While both guests and hosts should take the time to learn about regulations for short-term rentals, much of the burden falls upon local hosts. As a host, you could get fined by authorities or find that your insurance won’t cover you for losses if you don’t take the time to understand your obligations. If you hope to rent rooms through room-sharing services, such as Airbnb to earn extra money, be careful that you don’t actually lose your profits because of penalties or other problems.
Examples of Local Rules You Could Violate With Short-Term Rentals
Most of the famous cases of hosts getting slapped with penalties have happened in large cities. However, even hosts in small- to medium-sized cities in states like Wisconsin should know how their state and city view these arrangements. For instance, several Wisconsin regulatory authorities have worked together to publish “A Guide for Short Term Renters,” and you should take some time to find and review this information.
Consider some examples of the information that you can find in this free guide:
- Licenses: Wisconsin expects a variety of different kinds of lodging facilities to have a current license. While many people think this only includes hotels or motels, it actually extends to bed and breakfast or rooming house facilities. Before you start renting, you might send an email to the DATCP to see if the rules apply to your Wisconsin property and rental arrangement. If they do, you may need to invest in certain measures to comply with these licensing requirements.
- State and local taxes: Hotels and motels charge sales tax on their rented rooms. If you earn more than $1,000 a year with short-term rentals, you may also need to send the government their share. Besides complying with state rules, you should also see if any local room taxes apply. For instance, you may need to check door locks and fire extinguishers for compliance with licensing regulations.
Complying With Wisconsin Homeowners Insurance Policies
Besides making sure you comply with laws, you also need to make sure you comply with the terms of your current insurance policies. In fact, the state-produced document says that the first step any prospective short-term renter should take is to contact their insurance company.
If you only plan to rent a room once or even once a year, your insurer may waive any restrictions; however, if you make this activity into a consistent business, your insurance company will almost certainly ask you to upgrade your coverage. In any case, you’re taking a big risk if you don’t contact your insurance agent to let them know that you plan to open your home to paying guests.
Some insurers can add this kind of protection to your current policy, but others may also you to buy a stand-alone policy for paying guests. These days, a few homeowners insurance companies even offer customized policies that you can buy for 30 days at a time when you expect to act as a room-sharing host.
Get Help, So You Don’t Break Wisconsin Rules
Your local insurance agent can help you protect yourself in many ways. Before you decide to join a room-sharing site as a host, you should speak with an agent at Couri Insurance Agency about the things you need to do to avoid problems with either regulators or insurance companies. If you get caught violating any laws or policy terms, you could lose all of your profits because of damages or fines.
