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Coach1310

Vacation Home Rentals

15 posts in this topic

What are your thoughts? Taken from the St. Cloud Times

House rentals spur regulation

RICHMOND — Jim DeRose has owned a ma-and-pa resort on the Chain of Lakes for almost 30 years — long enough to know that some potential customers are looking for something different.

He recently bought a three-bedroom house next to Riverside Resort and is renting it out as a vacation home to people who want their own beach, garage and a bit more privacy than his traditional cabins offer.

DeRose isn’t alone. Renting out homes to vacationers by the week or weekend is a growing industry across the United States, but particularly in Minnesota’s lake areas.

There are 200 homes for rent on Lake Vermillion in northeastern Minnesota, said DeRose, who also serves on the board of directors for the Minnesota Resort and Campground Association.

Web sites that advertise vacation home rentals show hundreds of listings in the state.

“As far as Minnesota is concerned, it’s exploded,” DeRose said. “It’s actually its own business now.”

Resort owners like DeRose say it’s not fair that owners of vacation homes don’t have to meet the same standards as resorts and hotels or pay the same taxes. Some homeowners also have voiced concerns about homes in their neighborhood that have become party houses with absentee landlords.

Stearns County recently became the first county in Minnesota to adopt rules for property owners who rent their homes or cabins for fewer than 30 consecutive days. The ordinance is expected to become a model for other counties.

“We learned that this was not just a Stearns County issue. It was a statewide issue,” said Don Adams, county environmental services director.

Seeking fairness

Stearns County started getting complaints about three or four years ago from neighbors fed up with loud parties and commotion at rented homes, Adams said.

Under the county’s rules, renting homes for short-term stays wasn’t allowed. But a look at the newspaper classified ads or an online Google search shows that vacation homes are definitely being rented in Stearns County, Adams said.

“With the current state of the economy, people with second homes are looking for creative ways to maintain that second home,” he said.

Paul Bugbee, who owns Bug-Bee Hive Resort near Paynesville, said he knows of two vacation rental homes on Lake Koronis. As property values and taxes rise and make it more difficult to own lakeshore property, he expects to see more.

“It’s a nice way for people to get into owning their own lake place and being able to generate some revenue from it to help with some of those expenses,” Bugbee said.

Just how many there are — or where — isn’t clear. Some lake-rich counties such as Cass and Crow Wing appear to have hundreds, Adams said. But off-shore homes and cabins also are popular for scrapbooking weekends and other get-togethers.

Resort owners struggling against rising property taxes and the decline of their industry grumbled that those renting vacation homes faced an unfair advantage. They could charge lower prices because they didn’t have to make sure their septic system was up to code, have their drinking water tested regularly or meet other standards.

“We’re just basically looking at a fair playing field,” Bugbee said. “I guess if other people are going to be in the business, they ought to abide by the same rules.”

Safety, health

A committee made up of county staff and planning commission members, resorters and others studied the issue and drafted an ordinance, which the county board adopted in June. It applies only to homes outside city limits.

The ordinance requires that anyone who wants to rent out a home must have an interim-use permit from the county planning commission. Such permits are typically issued for 10 years, Adams said.

“Licensing puts everybody on the same page,” he said. It also gives anyone who would be affected by the rental — such as neighboring residents — a chance to voice input at a public hearing.

The new rules also limit the number of guests who can stay at a rental home to two people per bedroom plus two additional people per building, or no more than 12 total.

And because most vacation homes aren’t connected to a community sewer system, there are concerns about whether individual septic systems are designed to handle additional people. So the ordinance also restricts the number of guests based on the size and capacity of the sewage treatment system, Adams said.

The home must be inspected annually, and the water must be tested to make sure it’s safe to drink, he said.

Finding property owners who are renting their vacation home is tricky. The county has sent letters to people with homes listed in the classifieds or online, outlining the steps they need to take to comply with the new ordinance, Adams said. But he isn’t expecting overnight success.

“We can’t expect that everybody is going to flood through our doors within the first two months of this and come into compliance,” he said.

Model for state

Stearns County’s ordinance comes as others in the state are looking for solutions.

Last year, state lawmakers ordered Explore Minnesota Tourism to lead a study of vacation home rentals, including tax, health and safety issues. A task force will report to the Legislature by Jan. 15, said Colleen Tollefson, Explore Minnesota’s manager of industry relations.

The study will try to gauge how many of Minnesota’s vacation homes are being rented and what rules other states have, Tollefson said.

It’s not clear whether any new regulations are necessary, she said. In some cases there might just need to be clarification of what rules already apply, Tollefson said, such as when a homeowner must pay sales tax on a rental property.

“What we really want to accomplish is to allow them to operate but within a level playing field, and make sure it’s safe for consumers,” she said.

Linda Crippes served on the committee that drafted Stearns County’s ordinance and was one of the first in the county to get a vacation home rental license.

Crippes rents out her mother’s home next to hers on the Chain of Lakes near Richmond. It allows her mother, who lives in a nursing home, to still enjoy the property.

Most people renting vacation homes take good care of the property and are choosy about to whom they rent, Crippes said. Her renters have included church groups, teachers, doctors and yoga enthusiasts.

“We don’t want it to be the frat-boy flop house,” Crippes said. “They’re normal people who want to spend their vacation dollars in Stearns County, which I think is just a big plus for all of us.”

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Two words, Big Brother. The aren't getting "Their fare share" and want a piece of the pie. Property taxes aren't enough so why not get a piece of what they make off of renting it. How much is this task force gonna cost? Probably more than it will generate.

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I'm with the resort owners on this even though they tend to find something to complain about when their business slows because of gas costs, bad weather or school starting dates (my kids start four days before the local publics this year).

The same regulations and tax laws that affect the resorters should also apply to those who rent their homes to vacationers. It's no different than ordinances designed to keep your neighbors from turning the block into a dump.

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Two words, Big Brother. The aren't getting "Their fare share" and want a piece of the pie. Property taxes aren't enough so why not get a piece of what they make off of renting it. How much is this task force gonna cost? Probably more than it will generate.

Well said. smile

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If they are out there in the open advertising for business, then I think they need to comply with state regs.

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Agreed Dtro, but say I have a home and I just rent it say one weekend every month or two just to help with mortgage or what not, I don't see any harm in that. Say you put it on Craig's List for the one weekend you aren't using it. If you rent it three weeks out of a month, then it should be concidered a business.

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In the eyes of the law, just renting it once makes it a business transaction.

Bob

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Wonder what kind of response we would be getting if I owned 200 acres and opened it up to hunting (like a game farm) but did it only a couple times a year. Would the game farms not be mad?

Or a "auto shop" in my garage? Eventually there will be a hard law/policy against this. It's only fair.

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Earned income is taxable.

This is true, but how many guys work on the side for cash and never report it.

Also, everytime you buy or sell something from a private party.... are you paying your tax on the item???

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I agree Coach, how about all the garage sales? Do those get reported as income?

I have a rental property so know a little how it works. I'll tell you though that if you only rent it a few times a year and claim the income, you would actually be better off. You could deduct all your interest, show a loss for the house and a lot of other things. IMO the gov't will get less if you get too worried about someone who rents their house out for a weekened once in a while.

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Granted people do things for cash and never report it but they usually won't advertise it.......now if it is your buddy wanting to use your cabin and gives you $200 for the use then that would be a better comparison to the guy doing cash jobs not a guy advertising for rent then never claiming it as income.

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I guess I don't understand how "advertising it" makes any difference. On one hand I think the new regs are probably a good thing just to make sure there is some regulation, but then on the other I think "Why does everything have to be regulated?" I guess the good ol government has got me brainwashed!

And as far as advertising, last I checked a lot of garage sales and personal item sales were advertised, does that make it different?

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I guess I don't know the laws on taxing and such things as garage sales and if the income received is suppose to be reported or not......I would imagine that it is suppose to be reported but isn't but how do you make sure they report it keep the paper clipping and the irs match the returns to the addresses and see who reported and who didn't....but that would be an overall waste for the taxes taken in. Just like most waitresses that I know don't report all the tips they take in and I would guess the IRS knows about that but how to regulate it?

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I think it works a lot like lawsuits. It can cost so much to fight it that it's just less costly to settle out of court.

At one time I heard that the underground commerce is estimated at roughly 30%. Basically any time money exchanges hands or work is traded, it is taxable but it would cost so much more to force the issue than what is lost that it goes unchallenged for the most part.

Bob

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