Montgomery county room rent application

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What are Short-Term Rental (Airbnb, VRBO) Regulations in Montgomery County, Maryland?

Montgomery County, Maryland has specific regulations governing short-term rentals like those listed on Airbnb and VRBO. A short-term rental is defined as renting out an entire home or a room within a home for less than 30 consecutive days.

Starting a Short-Term Rental Business in Montgomery County

To legally operate a short-term rental in Montgomery County, the property must be the owner's primary residence. The owner can only use one property as a short-term rental.

Before starting, owners must:

There are several restrictions on short-term rentals in the county:

  1. Maximum of 6 adults per stay, with a maximum of 2 adults per bedroom
  2. When the owner is absent, rentals are limited to 120 days per calendar year
  3. Accessory Dwelling Units (ADUs) may not be used as short-term rentals

Short-term rentals are prohibited by zoning regulations in certain municipalities, including Chevy Chase, Gaithersburg, Rockville, and others. HOAs and condo associations may also ban or restrict them.

Failing to comply with the licensing requirements can result in additional fees, penalties, and restrictions on the property. On Reddit, residents have complained about disruptive Airbnbs in their neighborhoods, with issues like trash, parking problems, noise, and safety concerns. They recommend reporting potential violations of the regulations to the county.

In summary, Montgomery County allows short-term rentals but with specific licensing requirements and operational restrictions. Hosts should carefully review the regulations before listing their property. Improperly run short-term rentals can negatively impact surrounding communities.

Short-Term Rental Licensing Requirement in Montgomery County

To legally operate a short-term rental in Montgomery County, property owners must obtain a license from the Department of Health and Human Services (DHHS). The licensing process involves several steps:

  1. Obtain a Maryland State Sales Use and Tax ID number
  2. Apply for a Montgomery County Room Rental-Transient Tax account through the Department of Finance
  3. Submit a Short-Term Residential Rental application to DHHS, along with a $150 fee

The application requires notifying immediate neighbors, the homeowners'/condo association, and the municipality about the intent to operate a short-term rental.

Additional requirements include:

  1. The rental property must be the owner's primary residence
  2. Owners can only use one property as a short-term rental
  3. Maximum occupancy is 6 adults per stay, with a maximum of 2 adults per bedroom
  4. When the owner is absent, rentals are limited to 120 days per calendar year
  5. Accessory Dwelling Units (ADUs) may not be used as short-term rentals

Applications and fees can be submitted online through the county's digital platform powered by CivicGov. Alternatively, PDF applications can be mailed to the Licensure & Regulatory Services office at 2425 Reedie Drive, 9th floor, Wheaton, MD 20902, or faxed to 240-777-3088.

The approval process typically takes 10-14 business days. Licenses must be renewed every two years.

Failure to comply with the licensing requirements may result in additional fees, penalties, and possible restrictions on the short-term rental property. Operating without a license is illegal and subject to fines.

In summary, obtaining a short-term rental license in Montgomery County involves registering with state and local tax authorities, submitting an application to DHHS with a fee, and meeting specific requirements regarding the property, occupancy limits, and rental duration. Properly licensed rentals help ensure a well-regulated short-term rental market in the county.

Required Documents for Montgomery County Short-Term Rentals

To apply for a short-term rental license in Montgomery County, property owners must submit the following documents:

  1. Short-Term Residential Rental License Application: This is the main application form that collects information about the rental property, owner, and property management details. It is available on the county's Department of Health and Human Services (DHHS) website.
  2. Proof of Primary Residence: Owners must provide documentation showing the rental property is their primary residence, such as a driver's license, voter registration card, or utility bill.
  3. Proof of Ownership: A copy of the deed or property tax bill is required to verify ownership of the rental property.
  4. Floor Plan: A floor plan of the rental property must be submitted, clearly labeling all rooms and spaces to be used for sleeping.
  5. Maryland State Sales Use and Tax ID: Owners must register with the state and obtain a Sales Use and Tax ID number, which is required for collecting and remitting state taxes on short-term rental income.
  6. Montgomery County Room Rental-Transient Tax Account: Owners must also register with the county's Department of Finance to obtain a Room Rental-Transient Tax account for collecting and remitting the county's room rental tax.
  7. Notification Letters: Copies of notification letters sent to immediate neighbors, the homeowners'/condo association (if applicable), and the municipality about the intent to operate a short-term rental must be provided.
  8. Homeowners'/Condo Association Approval: If the rental property is part of an HOA or condo association, written approval from the association to operate a short-term rental is required.

These documents help ensure that short-term rentals are operated by the property owner, meet safety and occupancy standards, and comply with state and local tax requirements. The application and supporting documents are submitted to DHHS for review and approval as part of the licensing process.

Montgomery County Short-Term Rental Taxes

Short-term rental operators in Montgomery County are subject to several state and local taxes:

Maryland Sales and Use Tax: The state of Maryland imposes a 6% sales and use tax on short-term rentals. This tax must be collected from guests and remitted to the Maryland State Department of Assessments and Taxation (SDAT). As of June 1, 2019, short-term rentals are no longer exempt from this tax.

Montgomery County Room Rental and Transient Tax: Montgomery County levies a 7% room rental and transient tax on short-term rentals under 31 days. This tax is in addition to the state sales tax and must be collected by the host and remitted to the county.

Platforms like Airbnb collect and remit these taxes on behalf of hosts in many cases. However, it's ultimately the responsibility of the short-term rental operator to ensure proper collection and payment of all applicable taxes. Failure to comply can result in penalties and legal action.

Possible Tax Deductions for Short-Term Rentals

Short-term rental hosts may be able to deduct certain expenses from their rental income to reduce their tax liability:

  1. Mortgage interest and property taxes
  2. Utilities like electricity, water, gas, internet, etc.
  3. Cleaning fees and supplies
  4. Rental commissions paid to platforms like Airbnb
  5. Repairs and maintenance under $2,500 per item
  6. Depreciation of the rental property and furnishings
  7. Supplies for guests like toiletries, linens, coffee, etc.
  8. Advertising and marketing costs
  9. Property insurance
  10. Home office expenses, if used for the rental business

Carefully tracking and documenting these expenses is key to maximizing deductions. Hosts should consult with a qualified tax professional to determine their eligibility for deductions based on their specific circumstances. With proper tax planning, short-term rentals can provide valuable tax benefits to offset income.

Maryland Wide Short-Term Rental Rules

While many short-term rental regulations in Maryland are set at the county or municipal level, there are a few statewide rules that apply to all hosts:

  1. Sales and Use Tax: As of June 1, 2019, short-term rentals are subject to the state's 6% sales and use tax. This applies to all rentals under 30 days, regardless of whether they are listed on booking platforms like Airbnb or VRBO. Hosts are responsible for collecting and remitting this tax to the state.
  2. Rental Property Surety Bond: Landlords in Maryland, including short-term rental hosts, are required to maintain a rental property surety bond that covers any security deposits collected from guests. This provides financial protection for guests in case the host fails to properly handle security deposit funds.
  3. Written Lease Requirement: If a guest requests it, Maryland law requires the host to provide a written lease specifying the terms and conditions of the rental agreement. This applies even for short stays booked through online platforms.
  4. Landlord-Tenant Laws: Many of Maryland's standard landlord-tenant laws and regulations apply to short-term rentals as well. This includes rules around security deposits, lease termination notices, and the landlord's duty to maintain a habitable property.
  5. Homeowners Association Rules: If a rental property is part of a homeowners association (HOA) or condo association, hosts must comply with any rules or restrictions set by the association regarding short-term rentals. HOAs have the power to prohibit or limit short-term rentals in their communities.

It's important to note that these statewide rules are in addition to any specific regulations set by counties and municipalities. Hosts should carefully review both state and local requirements to ensure they are in full compliance. Failing to follow applicable rules can result in fines, penalties, and legal issues.

Does Montgomery County Strictly Enforce STR Rules?

Based on discussions in online forums like Reddit and Bigger Pockets, Montgomery County does not appear to strictly enforce its short-term rental regulations, despite having a comprehensive licensing system in place. Many hosts continue to operate illegally without much fear of consequences.

One Reddit user shared their experience reporting a neighbor's illegal Airbnb that was causing issues in their cul-de-sac. While the county was responsive, there was no actual enforcement action taken against the property owner even after nine months. The rental continued to operate in violation of the rules.

Others noted that the Department of Health and Human Services, tasked with STR enforcement, simply lacks the resources to keep up with the volume of potential violations. With over a thousand unlicensed listings, the county relies primarily on neighbor complaints rather than proactive enforcement. Fines and penalties are rarely issued.

Compared to other jurisdictions, Montgomery County is not particularly Airbnb-friendly due to its strict primary residence requirement and 120-day annual limit on un-hosted rentals. However, the lax enforcement creates a loophole that many hosts exploit to run de-facto hotels in residential areas with minimal oversight.

In contrast, some parts of Maryland like Deep Creek Lake, Ocean City, and Annapolis are much more favorable STR markets with fewer restrictions and higher demand. Investors tend to gravitate to these vacation hotspots rather than deal with Montgomery County's burdensome rules, even if sparsely enforced.

The lack of proactive STR enforcement in Montgomery County frustrates residents dealing with noise, parking, and trash issues from illegal rentals in their neighborhoods. Despite the well-intentioned regulations, it's clear the county needs to dedicate more resources to ensure STR hosts are properly licensed and operating within the law. Until then, rampant violations will likely continue.

How to Start a Short-Term Rental Business in Montgomery County

  1. Verify Your Property Meets Requirements: Ensure your property is in a municipality that allows short-term rentals and that it is your primary residence. Check with your HOA or condo association for any additional restrictions. Thoroughly review county and municipal zoning regulations. If part of an HOA, obtain written approval early in the process.
  2. Obtain a Maryland State Sales Use and Tax ID: Register with the Maryland State Department of Assessments and Taxation (SDAT) to get your state tax ID. Familiarize yourself with the SDAT registration process beforehand by visiting their website and reviewing all requirements. Maintain organized records of submitted documents.
  3. Apply for a Montgomery County Room Rental-Transient Tax Account: Register for the transient tax account with the county's Department of Finance to collect and remit the 7% room rental tax. Prepare all necessary documentation in advance and ensure accuracy to avoid delays. Utilize online resources to better understand tax obligations.
  4. Submit a Short-Term Residential Rental Application: Submit the application to the Department of Health and Human Services (DHHS), including proof of primary residence, floor plan, proof of ownership, and required neighbor/HOA notifications. Pay the $150 application fee. Double-check the application for completeness before submission. Take advantage of online submission if available for faster processing. Ensure timely payment of the fee to avoid delays.
  5. Prepare Your Property:Outfit your space with necessary amenities, furniture, and safety equipment. Conduct a self-inspection to ensure compliance with regulations. Use the county's inspection checklist to preemptively address common safety concerns like fire alarms, exits, and electrical systems. Provide ample amenities for a hotel-like experience.
  6. Create Appealing Listings: Take high-quality photos and write compelling descriptions that highlight your space's best features and neighborhood attractions. Emphasize unique selling points and proximity to popular destinations. Be transparent about house rules and expectations.
  7. Obtain License Approval: Once your application is reviewed and approved, you will receive your short-term rental license, typically within 10-14 days. Regularly check your application status online, if possible. Keep clear records of all communication. Mark your calendar to track key dates.
  8. Post License Number on Listings: Prominently display your license number on all online listings across rental platforms. Ensure your license number is easily visible to build trust with potential guests and maintain legal compliance.
  9. Launch and Manage Your Rental: Start accepting reservations and utilize a dynamic pricing strategy to maximize occupancy. Establish clear check-in/out procedures and maintain open communication with guests. Use automation tools for seamless reservations and guest communication. Promptly address any concerns to ensure positive reviews. Regularly monitor and adjust pricing based on demand and seasonality.
  10. Comply with Ongoing Requirements: Renew your license annually, maintain accurate tax records, and ensure continual adherence to all county regulations. Set renewal reminders well in advance to avoid lapses. Keep detailed documentation of income and expenses for tax purposes. Regularly review county websites for regulation updates.

By following these steps and implementing the provided tips, you'll be well-positioned to launch and maintain a successful short-term rental business in Montgomery County. Remember to prioritize compliance, guest satisfaction, and adaptability in this dynamic industry.

Who to Contact in Montgomery County about Short-Term Rental Regulations and Zoning?

For questions about short-term rental regulations, licensing, and enforcement in Montgomery County, contact:

Department of Health and Human Services (DHHS)
Licensure & Regulatory Services
255 Rockville Pike, Suite 100
Rockville, MD 20850
Phone: 240-777-3986
Email: DHHS.LodgingFacility@montgomerycountymd.gov

For inquiries related to zoning rules and property compliance, reach out to:

Department of Permitting Services (DPS)
Zoning and Code Compliance Division
2425 Reedie Drive, 7th Floor
Wheaton, MD 20902
Phone: 311 (in the County) or 240-777-0311
Email: DPSZoningInfo@montgomerycountymd.gov

The Montgomery County Planning Department can also provide information on zoning, master plans, and property details:

Montgomery County Planning Department
2425 Reedie Drive
Wheaton, MD 20902
Phone: 301-495-4610
Email: MCP-InfoCounter@mncppc-mc.org

In addition to official county resources, short-term rental hosts in Montgomery County may find the following online communities and forums helpful for connecting with other local hosts, sharing experiences, and staying updated on regulations:

  1. Airbnb Community Center - Montgomery County Hosts Forum: https://community.withairbnb.com/t5/Montgomery-County/bd-p/en-montgomery-county-md
  2. Bigger Pockets Maryland Short-Term Rental Forum: https://www.biggerpockets.com/forums/52/topics/tag/maryland
  3. Maryland Vacation Rental Managers Association: https://www.mvrma.org/
  4. Reddit - /r/AirBnB_Hosts: https://www.reddit.com/r/AirBnB_Hosts/

These online groups provide a platform for hosts to engage in discussions, ask questions, and stay informed about the evolving short-term rental landscape in Montgomery County and across Maryland. However, always verify any information or advice with official county sources.

What Do Airbnb Hosts in Montgomery County on Reddit and Bigger Pockets Think about Local Regulations?

Based on discussions in online forums, Montgomery County Airbnb hosts have mixed feelings about the local short-term rental regulations:

In a Reddit thread titled "Investors running an Airbnb that's running our neighborhood," residents complained about issues with a nearby illegal Airbnb, including trash, parking problems, noise and safety concerns. Commenters noted that Montgomery County requires STRs to be the owner's primary residence and limits un-hosted rentals to 120 days per year. However, some expressed frustration that even after reporting violations, the county was slow to take enforcement action, allowing problem rentals to continue operating.

On the Bigger Pockets forum, a real estate investor asked about converting a condo they previously lived in to a short-term rental. Responders cautioned that many condo and homeowners associations in Montgomery County prohibit or restrict STRs, so it's important to carefully review the bylaws before pursuing that strategy. The original poster ultimately converted their property to a 6-month furnished corporate rental to comply with the association rules.

In July 2023, a Bigger Pockets user warned Montgomery County landlords about a proposed rent control bill that could cap rent increases at just 3%. They expressed frustration at the lack of a strong local landlord association to advocate against burdensome regulations on rental properties. This highlights the challenging regulatory environment for landlords in the county.

Overall, while Montgomery County STR hosts don't appear to be very active on these forums, the general sentiment is that the county's regulations are quite strict and can be challenging to navigate, especially for condo owners and small landlords. Lax enforcement of illegal STRs and the looming threat of rent control create additional uncertainty and frustration for rental property owners. Hosts emphasize the importance of thoroughly understanding the applicable rules and having contingency plans in place.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.