is in conjunction with the 180-day maximum rental periods. Communities may require, or not, that the 180-day rental period be continuous.
There is also the state licensing and inspection requirements, which are not new. These are arranged by the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). This license is required for all vacation properties that are rented out for more than 10 nights in a 12-month period. A property owner may rent up to four units under each tourist rooming house license. The annual license is $110.
There is also a one-time inspection fee of $300 that is part of the licensing process. The state sends a sanitarian to make sure the property meets health and safety regulations.
And of course, there are taxes to be collected. For any property where the annual revenue is equal to or greater than $1,000, there is a state sales and use tax of 5% and .5% county tax. This applies to all third parties that rent short-term rentals, such as AirBnB, VRBO, and local property management companies.
For communities that charge a local room tax, these also must be collected and sent to the appropriate local government body. Several townships across the Northwoods do have a room tax in place to help fund their marketing efforts.
Several local vacation property management companies are here to serve vacation home owners who would like to rent their properties while they are not using them. We have seen this trend grow in the area as rental management companies take on the challenge of marketing vacation rentals, cleaning between stays, and handling inquiries and reservations, and financial reporting for owners throughout the year. Contact one of our sales professionals if you are thinking of buying a vacation rental property. We'll help guide you through the process and get you in touch with the best rental managers in the area.
To learn more details about this new law, visit the WRA website or the Wisconsin Law Library website with links to local governments ordinances governing vacation rentals, DATCP, and more.