January 8, 2024

Airbnb & Short Term Rental Laws and Regulations In Indiana

Steadily's blog cover page for information around landlord insurance.

With the flourishing popularity of home sharing platforms such as Airbnb, the need for clear and comprehensible information on the Airbnb & Short Term Rental Laws and Regulations In Indiana has become paramount for homeowners and investors alike. The landscape of legal requirements for Airbnb rentals in Indiana underwent a pivotal shift following the enactment of House Bill 1035 in 2018, which significantly altered the way municipalities regulate these transient lodgings. As the Hoosier State continues to adapt to the proliferating short-term rental market, it's crucial for rental owners to navigate the amended Indiana vacation rental laws and ensure they remain compliant in this dynamically changing legal environment. Choose proactive protection for your rental property through the purchase of Indiana landlord insurance.

Key Takeaways

  • House Bill 1035 bars Indiana cities from outright bans on short-term rentals, granting a pathway for regulation through permits and insurance.
  • Insurance tailored for short-term rental properties is essential due to specific risks, with companies like Proper Insurance offering specialized policies.
  • Local authorities may require an owner to acquire a special permit or adhere to local regulations, such as the “Special Exception Application” in Carmel.
  • Short-term rental permits are mandated in some municipalities, and penalties for non-compliance underscore the importance of staying informed on Indiana's rental laws.
  • Taxes for short-term rentals, including gross retail and county innkeeper's tax, are obligatory and must be diligently managed by the hosts.
  • In cities like Indianapolis, operational policies include minimum stay requirements and limitations on large gatherings.
  • Proactively engaging with local zoning and regulatory authorities is key for a successful hosting experience in Indiana.

Overview of Indiana's Statewide Short Term Rental Rules

In the wake of home-sharing's increasing popularity, Indiana has tackled the need to regulate the burgeoning market with House Bill 1035. This piece of legislation carries substantial implications for both property owners and municipalities throughout the state. As it stands, Indiana's short-term rental laws now function under a regulated canvas outlined by this pivotal bill, efficiently bridging the gap between protecting homeowner rights and ensuring municipal oversight.

The Impact of House Bill 1035 on Short Term Rentals

The inception of House Bill 1035 marked a watershed moment for the short term rental landscape in Indiana, dictating how platforms like Airbnb integrate into local communities. Rep. Matt Lehman, a driving force behind the bill, envisioned an equilibrium between the autonomy of property owners and the reach of local governance. The legislation conclusively obstructed municipalities from imposing complete bans on short term rentals, such as Airbnb and VRBO, thereby safeguarding Indiana homeowners' rights to engage in home sharing.

State Limitations on Local Government Regulations

Scaling up its effects, House Bill 1035 places tempered reins on local authorities, establishing a statewide template for moderating the influence of city-imposed Airbnb regulations in Indiana. This edict imposes a ceiling on the severity of local ordinances and insists that any permitting process introduced by municipalities must not be unduly onerous. Consequently, the state fortifies its stance on an open market for Indiana short term rental laws, achieving a consistent and equitable regulatory atmosphere for residents eager to partake in registering a short term rental in Indiana.

Registering a Short Term Rental in Indiana

Commencing a venture in the short term rental market within Indiana, including well-known areas like Indianapolis, necessitates adherence to several key regulations, specifically concerning the attainment of a valid permit. A close look at the legal frameworks laid out by both state and local governments reveals a tiered approach to formalize the operation of short-term rentals, ensuring both compliance and community well-being.

Local Registration Requirements for Business Operation

Prospective hosts looking to step into the realm of short term rental permits in Indiana should be aware that engaging in the rental business requires registration at a municipal level. Each city in Indiana may have varying expectations and guidelines for the registration process, but one common thread is the necessity of acquiring a business permit—also known as a short-term rental permit—from the local government. This permit acts as an official record that sanctions the lawful operation of a short-term rental, with particular focus on residences listed on esteemed platforms such as Airbnb and VRBO.

Renewal and Expiration of Short-Term Rental Permits

Once obtained, the maintenance of these permits is just as crucial as their initial acquisition. Permits are often imbued with a one-year expiration period and require diligent attention for renewal. It's vital for hosts to mark their calendars for these renewal dates, as Indiana law illustrates a clear stance on the matter: lapse in the upkeep of short-term rental permits in Indiana can catapult into misdemeanors, with financial penalties climbing up to $500 for each renting occasion that transpires sans a permit. Keeping abreast of both regulations for hosting on Airbnb in Indiana and the current status of rental permits is a cornerstone of responsible hosting in the Hoosier State.

Permit and Insurance Regulations for Indiana Short Term Rentals

Delving into the realm of short-term rentals in Indiana, it becomes evident that succeeding in the Airbnb market hinges on compliance with the state's structured legal framework. A key aspect of this framework is the stipulation that hosts secure the appropriate permits and insurance coverage to ensure both the protection of their property and the safety of their guests.

Requirement of Liability Insurance Coverage

One of the foundational legal requirements for Airbnb rentals in Indiana is obtaining liability insurance. This insurance serves as a safeguard against the financial consequences of accidents resulting in injury or property damage. The mandate, as specified by Indiana Code, requires primary liability insurance to cover third-party claims pertinent to the period of short-term rental occupancy. Proper Insurance, for instance, steps in to fulfill these needs, offering policies tailored to the unique exposures faced by short-term rental owners.

Mandate for Special Exception Application in Certain Cities

Adding a layer to the regulatory tapestry, certain Indiana municipalities such as Carmel have instituted stringent measures like the "Special Exception Application," which is rooted in the zoning laws for short-term rentals in Indiana. This ordinance highlights the city's intent to balance the thriving Airbnb market with the integrity of residential zoning. The eligibility for this application hinges on the property being the principal residence of the Airbnb host, a move that characterizes the measured approach towards Airbnb & Short Term Rental Laws and Regulations In Indiana.

Collectively, these permit and insurance requirements signify Indiana's proactive measures in upholding regulated, secure, and equitable operations within the short-term rental domain. As the landscape continues to evolve, staying informed and compliant with these legal stipulations is indispensable for hosts aiming to run successful and lawful rental businesses in the Hoosier State.

Airbnb & Short Term Rental Laws and Regulations In Indiana

The fabric of the Hoosier State is becoming increasingly interwoven with the trend of short-term rentals, and with it, the legislature has responded by shaping laws such as Indiana House Bill 1035. This bill represents a substantial development in the way short term rental permits in Indiana are managed, offering a streamlined set of guidelines for homeowners and local governments alike. Property owners looking to rent out their spaces must diligently understand and implement rentals' protocols around legal requirements for Airbnb rentals in Indiana.

Diving into this legislative environment, it is evident that, prior to 2018, locales such as Indianapolis and Carmel wielded stringent Airbnb laws that restricted the freedom of property owners to engage in short-term rentals. Post the passage of House Bill 1035, a notable shift can be seen where Indiana Airbnb regulations have become less restrictive, although with room for municipal finesse in regulation through permits and mandatory insurance requirements.

"This legislation reflects the perfect balance of individual property rights and government oversight," - Rep. Matt Lehman, in reference to House Bill 1035.

Under the new paradigm, cities are barred from outright bans but may require Airbnb hosts to obtain permits or provide proof of insurance, establishing a clear directive within Indiana short term rental laws. Carmel, for instance, entails a "Special Exception Application" as a part of their short-term rental ordinance, which homeowners must navigate with precision to ensure legal operation.

  • A permit application is mandatory for each short-term rental property within participating municipalities.
  • Revocation of permits looms over properties with three violations within a year, emphasizing rigorous conformity with Indiana vacation rental laws.
  • Third-party liability insurance is a pivotal requirement, underscoring the necessity for commercial insurance through entities like Proper Insurance—endorsed by leading vacation rental platforms.
  • Carmel's stance postulates the home must be the owner's primary residence, showcasing the nuanced approaches to Indiana vacation rental laws.

For prospective and current Airbnb hosts in Indiana, keeping pace with these regulatory shifts is not merely about avoiding penalties but fostering a legally sound and profitable hosting practice. Whether it’s understanding the intricate details of the laws, applying for the necessary permits, or securing appropriate insurance, the message is unequivocal: compliance with Indiana home sharing laws is the cornerstone of sustainable short-term rental enterprise.

As the ripple effect of these regulatory adjustments spreads across Indiana, the emphasis on informed participation in the Airbnb market cannot be overstated. For hosts poised to navigate this terrain successfully, vigilance and an unwavering commitment to aligning with the evolving Airbnb & Short Term Rental Laws and Regulations In Indiana are imperative.

Zoning Laws for Short Term Rentals in Indiana

Zoning laws significantly influence the operation and management of short-term rentals throughout Indiana. Given the varying approaches from one municipality to another—and recent legislative changes—it is critical for property owners and prospective hosts to understand and navigate these laws to ensure their rental ventures align with local legal frameworks.

Understanding Zoning Ordinances in Different Municipalities

Local zoning ordinances are the blueprint governing land use and development, which inherently includes short-term rentals. In Indiana, while state laws have evolved to forbid wholesale bans on short-term rentals, individual cities retain considerable leeway to craft their own sets of rules within this framework. For example, Carmel once categorized these rentals as incompatible with zoning codes, but now must work within the parameters set by statewide mandates. This underscores the necessity for hosts to become well-acquainted with the zoning laws for short-term rentals in Indiana specific to their locality.

Navigating Zoning for Home Sharing and Short-Term Rentals

Successfully navigating the zoning landscape for home-sharing and short-term rentals demands attentiveness to evolving legalities, such as the recently modified Airbnb regulations in Indiana. Although prohibitive stances have been softened, the prerogative to enforce certain permit and insurance requirements still lies with local governments. It implores rental operators to proactively engage with zoning laws to secure the necessary permits, align with Indiana vacation rental laws, and ensure their rental activities are entirely above board. Adapting to the demands of local zoning can be the pivotal factor that balances the commercial interests of hosts with the character and governance of the community they operate within.

Short Term Rental Permits: The Carmel Example

The case of Carmel, Indiana, exemplifies the evolving landscape of Indiana vacation rental laws. What was once a city with restrictive zoning codes towards short-term rentals, now Carmel's approach aligns with legislative advancements by integrating a mandatory "Special Exception Application". This strategic shift in policy echoes the state's intent to allow responsible hosting while effectively managing community interests.

Analysis of Carmel's "Special Exception Application"

At the heart of Carmel's regulatory environment for short-term rentals is the "Special Exception Application". Its requirement is a response to the statewide regulations for hosting on Airbnb in Indiana. By mandating this application, processed via the Board of Zoning Appeals, Carmel compels short-term rental owners to align with the city's vision for its neighborhoods. The application not only marks the city's permission for hosts to operate but also ensures that rental activities harmonize with existing residential uses.

Consequences of Non-compliance with Permit Regulations

Adherence to short term rental permits in Indiana is not merely a regulatory formality; it bears significant consequences for non-compliance. In Carmel, the revocation of permits is a tangible risk for rental owners who fail to strictly follow permit guidelines. Owners could face a cessation of their short-term rental activities for up to a year—a punitive measure that endorses the stringent compliance culture demanded by the city and reinforces the imperativeness of navigating Indiana vacation rental laws conscientiously.

Tax Obligations for Short Term Rentals in Indiana

The operation of short-term rentals carries with it not just the responsibility of managing guests and maintaining properties, but also the important duty of adhering to tax laws in Indiana. This includes specific financial obligations that are an integral part of the legal requirements for Airbnb rentals in Indiana. Hosts must be meticulous in managing these matters to stay compliant with state regulations and ensure the sustainability of their rental businesses.

Gross Retail and County Innkeeper's Tax Responsibilities

One of the essential components of the Indiana short term rental laws is the collection of Gross Retail Tax. This tax, set at 7% of the listing price, is applied to all reservations that are 29 nights or shorter. Additionally, hosts in Indiana are responsible for the County Innkeeper's Tax, which can vary from 2-10% of the listing price based on the county in which the rental is located. Together, these taxes reflect the state's approach to ensuring that short-term rentals contribute their fair share to the local economy, in line with other forms of lodging and hospitality.

Filing Returns and Collecting Taxes as a Host

Hosts of short-term rentals are not only expected to collect these taxes from their guests, but they must also take on the responsibility of remitting them to the correct tax authority. This process includes filing tax returns for each assigned filing period, regardless of whether income was earned or taxes were collected during that time. As the state increasingly focuses on enforcing the short term rental permits in Indiana, hosts must familiarize themselves with the tax filing schedules and requirements that are part of the legal framework for short-term rentals in the state.

The diligence with which hosts address these tax obligations can have a direct impact on the success and legality of their rental endeavors, making tax management a pivotal aspect of operating within the Indiana short term rental laws. Navigating these fiscal responsibilities not only ensures compliance but also reinforces the professionalism and reliability of the short-term rental market in Indiana.

Legal Requirements for Airbnb Rentals in Indiana

Understanding the legal requirements for Airbnb rentals in Indiana is a critical step for anyone looking to operate a successful short-term rental business in the Hoosier State. The passage of House Bill 1035 has significantly transformed the regulatory landscape for short-term rentals within Indiana, establishing a set of statewide standards that spell out the dos and don'ts for prospective and existing hosts on platforms such as Airbnb, VRBO, and HomeAway.

For instance, among the critical areas affected by HB 1035 are the adjustments made within the city of Indianapolis. The Indianapolis short term rental laws now exhibit a more balanced approach in contrast to the previously restrictive stance. The introduction of permitting systems and the emphasis on proper insurance coverage reflect this moderation, targeting both the protection of hosts and guests as well as ensuring conscientious usage of residential properties.

The city of Carmel, Indiana, serves as a notable example where new ordinances have been set in the wake of HB 1035. If you are a Carmel resident interested in entering the short-term rental marketplace, you are now required to submit a "Special Exception Application" through the Board of Zoning Appeals. An imperative stipulation for this is that the home must be your primary residence, attesting to the delicacies involved in balancing short-term rental activities with residential community ethics.

  • Short-term rental operators must register their venture with the city and may be required to hold a state business permit.
  • A vital regulation is the upholding of insurance mandates, where an owner must maintain primary liability insurance to cover injuries or damages.
  • Permit applications are increasingly pivotal under the Indiana short term rental laws, which potentially impacts your business operation.
  • Hosts should remain attentive to regulations regarding revocation of permits, triggered by recurrent ordinance violations tied to an owner's properties.
  • Prompt compliance with local tax regulations, including the Gross Retail Tax and County Innkeeper's Tax, is essential for maintaining the legitimacy of your listing.

Acquiring comprehensive short-term rental insurance from experienced providers such as Proper Insurance can ensure your property meets Indiana's statutory provisioning, shielding you against the unique liabilities inherent in short-term leasing. Indianapolis's host requirements may also include posting contact details within the residence and notifying adjacent neighbors about the rental operation, demonstrating a push for transparency and accountability in community relations.

Overall, hosts must heed to Indiana home sharing laws that cover a broad spectrum of operational facets, including zoning, taxation, and legal permits. A prudent host will consult local authorities or seek legal advice to ensure they’re fluidly navigating the multifaceted regulations and requirements that govern the short-term rental industry in Indiana.

By being fully versed and compliant with the Indiana vacation rental laws, hosts in Indiana can confidently contribute to a vibrant and responsible short-term rental culture, positioned as both economically and socially advantageous participants within their local communities.

"This legislation reflects the perfect balance of individual property rights and government oversight," remarked Rep. Matt Lehman, emphasizing the objective of House Bill 1035 in fostering a regulated yet receptive environment for short-term rentals in the state of Indiana.

Operational Restrictions and Guidelines for Indiana Short Term Rentals

As Indiana continues to nurture the growth of short-term rentals, it maintains a structured approach to regulating the sector, focusing on creating harmonious community relations while catering to the increase of properties listed on platforms like Airbnb. This structural framework includes specific operational restrictions and guidelines tailored to safeguard both the interests of local residents and short-term rental hosts. Owners and rental operators must be conversant with, and strictly adhere to, these Airbnb & Short Term Rental Laws and Regulations In Indiana to ensure their businesses remain compliant and sustainable.

Policy on Minimum Stay and Large Gatherings

One key aspect of the Indiana short term rental laws is the imposition of a minimum stay requirement. In Indianapolis, for instance, a two-night minimum stay mandate exemplifies the city's efforts to regulate the market more effectively and to minimize disruption to local neighborhoods. Additionally, the regulations also encompass restrictions concerning the size and scale of gatherings within these short-term rental units. Prohibitive measures against large gatherings include a clear ban on the use of food trucks, recreational vehicles, buses, or trailers at rental properties, affirming the city's commitment to maintaining orderly, peaceful residential areas amidst the flourishing Airbnb market.

Adherence to Local Health and Safety Standards

Additionally, adherence to local health and safety standards remains a paramount concern within the Airbnb regulations in Indiana. The upkeep of these standards involves regular compliance with noise and trash ordinances, which are critical to maintaining the quality of life for residents and ensuring guest safety. Inspections conducted at the owner's expense further encapsulate the rigorous environment in which these short-term rentals operate, solidifying the legal responsibilities of hosts to meet the exacting health and safety requirements laid out in Indiana's regulations. The integrity and attractiveness of the short-term rental industry in Indiana ultimately hinges on this steadfast compliance.

Insurance and Liability Considerations for Indiana Hosts

As the ecosystem of short-term rentals in Indiana thrives, hosts are increasingly scrutinizing the realm of insurance and liability to protect their rental ventures. The intricate fabric of Airbnb & Short Term Rental Laws and Regulations In Indiana intricately weaves in stipulations for coverage that surpass the ordinary scope of homeowner's insurance, confronting the distinctive risks intrinsic to short-term hospitality businesses.

Choosing the Right Insurance for Your Rental Property

Selecting an insurance policy that harmonizes with the Indiana vacation rental laws is a decisive step for rental hosts. Apart from general liability coverage, contemplating policies that extend to cover incidents unique to the short-term rental industry—like guest accidents or property damage occurring during a stay—is imperative. Commercial insurance providers, deeply versed in the nuances of this industry, such as Proper Insurance, can offer plans that adhere to the meticulous insurance requirements mandated by the state, thereby aligning closely with short term rental permits in Indiana.

Benefits of Forming a Business Entity for Your Rentals

Indiana hosts are often counselled to weigh the benefits of constituting a business entity for their rentals. This strategic move not only primes rentals for operational efficiency but also fortifies the host's position against liabilities. By establishing a business entity, hosts may avail themselves of limited liability protections, which act as a buffer between personal assets and the potential legal entanglements of the short-term rental business. The formation of an entity should be discussed with legal professionals to ensure that hosts navigate the Airbnb & Short Term Rental Laws and Regulations In Indiana with precision, serving to enhance the stature and fortitude of their rental endeavors in accordance to Indiana vacation rental laws.

Indianapolis' Approach to Short Term Rental Business

The bustling city of Indianapolis has established a comprehensive pathway for homeowners aiming to tap into the short-term rental market. Prospective hosts must be diligent in registering a short term rental in Indianapolis, understanding the intricacies of the Indianapolis short term rental laws, and ensuring that their properties adhere to the established Indiana home sharing laws. Navigating the local regulatory framework is crucial for a seamless integration into the city's burgeoning short-term rental landscape.

Steps for Starting a STR Business in Indianapolis

In order to kickstart a short-term rental business in Indianapolis, it is essential for hosts to first register with the city and secure a business permit from the state of Indiana. The registration process serves to affirm that the property complies with important city ordinances and Indiana’s state laws concerning short-term rentals. Once the administrative groundwork is laid, hosts must uphold various regulations such as occupancy rates, minimum stay requirements, and adherence to community standards to maintain their permit’s validity. This attention to rule-following is imperative for a prosperous operation within Indianapolis’ thriving short-term rental market.

Key Contact Points for Regulation and Zoning Inquiries

To ensure complete compliance with Indianapolis short term rental laws, establishing a line of communication with the city's planning or zoning departments is recommended. Additionally, the Indiana Department of Revenue stands as a valuable resource for queries related to tax obligations relevant to short-term rentals. Being proactive and making contact with the appropriate local authorities not only facilitates a more informed hosting experience but also positions rental proprietors to adeptly navigate the potential complexities of the Indiana home sharing laws.


What impact did House Bill 1035 have on short-term rentals in Indiana?

House Bill 1035 has ensured that cities and municipalities in Indiana cannot completely prohibit Airbnb and other similar rental services. Moreover, the bill allows cities to require permits and set ordinances without imposing overly restrictive regulations, thus balancing property rights and government oversight.

Can local governments in Indiana impose their own short-term rental regulations?

Yes, local governments in Indiana can impose their own regulations on short-term rentals, including permit requirements and insurance mandates. However, due to statewide rules, local regulations cannot be so restrictive as to effectively ban such rentals.

What are the local registration requirements for operating a short-term rental in Indiana?

Local registration requirements can vary; however, in general, Indiana short-term rental operators must register their rental with the city, obtain an annual permit, and pay a fee capped at $150, subject to annual renewal.

When do short-term rental permits expire, and what's the renewal process in Indiana?

Short-term rental permits in Indiana typically require annual renewal. The renewal process involves applying with the local city or town and paying the renewal fee. Failure to renew can result in legal consequences.

What type of insurance is required for a short-term rental in Indiana?

Indiana requires operators of short-term rentals to have primary liability insurance coverage to protect against claims for injury, death, or property damage that may arise from rental activities.

Is a "Special Exception Application" mandatory for all cities in Indiana for short-term rentals?

Not for all cities, but some, like Carmel, require a "Special Exception Application" for operating short-term rentals. This must be processed through the Board of Zoning Appeals to ensure compliance with local regulations.

How do zoning laws affect short-term rentals in Indiana?

Zoning laws vary across Indiana municipalities and can impact where and how short-term rentals operate. Hosts must understand and follow local zoning ordinances which dictate the use of properties in specific areas.

What are the consequences for not adhering to short-term rental permit regulations in Indiana?

Non-compliance with permit regulations can result in penalties that include fines, legal action, and potential revocation of the right to operate the rental property.

What tax obligations do short-term rental hosts have in Indiana?

Hosts in Indiana must collect Gross Retail Taxes at 7% and applicable County Innkeeper's Taxes from guests for rentals of up to 29 nights. They're also responsible for filing returns and remitting these taxes to the state.

Are there minimum stay requirements for short-term rentals in Indiana?

Yes, some cities, like Indianapolis, have minimum stay requirements such as a two-night stay. These cities may also have policies against large gatherings and other activities that could disrupt local communities.

How important is adherence to local health and safety standards for short-term rentals in Indiana?

Adherence to local health and safety standards is crucial. Hosts must comply with inspections and regulations relating to noise, trash disposal, and other community standards to maintain their permits and avoid penalties.

Why is choosing the right insurance important for short-term rental hosts in Indiana?

Short-term rental activities pose unique risks that standard homeowner's insurance may not cover. Hosts need tailored commercial insurance policies to protect against potential liabilities specific to short-term rentals.

What are the benefits of forming a business entity for short-term rental properties in Indiana?

Forming a business entity, like an LLC, may offer added liability protection and tax benefits for rental property owners. It separates personal assets from the business, potentially reducing personal risk.

What steps should be followed to start a short-term rental (STR) business in Indianapolis?

To start an STR business in Indianapolis, owners need to register their business, obtain the necessary permits, ensure adequate insurance coverage, and comply with local ordinances. Key contact points include local zoning departments and the Indiana Department of Revenue.

Who do I contact for regulation and zoning inquiries for my short-term rental in Indianapolis?

For ordinance or zoning information related to your STR in Indianapolis, contact the city's planning or zoning departments. For tax-related queries, reach out to the Indiana Department of Revenue.

Source Links

Download your free resource

Table of Contents

Get coverage in minutes

One of America's best-rated landlord insurance services. No hidden cancellation fees. Competitive rates nationwide.

Get a quote
Get Appointed

Delight your clients with one of America's best-rated landlord insurance services nationwide.

Apply Today

Video Library

View all videos

Other Resources

Get coverage in minutes

No hidden cancellation fees. Competitive rates nationwide.

    Thank you! Your submission has been received!
    Oops! Something went wrong while submitting the form.

    Get Appointed

    Become a Steadily appointed agent and start selling one of America's best-rated landlord insurance services.