Minnesota Short-Term Rental Rules: A Comprehensive Guide

Quick Answer: Minnesota Short-Term Rental Essentials

Operating a short-term rental (STR) in Minnesota requires understanding these essentials before listing:

No statewide STR license exists. Minnesota has not enacted a statewide registration or licensing framework specific to short-term rentals. The Minnesota Legislature has debated the idea, but as of mid-2025, no such law has passed.

State sales tax applies to every booking. Minnesota imposes its 6.875% statewide sales tax on lodging, including STRs (Minn. Stat. §297A.61, subd. 3(g)). This tax is mandatory, regardless of the booking platform.

Local rules govern almost everything else. Zoning, permits, registration fees, occupancy caps, parking, noise, and safety inspections are all set at the city or county level. Minneapolis, St. Paul, Duluth, and tourist-heavy counties like Cook and Crow Wing have distinct ordinances.

Your action items before you list:

1. Confirm your property's zoning classification with your city or county.
2. Apply for any required local STR permit or business license.
3. Register with the Minnesota Department of Revenue for sales tax collection.
4. Determine whether any local lodging tax applies and how to remit it.
5. Check whether your

Federal Tax Considerations

Short-term rentals in Minnesota are subject to specific federal tax implications under the Internal Revenue Code (IRC). Depending on the level of services provided, income may be reported on Schedule E or Schedule C. Additionally, the 14-day rule under IRC § 280A(g) allows for tax-free income under certain conditions.

• Income from short-term rentals may be reported on Schedule E if rental days are fewer than 15 per year, making it tax-free under IRC § 280A(g).
• If substantial services are provided (like meals or daily cleaning), income must be reported on Schedule C, as per IRC § 162.
• Depreciation for residential rental property is typically calculated over 27.5 years under IRC § 168, while properties providing substantial services may be depreciated over 39 years.
• Federal occupancy tax does not exist; however, state and local lodging taxes may be collected through online travel agencies (OTAs).
• Be aware of potential deductions and credits, such as the Qualified Business Income deduction under IRC § 199A, which may apply to certain rental activities.

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

Frequently Asked Questions

Why doesn't Minnesota have a statewide short-term rental license?

Minnesota has not enacted a statewide registration or licensing framework for short-term rentals, despite discussions in the legislature. This means that local jurisdictions have the authority to create their own rules.

What laws apply to short-term rentals in Minnesota?

While Minnesota does not have specific state laws for short-term rentals, the state sales tax of 6.875% applies to all bookings. Local ordinances dictate zoning, permits, and other operational requirements.

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

As of mid-2025, there have been discussions in the Minnesota Legislature about establishing a statewide short-term rental registration system, but no proposals have successfully passed into law.

What do residents do given the absence of state regulations on short-term rentals?

Residents interested in operating short-term rentals must comply with local city or county regulations, which can vary significantly. This often involves obtaining local permits, adhering to zoning laws, and collecting sales tax.

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

Unlike Minnesota, some neighboring states have implemented statewide regulations or licensing for short-term rentals, creating a more uniform framework. This can lead to different operational requirements and compliance processes for hosts.