Here are some facts you need to consider when starting a Short-Term Rental (STR) business in Pulaski County, KY. It will help you understand all the license, tax and zoning ordinances and regulations that go together with hosting a short-term rental. This guide is not intended to supplement any information/guidelines that may have been provided by a short-term rental company. This guide is not intended to be a substitute for legal advice.
What is a short-term rental? Airbnb, Flip Key, HomeAway, Expedia, Vacation Rental by Owners (VRBO) and any other type of rental that meets the definition below are all considered short-term rentals. A short-term rental is defined as… A dwelling, unit or room that is rented, leased, or assigned for a tenancy of less than thirty consecutive days in duration. A short-term rental may be owner occupied or non-owner occupied. A short-term rental does not include extended stay lodging, 30 days or more.
1. Get a business permit (aka occupational license)
Anyone that opens a business in Pulaski County must obtain a business permit (also known as an occupational license). You will need to apply for a business permit, that application can be found at http://tax.pulaskigov.com/. If you are in the Somerset city limits, an application for that license can be found at https://www.cityofsomerset.com/city-clerk/#taxes.
2. Taxes
PC Ordinance 150.1 creates a transient room tax (lodging tax) at the rate of 3 percent of the rent, on every occupancy of any suite, room, rooms, cabins, lodgings, campsites, or other accommodations charged by any hotel, motel, inn, tourist camp, tourist cabin, campground, recreational vehicle park, or other place in which accommodations are regularly furnished to transients for a consideration or by any person that facilitates the rental of the accommodations by brokering, coordinating, or in any other way arranging for the rental of the accommodations for consideration.
A. Paying taxes:
As a short-term rental host, you are required to pay taxes on the rental income you receive. These taxes include:
· 3% local Pulaski County transient room tax
· 1% state transient room tax
· 6 % sales tax
· 4% City of Somerset Transient tax (if rental is in located in City of Somerset limits)
· 3% City of Burnside Transient tax (if rental is in located in City of Burnside limits)
Note: House Bill 8 took effect on January 1, 2023, that states that rental platforms such as Airbnb, VRBO, Expedia and those websites alike should be remitting these taxes to our office on your behalf. Airbnb is not complying as of January 1, 2023, and you will be required to remit the local taxes to the appropriate offices.
B. Occupational Tax- Any earnings you receive from rentals may be subject to the local net profits occupational license fee. You will find information about this when you register for your business permit (step 1).
3. Transient Tax ID Number
Any short-term rental will need to have a transient tax id number along with a tax certificate issued by the Somerset-Pulaski Convention and Visitors Bureau. You will need to obtain these items by filling out the Transient Room Tax Questionnaire and Registration, which can be found on our website here. Once we receive this back, we will issue a Tax ID number and certificate that you will need to keep on file for your records. The CVB collects a transient tax from all lodging businesses. This tax is assessed at three percent (3%) of your gross room rentals and is used to promote the Somerset-Pulaski County area to tourists nationwide. On the twentieth of each month, you will be mailed a transient tax form to complete and send back with your check for three percent (3%) of your monthly gross rentals, if not paid through your online booking platform. This payment is due before the 20th of the following month. For example, the Transient Tax Statement mailed to you on March 20th is due with payment by April 20th. Pulaski County Ordinance 150.1.
4. Zoning ordinances and regulations
Questions about zoning ordinances? Please contact Planning and Zoning at 606.679.6366.
5. Other considerations as with any business, there are other considerations you should be aware of when operating a short-term rental. You should consider consulting with a legal advisor for assistance with any legal issues that may be involved with this type of business. Some of these considerations include:
A. Insurance: Review your insurance policies and consult with your agent to make sure that they cover injuries, accidents or losses arising from the use of the property by renters.
B. For renters: get your landlord’s approval If you rent your apartment, townhouse, home, etc., check with your landlord before using it as a short-term rental. Many rental properties are not open to short-term subleasing/renting. If short-term leasing/renting is allowed, be sure to get the agreement in writing from the property owner so that there are no disputes down the road.
C. Restrictive covenants: Review your property deed for restrictive covenants. Owners who live in a development or subdivision with a deed of restriction covenant should determine if the covenant regulates rental activity.
D. Occupancy agreements: This is optional but consider seeking legal advice to determine if a different form of ownership is needed to provide anonymity or protection from individual liability and to prepare an occupancy agreement specific to the arrangement the owner wishes to establish with the renter.
If you have any questions, please contact our office at 606-679-6394 or visit us at 522 Ogden St. Somerset, KY 42501.
Disclaimer: Every attempt has been made to ensure that the information contained herein is complete, up-to-date and accurate. However, this does not release the owner or host from their obligation to verify the information and the obligation to comply with the regulations listed above and any other applicable rules or requirements, governmental or private. This document was created in April 2024.
