Kentucky Short-Term Rental Rules: A Comprehensive Guide

Quick Answer: Key Short-Term Rental Rules in Kentucky

• No statewide STR license or registration exists. Kentucky lacks a preemption law or unified registration framework.
• Local governments control rules. Cities and counties set permit requirements, zoning restrictions, and operational standards under KRS Chapter 82 (cities) and KRS Chapter 67 (counties).
• State sales tax applies to every booking. Kentucky levies a 6% sales tax on STR income under KRS Chapter 139.
• Local transient room taxes stack on top; rates vary by jurisdiction under KRS Chapter 91A.
• Common local requirements include a business license, an STR-specific permit, zoning compliance, occupancy limits, parking minimums, and safety inspections.

Louisville and Lexington have the most developed STR ordinances. Outside these cities, consult your county planning office; rules vary from nonexistent to detailed.

State-Level Regulations Affecting Kentucky STRs

No Statewide Preemption or Registration

Kentucky has not enacted a law preempting local STR regulation or creating a statewide registration database. Cities and counties write their own rules, and many have. No single state agency registers STR hosts.

Kentucky has not limited local authority over STRs, so local ordinances carry full legal weight under home rule powers granted to cities by KRS Chapter 82 and to counties by KRS Chapter 67.

State Sales Tax on STR Income

Kentucky imposes a 6% sales and use tax on gross receipts from short-term lodging rentals (KRS 139.200) for stays under 30 consecutive days. Rentals of 30 days or more to the same guest are generally exempt under KRS 139.470.

You must register with the Kentucky Department of Revenue to collect and remit this tax. Registration is available through the Kentucky Business One Stop portal (revenue.ky.gov). Platforms like Airbnb and Vrbo collect and remit Kentucky state sales tax on your behalf under marketplace facilitator rules, but confirm this in writing with your platform before assuming you are covered.

Property Rights and Consumer Protections

Kentucky does not have a specific STR consumer protection statute, but general landlord-tenant law under KRS Chapter 383 and consumer protection provisions under KRS Chapter 367 (Kentucky Consumer Protection Act) apply to your guest interactions. Misrepresenting your property's condition or amenities can expose you to liability under KRS 367.170.

Local Control: How Kentucky Cities Regulate STRs

What Most Local Ordinances Cover

Major Kentucky cities typically require:

• A general business license from the city or county
• An STR-specific permit (sometimes called a short-term rental certificate or conditional use permit)
• Zoning approval confirming the property is in a district that allows STRs
• Occupancy limits (often tied to bedroom count or square footage)
• Parking requirements (minimum off-street spaces per guest)
• A local contact person reachable 24/7 during guest stays
• Proof of liability insurance
• Safety inspections or self-certification of safety equipment

Louisville Metro

Louisville Metro regulates STRs under Louisville Metro Code of Ordinances Chapter 115, distinguishing between owner-occupied (host lives on-site) and non-owner-occupied STRs with different permit tiers and zoning requirements.

Louisville STRs require a Short-Term Rental Permit from Louisville Metro Planning and Design Services. Zoning is critical; non-owner-occupied STRs face tighter restrictions on permitted residential zones. Consult Louisville Metro Planning and Design Services (louisvilleky.gov) for current zoning maps and permitted districts, as ordinances and applicable zones change.

Permit fees and renewal schedules: consult Louisville Metro Planning and Design Services directly, as fees are set by administrative rule and subject to change.

Lexington-Fayette Urban County Government

Lexington regulates STRs via its Zoning Ordinance, administered by the Division of Planning. Hosts generally need a Home Occupation or Conditional Use Permit, depending on property type and zoning district. The Lexington-Fayette Urban County Government (lexingtonky.gov) Planning division handles applications.

Lexington also requires STR registration and enforces compliance through its Code Enforcement division. For specific permit fees and timelines, consult the Lexington-Fayette Urban County Government Division of Planning, as figures update periodically.

Bowling Green

Bowling Green STR regulations are administered through the City of Bowling Green Planning and Zoning Department. Hosts must obtain a business license and comply with zoning. Consult the City of Bowling Green Planning Department (bgky.org) for current permit requirements and STR-specific ordinance provisions.

Covington

Covington STR operators must comply with City of Covington zoning and business licensing requirements. Consult the City of Covington Planning and Development Department (covingtonky.gov) for current STR permit requirements and permitted zoning districts.

Understanding Kentucky's STR Tax Obligations

State Sales Tax

Kentucky's 6% state sales tax applies to gross receipts from STR bookings under KRS 139.200. Register through the Kentucky Business One Stop portal. If your platform remits this on your behalf as a marketplace facilitator, get written confirmation from the platform and keep records.

Transient Room Taxes

On top of state sales tax, most Kentucky jurisdictions levy a local transient room tax under KRS Chapter 91A. These taxes are collected separately and remitted to the local government, not the state. Rates vary:

The specific rates for each jurisdiction are set by local ordinance and change periodically. Do not rely on third-party sources for these figures. Contact each jurisdiction's finance or revenue department directly, or check whether your booking platform remits local transient room taxes on your behalf (many do in Kentucky's major cities, but coverage varies).

Federal Tax Considerations

Short-term rental income in Kentucky can be treated differently for federal tax purposes depending on the level of services provided. Generally, income can be reported on Schedule E for passive rental income or Schedule C if substantial services are offered, as defined under IRC § 469.

• Income from renting a property for fewer than 15 days a year qualifies for tax-free treatment under IRC § 280A(g).
• If substantial services are provided (like meals or daily cleaning), income may need to be reported on Schedule C, which could lead to self-employment tax implications.
• Depreciation for residential rental properties is typically calculated over 27.5 years under IRC § 168, while properties offering substantial services may be depreciated over 39 years.
• Federal occupancy tax does not exist, but state and local lodging taxes may apply, often collected through online travel agencies (OTAs).
• Be aware of potential deductions and credits related to rental activities, including the Qualified Business Income Deduction under IRC § 199A, if applicable.

This is not tax advice — consult a CPA familiar with Short-term rentals for your specific situation.

Frequently Asked Questions

Why doesn't Kentucky have a statewide short-term rental licensing system?

Kentucky has opted to allow local governments to control short-term rental regulations, meaning each city and county can set its own rules without a statewide framework.

What sales tax applies to short-term rentals in Kentucky?

Kentucky imposes a 6% sales tax on gross receipts from short-term lodging rentals, and local transient room taxes may apply depending on the jurisdiction.

Are there any active legislative proposals regarding short-term rentals in Kentucky?

As of now, there have been no significant statewide legislative proposals to establish a uniform short-term rental licensing system in Kentucky.

What do short-term rental hosts in Kentucky do given the lack of state regulation?

Hosts must comply with local regulations set by their city or county, which can include obtaining permits, licenses, and adhering to zoning laws.

How do Kentucky's short-term rental regulations compare to neighboring states?

Unlike some neighboring states that have statewide regulations, Kentucky's approach is decentralized, allowing for a wide variety of local rules and requirements.