STR & Investment Guide
Short-Term Rentals (STRs) for Out-of-State and Instate Buyers
If you plan to rent your Vermont property for less than 30 consecutive days, you are operating a Short-Term Rental (STR) and must comply with state and local laws.
1. Mandatory State Requirements (The Checklist)
The State of Vermont has strict, universal requirements for all STR operators who rent for more than 14 days per calendar year.
| Requirement | What You Must Do | Consequences of Non-Compliance |
|---|---|---|
| Tax Registration | Obtain a Vermont Meals and Rooms Tax Account Number from the Department of Taxes. This must be displayed on all advertisements (Airbnb, Vrbo, etc.). | Heavy fines, interest penalties, and civil action for tax evasion. |
| Tax Collection | You must collect and remit the applicable Rooms and Meals Tax on all rental charges (including cleaning fees) for stays under 30 days. State Tax Rate: 9% | |
| New STR Surcharge | As of August 1, 2024, an additional 3% Short-Term Rental Surcharge is also required. Total Base State Tax: 12% | |
| Safety Compliance | Complete the "Short Term Rental Safety, Health and Financial Obligations" form. You must certify that the unit meets all state fire and life safety codes (working smoke/CO alarms, proper egress windows). | Civil liability for guest injury, and the Division of Fire Safety may require an inspection. |
| On-Site Posting | You must post the Safety Compliance form and emergency contact information inside the rental unit. | Non-compliance can lead to fines from the town or state. |
2. Local Zoning & Regulation (Location is Key)
While the state handles taxes and safety, your town or city controls whether you can operate an STR and under what conditions. This is the most critical due diligence step for a buyer.
Zoning Restrictions
Some towns only allow STRs in certain zoning districts (e.g., commercial or resort zones). Others may have residency requirements (e.g., you must live in the unit for a certain number of days per year).
Permitting & Registration
Many popular areas require a local Annual Registration and payment of a local fee.
- •Example (Rutland County): Rutland Town requires annual registration and has a $100 fee per unit.
- •Example (Bennington County): The Town of Bennington has specific zoning and permitting rules, and any "change of use" (like turning a residential home into a commercial STR) often requires a Zoning Permit.
Local Option Tax
Some towns levy an additional 1% Local Option Tax on rooms and meals, bringing your total tax rate to 13% in those areas (e.g., Killington).
Buyer's Mandate
Before making an offer on any property intended for STR use, always verify the local zoning and permitting rules with the municipal Zoning Administrator. Relying solely on the state's rules is insufficient.
3. Financing and Insurance Considerations
Financing
If the property is not your primary residence, you will need an Investment Property Mortgage, which typically requires a larger down payment (20-25%) and may have a higher interest rate than a traditional primary home loan.
Insurance
A standard homeowner's insurance policy will not cover commercial STR activity. You must obtain a commercial liability policy or a specialized STR/Landlord policy to ensure you are covered for damage or guest injury.
Interested in STR Investment Properties?
Our team can help you navigate Vermont's STR regulations and find the right investment property for your goals.