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Short Term Rental News and Ideas

Author: Jed Collins

  • Idaho Supreme Court Strikes Down STR Ban: What the Landmark Lava Hot Springs Ruling Really Means

    Idaho Supreme Court Strikes Down STR Ban: What the Landmark Lava Hot Springs Ruling Really Means

    Imagine You’re a Host in Idaho: The Law Just Changed Overnight

    You’ve invested in a charming cottage in Lava Hot Springs, Idaho, planning to operate it as a short-term rental (STR). Suddenly, your business license is denied—not because of safety or nuisance complaints, but because you’re not living there. For years, municipal ordinances have drawn firm lines, often excluding non-owner-occupied STRs from residential zones. Now, the Idaho Supreme Court has upended that legal landscape, setting a statewide precedent with ramifications for property owners, local governments, and Idaho’s entire hospitality market.

    The Idaho Supreme Court’s Clear Message: State Law Trumps Local Bans

    On May 21, 2025, in Idaho Association of Realtors, Inc. v. City of Lava Hot Springs, the Idaho Supreme Court unanimously invalidated the City’s ordinance banning non-owner-occupied STRs in residential zones.[^1] The decision is unambiguous: Idaho’s Short-Term Rental and Vacation Rental Act (“the Act”), enacted in 2017, preempts local rules that categorically bar any of the Act’s three protected STR types from residential zones—non-owner-occupied units, owner-occupied rentals (like a room in your home), and short-term condos/timeshares. That means cities can no longer use zoning to exclude non-owner STRs from residential neighborhoods.

    The Court’s opinion, authored by Chief Justice Bevan, stresses that municipal regulations cannot “expressly or practically” prohibit STRs of any defined type, even under claims of protecting neighborhood welfare. Allowing only owner-occupied STRs isn’t enough; all types must be permitted residentially, and only truly “reasonable regulations” are allowed.

    What Counts as a “Reasonable Regulation?” The Court’s Subtle Line in the Sand

    The most significant legal nuance is the distinction between a regulation—a rule controlling behavior—and a prohibition—which bars it outright. The decision clarifies:

    • Health, safety, or operational regulations (noise, parking, occupancy limits) remain fair game for localities—provided they don’t single out non-owner-occupied properties for outright exclusion.
    • Owner-occupancy requirements, numeric caps, or proximity bans targeting just one STR type are now highly vulnerable to legal challenge, unless municipalities can show their rules don’t effectively “severely hinder” operation of any covered category.[^2]
    • STRs are classified as a “residential land use” under state law, so treating them as inherently commercial is a non-starter for Idaho zoning boards.[^3]

    For mayors, city planners, and neighborhood groups anxious about STR proliferation, this is a narrow path. Courts are likely to look closely at city ordinances for evidence that any regulation tips over from “regulating” to “banning”—especially when aimed at investor-owned properties.

    Why This Matters: The Balance of Power and Policy in STR Regulation

    For Property Owners and Investors

    This ruling decisively strengthens property rights in Idaho. Investors seeking to operate STRs in residential neighborhoods now have a robust, court-recognized shield against categorical local bans. However, expect “reasonable regulation” to remain a live legal battleground—a poorly crafted noise or trash ordinance that targets only non-owner-occupied homes, for instance, could still land a local government in court.

    For Local Governments

    Idaho municipalities must immediately revisit their STR ordinances for compliance. They lose an important tool—zoning-based differentiation by ownership status—but may still regulate via general rules for health, safety, and neighborhood livability. Implementing and enforcing these operational standards (think: 24/7 local contact requirements, trash collection mandates, on-site parking minimums) will likely grow more complex and resource-intensive, especially in tourism-heavy small towns.

    For Neighborhoods and Residents

    The core challenge remains: How can Idaho communities balance the economic vitality STRs bring with protection against housing shortages, changing neighborhood character, and nuisance issues? If “reasonable regulations” can’t solve these pressures, locals may increasingly push for amendments to state law.

    National Trends: Idaho Isn’t Alone

    This case mirrors a nationwide clash between state legislatures keen on protecting STRs (often at industry urging) and municipalities defending local autonomy.[^4] Similar battles in Arizona, Texas, Pennsylvania, and Montana highlight the recurring property rights vs. local control debate. In most instances, the trend is toward state preemption limiting cities’ ability to restrict STRs wide-scale—a fact that savvy investors are quick to note, and that neighboring Idaho cities will need to weigh as they draft new ordinances.

    What Should You Do Next?

    Whether you’re a property owner, aspiring host, or a city official, the next step is to:

    1. Review your local ordinances. Are any rules differentiating by owner-occupancy status? If so, legal risk just went up.
    2. Follow the evolution of “reasonable regulation” litigation. Definitions and boundaries will almost certainly be refined in future court battles.
    3. Assess your property’s earning potential under compliant rules. Check out StaySTRa Analyzer for forecasts based on actual Idaho market data.
    4. Stay engaged with policy discussions. As Idaho’s legal landscape continues to evolve, regulatory changes will likely impact both the STR market and community life for years to come.

    Ultimately, regulations around short-term rentals are a mirror of a community’s priorities and values. In Idaho, for now, the scales have tipped toward property rights and state-level uniformity. But the story of how, and how much, local authority can adapt and respond, is far from finished.

    Sign up for our StaySTRa Insider mailing list to get updates on Idaho STR law, market data, and best practices as the rules keep changing.

    [^1]: Idaho Association of Realtors, Inc. v. City of Lava Hot Springs, Docket No. 50888 (Idaho S. Ct. May 21, 2025).
    [^2]: See Idaho Code § 67-6539(1): “no county or city may enact or enforce any ordinance that has the express or practical effect of prohibiting short-term rentals or vacation rentals…”.
    [^3]: The Act, Idaho Code § 67-6539, classifies STRs as a residential land use.
    [^4]: For a summary of recent state preemption trends, see National League of Cities: How States Preempt Local Laws.

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  • Unlocking Tax Advantages: Your guide to the Short-Term Rental Tax Loophole

    Unlocking Tax Advantages: Your guide to the Short-Term Rental Tax Loophole

    Investing in property is an ever-evolving field. If you’re an investor, you’re likely always looking for legitimate ways to improve your financial outcomes. One powerful method, often called the “Short-Term Rental (STR) Tax Loophole,” can allow property owners to reclassify their rental income and losses. This reclassification can lead to a significant reduction in overall tax liability.

    However, this isn’t a simple tax form checkbox. It’s an advanced strategy that requires careful attention to specific Internal Revenue Service (IRS) rules. Let’s break it down.

    Understanding the STR Tax Loophole: Passive vs. Non-Passive

    The core of this strategy lies in how the IRS treats “passive” versus “non-passive” activities.

    • Passive Activities: Generally, the IRS considers rental activities passive by default (under IRC Section 469). This means losses from these rentals typically can only offset income from other passive activities. They usually can’t reduce your active income, like your W-2 salary or profits from a business you actively run. This is the Passive Activity Loss (PAL) rule.
    • Non-Passive Activities: The STR tax loophole offers a way for your short-term rental (think Airbnb, VRBO) to be treated as a non-passive activity. If your STR meets certain conditions, it might not be seen as a “rental activity” for PAL rule purposes. Instead, it could be treated as a trade or business. If you, the owner, then “materially participate” in this business, the income or losses can become non-passive.

    Why does this matter? Non-passive losses can be deducted against your other non-passive (active) income. This can lead to substantial tax savings – a key benefit highlighted by tax experts.

    The main rule that makes this possible is in Temporary Treasury Regulation §1.469-1T(e)(3)(ii)(A). It states an activity isn’t a “rental activity” if “the average period of customer use for such property is seven days or less.” This is famously known as the “7-Day Rule.” Though called “Temporary,” this rule has been a long-standing part of tax planning.

    It’s also crucial to distinguish this from the “14-Day Rule” (IRC Section 280A(g)). The 14-Day Rule lets you exclude rental income if you rent your home for 14 days or fewer per year and meet personal use requirements. With that rule, the income is tax-free, but you can’t deduct most expenses. The STR loophole, on the other hand, is for when your rental income is taxable (rented more than 14 days), and your goal is to deduct net losses against other income.

    How to Qualify: The Two Main Pillars

    To use the STR tax loophole, you must meet two primary sets of IRS criteria:

    1. Average Period of Customer Use
    2. Material Participation

    1. Average Period of Customer Use

    The IRS has specific tests for average guest stays:

    • The 7-Day Rule: If the average guest stay is seven days or less, your STR generally isn’t treated as a “rental activity.” This is a common path.
    • The 30-Day Rule with Significant Personal Services: Alternatively, if the average stay is 30 days or less, and you provide “significant personal services” (like daily cleaning, meals, or concierge services similar to a hotel), it may also qualify. Basic services don’t count here. This path is more hands-on and subjective.

    Calculating Average Stay: This needs to be exact.

    • Formula: Total days the property was rented / Total number of separate rental stays in the year.
    • No Rounding: For the 7-Day Rule, the average must be 7.0 days or less. You can’t round down.
    • Multi-Unit Properties: Calculations are more complex, often requiring a weighted average if you have different types of units or a mix of long-term and short-term rentals in one property.

    2. Material Participation

    Even if your STR meets an average stay test (like the 7-Day Rule), you still must “materially participate” in this non-rental business for its income or losses to be non-passive. Material participation means your involvement is “regular, continuous, and substantial.” The IRS provides seven tests, and you only need to meet one:

    1. Over 500 Hours: You participate for more than 500 hours in the tax year.
    2. Substantially All Participation: Your work is nearly all the work done by anyone.
    3. Over 100 Hours & Most Active: You work more than 100 hours, AND no one else (including contractors) works more hours than you. This is common but requires you to track others’ time.
    4. Significant Participation Activity (SPA): It’s an SPA (over 100 hours but not meeting other tests alone), AND your total time in all your SPAs is over 500 hours.
    5. Prior Year Participation (5 of 10 Years): You materially participated for any 5 of the last 10 tax years.
    6. Prior Year Participation (Personal Service Activity – 3 Years): Less common for STRs; applies to personal service activities where you materially participated for any 3 prior years.
    7. Facts and Circumstances: Based on all factors, your participation is regular, continuous, and substantial (usually needs >100 hours, and no paid manager works more).

    As the IRS explains regarding passive activities, “You materially participate in an activity if you’re involved in the operation of the activity on a regular, continuous, and substantial basis.” (Source: IRS Topic No. 425, Passive Activities – Losses and Credits – irs.gov) Understanding these tests is crucial because, as Investopedia notes, “Material participation tests help determine whether a taxpayer has materially participated in business, rental, or other income-producing activity. A material participant can deduct the full amount of losses on their tax returns.” (Source: Investopedia, “Material Participation Tests: Definition, IRS Rules, vs. Passive”)

    Documenting Your Hours is Key! Keep detailed, contemporaneous (at-the-time) records:

    • Date
    • Hours spent
    • Specific tasks performed (e.g., “July 10: 3 hrs – Responded to guest inquiries, coordinated plumbing repair, updated online listing photos.”) Qualifying activities include operations, management, maintenance (if you’re actively doing or managing it), financial tasks, marketing, and guest services.

    Tax Benefits: How This Can Lower Your Tax Bill

    Qualifying for the STR loophole opens up significant tax advantages:

    • Deduct STR Losses Against Active Income: This is the biggest win. Net losses from your qualified non-passive STR can offset your W-2 income or other active business income. This directly reduces your Adjusted Gross Income (AGI) and your tax bill.
    • Deduct More Expenses: You can deduct many ordinary and necessary business expenses:
      • Mortgage interest
      • Property taxes
      • Insurance (homeowners and STR-specific)
      • Utilities
      • Cleaning and maintenance services
      • Repairs
      • Guest supplies (toiletries, coffee, etc.)
      • Advertising and listing fees (OTA commissions)
      • Travel (if primarily for managing/maintaining the STR – document carefully!)
    • The Power of Depreciation: Depreciation lets you deduct the cost of buying and improving your rental property (not the land) over its useful life.
      • Standard Depreciation: Typically 27.5 years for residential rental property. (There’s some debate if an STR as a non-rental business might use 39 years for the building shell – consult a tax pro here.)
      • Cost Segregation Studies: These engineering studies can identify parts of your property (like furniture, appliances, landscaping) that can be depreciated over shorter periods (5, 7, or 15 years). This means bigger deductions upfront. Often, 20-30% of a property’s value can be reclassified this way.
      • Bonus Depreciation: This allows a large upfront deduction for eligible property. For 2025, bonus depreciation is 40%. It’s phasing out (20% in 2026, 0% in 2027, unless Congress changes it). This makes early planning important.

    STRs vs. Long-Term Rentals (LTRs): Key Tax Differences

    FeatureSTR (Qualifying for Loophole)Long-Term Rental (LTR)
    Income ClassificationNon-Passive (if criteria met)Passive
    Losses vs. Active IncomeDeductibleGenerally Not (some exceptions like REPS or $25k allowance)
    Self-Employment TaxPotentially (if substantial services provided / Schedule C)No
    Key Tests for Loss DeductionAvg. Stay (e.g., ≤7 days) + Material ParticipationREPS tests or $25k Special Allowance rules
    Record-KeepingVery High (hours, stays, expenses, calculations)Moderate

    Export to Sheets

    Self-Employment (SE) Tax Note: If your STR provides hotel-like services, or functions as a full Schedule C business, your net income could be subject to SE tax. If it’s more of a straightforward rental (meeting the 7-day rule and material participation without substantial services), it’s often on Schedule E and avoids SE tax on the net rental income. This is a tricky area.

    Real Estate Professional Status (REPS): This is another way to make rental losses non-passive, but it has tough requirements (over half your work time in real estate trades/businesses you materially participate in, AND over 750 hours). The STR loophole (via the 7-Day Rule + material participation) offers an alternative for those who don’t qualify as REPS.

    Staying Compliant: Records, Rules, and Pitfalls

    The responsibility to prove you qualify for the STR loophole is 100% on you, the taxpayer.

    • Impeccable Records are Essential:
      • Average length of stay (booking details).
      • Material participation logs (dates, hours, tasks).
      • All income and expenses (receipts, invoices).
    • State and Local Taxes: Don’t forget sales tax, hotel/lodging/occupancy taxes (e.g., Texas has a 6% state hotel tax for rentals under 30 days, and cities like Austin add more), plus any local licenses or permits. These rules change often.
    • Common Mistakes to Avoid:
      • Miscalculating average stay (the “7.0 or less” rule is strict).
      • Poor records for material participation hours.
      • Too much personal use of the property.
    • IRS Audit Red Flags: Large rental losses offsetting high W-2 income can get IRS attention. The best defense? Prepare every tax return as if it will be audited. Keep perfect records and consider professional advice.
    • Depreciation Recapture: When you sell, the depreciation you claimed earlier is “recaptured” and taxed (often at a maximum federal rate of 25% for most real property). So, the loophole often means tax deferral and potential tax rate benefits, not complete avoidance.

    Recent Developments & Strategic Tips

    • Bonus Depreciation Phase-Out: With 40% bonus depreciation in 2025 and less in following years, maximizing other deductions (like through cost segregation) becomes even more critical.
    • Form 1099-K Reporting: Payment platforms (Airbnb, VRBO) issue Form 1099-K.
      • For 2024, the threshold was $5,000.
      • For 2025, the IRS anticipates a $2,500 threshold.
      • A $600 threshold is planned for 2026 and beyond (subject to IRS updates). Lower thresholds mean more IRS visibility into your rental income – making accurate reporting and deductions essential.

    Strategic Recommendations for STR Investors:

    • Plan Ahead: Before buying, model potential tax outcomes, average stays, and your ability to materially participate.
    • Systemize Record-Keeping: Start a meticulous system for tracking stays, hours, income, and expenses from day one. Software can help!
    • Master Material Participation: Know which test you’re aiming for and document everything.
    • Watch Your Average Stays: If using the 7-Day Rule, monitor booking lengths.
    • Consider Cost Segregation: Evaluate if a study can accelerate your depreciation.
    • Stay Updated: Tax laws change. Keep learning.
    • Get Expert Help: The rules are complex. A CPA or tax advisor specializing in real estate and STRs is highly recommended.

    Conclusion: Using the STR Loophole Wisely

    The Short-Term Rental Tax Loophole offers a fantastic way for investors to lower their tax bills by using STR losses against active income, often boosted by depreciation. But these benefits depend on strictly following IRS rules, especially on average guest stays and your material participation.

    This isn’t a set-it-and-forget-it tax strategy. It demands active involvement and top-notch records. For investors willing to put in the effort and navigate the details, the STR loophole can be a powerful tool for financial growth.

    Stay Informed and Maximize Your Returns!

    The rules around short-term rentals and taxes are always evolving. Want to stay ahead of the curve and get the latest insights, legal updates, and strategic tips delivered straight to your inbox?

    Join our exclusive mailing list today! You’ll receive actionable advice to help you navigate the complexities of STR ownership and optimize your investments.

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  • Houston Implements Comprehensive Short-Term Rental Ordinance: Balancing Growth and Neighborhood Concerns

    Houston Implements Comprehensive Short-Term Rental Ordinance: Balancing Growth and Neighborhood Concerns

    Houston, Texas, has officially entered the arena of comprehensive short-term rental (STR) regulation. On April 16, 2025, the City Council unanimously passed a new ordinance aimed squarely at mitigating the negative externalities often associated with STRs, particularly disruptive “party houses,” while establishing a clear framework for operators. This move culminates a period of deliberation and marks a significant step for a major city previously lacking such specific oversight.

    Establishing the Ground Rules: Registration and Operation

    The ordinance introduces a mandatory registration system, requiring operators to obtain an annual certificate for each STR unit.

    • Timeline: Applications open on August 1, 2025, with the ordinance taking full effect on January 1, 2026.
    • Cost: The annual registration fee is set at $275 per unit.
    • Scope: The rules apply to an estimated 8,500 STRs operating within Houston city limits.

    Beyond registration, the ordinance mandates adherence to several operational standards. Operators must:

    1. Comply with Existing Codes: Ensure properties meet noise, waste management, building safety, and fire safety standards.
    2. Provide Emergency Contact: Designate a contact person available 24/7 who can respond promptly to issues arising at the property.
    3. Remit Taxes: Pay the requisite Hotel Occupancy Taxes (HOT) (taxes levied on sleeping accommodations, akin to those paid by traditional hotels).
    4. Undergo Training: Complete annual training focused on identifying and reporting human trafficking.
    5. Prohibit Event Advertising: Explicitly forbid marketing STR properties as venues for parties or large events.

    Crucially, the ordinance leverages the cooperation of hosting platforms like Airbnb and Vrbo. These platforms will be required to remove listings for unregistered properties within 10 days of receiving notification from the city, adding a significant layer of enforcement capability.

    Enforcement Mechanisms: Addressing Violations

    Recognizing that rules without enforcement are often ineffective, the Houston ordinance includes specific mechanisms for addressing non-compliance. Registration certificates can be revoked for several reasons, including:

    • Multiple violations of the sound ordinance.
    • Serious criminal convictions involving guests at the property (e.g., disorderly conduct, prostitution, reckless firearm discharge).
    • Failure to adhere to other provisions of the ordinance or relevant city codes.

    The city has also implemented measures to target problematic operators managing multiple properties:

    • Portfolio Revocation: An owner or operator accumulating three or more certificate revocations across their entire portfolio within a two-year period may have all their STR registration certificates revoked city-wide.
    • Building-Specific Revocation: Within a single multifamily building, if 25% or more of an owner/operator’s STR certificates are revoked, the city reserves the right to revoke the remaining certificates held by that operator in that specific building.

    To manage complaints and monitor compliance, Houston has contracted with Host Compliance, a service provided by Granicus, indicating an investment in technological solutions for oversight.

    Initial Reactions and Lingering Questions

    The ordinance received public praise from Expedia Group (parent company of Vrbo), which lauded the collaborative process and positioned the outcome as a potential model for other cities. This suggests that at least some segments of the industry see value in clear, albeit potentially strict, regulatory frameworks.

    However, concerns remain. Some operators worry about the breadth of host liability for guest actions and the potential for subjective interpretation of offenses like “disorderly conduct” leading to revocation. Furthermore, despite the unanimous vote, several council members expressed reservations about the city’s practical ability to enforce the new rules effectively, citing historical challenges in responding to complaints even before this comprehensive system was in place. City officials have acknowledged that this ordinance represents a starting point, subject to potential amendments as implementation proceeds and data is gathered.

    Ultimately, Houston’s ordinance represents a concerted local effort to harness the economic benefits of STRs while actively managing their impact on residential communities. Its success will likely hinge on the city’s commitment and capacity for consistent enforcement.

    Stay up to date on the changing STR regulations.

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  • State vs. Local Control: Who Makes the Rules for Short-Term Rentals?

    State vs. Local Control: Who Makes the Rules for Short-Term Rentals?

    When it comes to short-term rentals (STRs) like those found on Airbnb or Vrbo, a big question keeps popping up across the country: Who gets to make the rules? Should the state government set one standard for everyone, or should local cities and counties decide what’s best for their own communities? This debate over state vs. local STR regulation is heating up, and recent events show just how different the approaches can be.

    Austin Takes Action: Making Platforms Collect Taxes

    Let’s look at Austin, Texas. While the city is still figuring out some bigger changes to its STR rules (now delayed until October 2025), they made one important move starting April 1, 2025.

    Now, platforms like Airbnb and Vrbo must collect the city’s 11% Hotel Occupancy Tax (HOT) on every booking. This applies to all STRs in Austin, even if the property doesn’t have a city license.

    Why did Austin do this? Officials estimate around 10,000 unlicensed rentals weren’t paying this tourism tax. This new rule aims to fix that, ensuring STRs contribute tax revenue similar to traditional hotels. It means guests will pay more, but the city expects a significant boost in funds for tourism and cultural projects. This is a clear example of a local government using its power to solve a specific local problem.

    States Step In: Different Directions on Local Power

    While Austin focused locally, state legislatures are taking broader actions, often pulling in opposite directions.

    • More Power to Locals (Louisiana): In Louisiana, lawmakers are moving forward with bills that clearly support local control. House Bill 469 confirms that cities and parishes can set their own STR rules, like requiring permits or safety checks. Another bill, Senate Bill 225, goes further. It would ban unlicensed STRs statewide and cleverly allows neighbors or community groups to sue illegal operators. This gives local areas another tool for enforcement, especially helpful where city resources are limited.
    • Less Power to Locals (Ohio & Idaho): Ohio and Idaho are heading the other way. Proposed laws there (Ohio Senate Bill 104, Idaho Senate Bill 1162) aim to limit what local governments can do. These bills try to stop cities and counties from enacting common STR restrictions, such as:
      • Outright bans on STRs
      • Requiring the owner to live on the property
      • Using zoning to keep STRs out of neighborhoods
      • Setting high license fees or strict limits on the number of rentals.
      These states favor treating STRs more like regular long-term rentals, pushing for state preemption where the state sets the main rules. They generally prefer low registration fees and sometimes want platforms to handle tax collection statewide.
    • Lobbying Matters (Washington State): Sometimes, industry players influence these state decisions. In Washington State, a proposal to let local governments add an optional tax (up to 4%) on STRs failed. Reports suggest Airbnb spent heavily lobbying against it. This shows how powerful platforms can be in shaping state vs. local STR regulation debates.

    What Does This Mean for STRs?

    This ongoing push-and-pull between state and local control highlights a few key things:

    1. Platforms Are Watching: Companies like Airbnb and Vrbo pay close attention to proposed rules. They fight hard against laws they dislike (like new taxes) but might work with cities on rules they can live with, or comply when mandated (like Austin’s tax collection). Handling these different short-term rental laws is a big part of their business strategy.
    2. Enforcement is Tricky: Even with new rules, making sure everyone follows them is a challenge. Houston officials worried about enforcing their new ordinance. Austin delayed rule changes partly to get better tracking software. Louisiana’s idea of letting neighbors sue suggests official enforcement isn’t always enough. This “enforcement gap” is a real issue.
    3. The Conflict Continues: The core argument – state authority vs. local needs – isn’t going away. Debates often pit statewide economic arguments against local worries about housing, neighborhood peace, and quality of life. Expect more battles over state vs. local STR regulation in legislatures and city halls.

    The rules for short-term rentals are constantly changing, shaped by this fundamental conflict over who holds the power to regulate.

  • Washington State Eyes New 6% Tax on Short-Term Rentals: A Deep Dive into House Bill 1763

    Washington State Eyes New 6% Tax on Short-Term Rentals: A Deep Dive into House Bill 1763

    The landscape for short-term rentals (STRs) in Washington State may be facing a significant shift. Proposed legislation, House Bill 1763, has ignited a contentious debate, pitting proponents of affordable housing against STR operators and platforms like Airbnb. At the heart of the matter is a proposed 6% statewide tax on STR bookings, designed to generate funds for local housing initiatives. As a former law clerk with a keen interest in housing policy and zoning, I find this development particularly noteworthy, representing a common tension playing out across the country.

    Understanding House Bill 1763

    Introduced in the Washington State Legislature, HB 1763 seeks to impose a new 6% tax specifically on the occupancy of short-term rental units. The revenue generated from this tax would be earmarked for local governments to invest in affordable housing projects within their jurisdictions. This legislative effort targets a market estimated to involve potentially 35,000 rental units statewide that proponents argue are impacting the long-term housing supply.

    The Argument for the Tax: Addressing the Housing Nexus

    Supporters of the bill, including State Senator Liz Lovelett, draw a direct line between the growth of the STR market and the state’s affordable housing challenges, particularly in tourist-heavy areas. Senator Lovelett articulated this view, stating, “There’s obviously a fairly easy nexus¹ to recognize between a lack of housing existing in areas that have a lot of tourism and the proliferation of short-term rentals, especially in the last decade.”

    The rationale is straightforward: as properties shift from long-term rentals or owner-occupancy to STRs, the available housing stock for residents decreases, driving up costs. Reports from areas like Glacier, WA, paint a stark picture, describing housing as “borderline impossible” for local workers and raising fears of the town becoming solely a resort destination. Proponents, like Senator Lovelett, argue the tax empowers local governments, allowing them to “put some skin in the game on solving their own local housing issues” using funds generated directly from the sector perceived to be contributing to the problem.

    ¹ Nexus, in a legal and tax context, refers to a sufficient connection or link between a taxing entity (like the state) and the activity or entity being taxed (STR operations) to justify the imposition of the tax.

    Industry Pushback: Fairness and Economic Strain

    Unsurprisingly, the proposed tax faces strong opposition from the STR industry. Airbnb, a major platform operating in the state, and its associated political action committee, HOST PAC, argue vehemently against the measure. They contend that the tax “creates an unfair competitive disadvantage for Washingtonians who share their home to make ends meet.” This highlights a key defense: many hosts are individuals using rental income to supplement their earnings, not large corporations.

    Airbnb also points to its existing contributions, noting it remitted approximately $78 million in tourism-related taxes in Washington on behalf of its hosts in 2023. Adding another 6% tax, they argue, constitutes an undue burden. Host organizations, such as the Washington Host Coalition Association (WHCA), echo these concerns, emphasizing the financial pressures hosts already face amid “tough economic times, and high gas and grocery prices.” While an opposition rally in Olympia drew around 70 attendees, the industry’s lobbying efforts are significant.

    Policy Considerations and the Broader Context

    The debate surrounding HB 1763 reflects a larger, national conversation about regulating the STR market. Municipalities and states are increasingly grappling with how to balance the economic benefits of tourism facilitated by STRs against concerns about neighborhood character, housing availability, and equitable taxation.

    From a policy perspective, the proposed tax in Washington attempts to internalize an externality – that is, making the STR industry contribute financially to mitigating a perceived negative consequence (reduced housing affordability) associated with its operations. The legal concept of “nexus” mentioned by Senator Lovelett is crucial here; establishing this link is fundamental to the tax’s justification and potential legal defensibility.

    However, opponents raise valid points about fairness, questioning whether STRs are being singled out disproportionately compared to other factors influencing housing costs. They also emphasize the economic activity generated by hosts and guests.

    Conclusion: A Balancing Act

    House Bill 1763 presents a clear conflict between distinct policy goals: fostering affordable housing versus supporting the burgeoning STR economy. Proponents see a necessary tool for local empowerment and a fair way to address housing shortages linked to STR growth. Opponents, including hosts and major platforms, view it as a punitive measure that unfairly burdens individuals and overlooks their existing economic contributions. As this bill progresses, the outcome will undoubtedly have significant implications for hosts, guests, and the broader housing market in Washington State. The debate underscores the complex challenge of integrating new economic models like STRs into existing community structures and regulatory frameworks.

    The rules governing short-term rentals are complex and subject to change. For ongoing expert analysis of key legislative actions, court decisions, and policy trends impacting the STR industry, subscribe to the Staystra email list today.

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  • The Hidden Dangers of Inflated Seller Concessions: A Legal Perspective

    The Hidden Dangers of Inflated Seller Concessions: A Legal Perspective

    As your Legal & Policy Contributor, I recently had the pleasure of listening to an incredibly informative segment on the Shortterm Show podcast, hosted by the insightful Avery Carl. You can find the full discussion here:

    In a recent discussion, Avery Carl and commercial real estate attorney Carrie Rosati explored some of the riskier “hacks” in real estate investing. One particular point, around the 29-minute mark, focused on seller concessions. As the Legal & Policy Contributor, this part of their conversation grabbed my attention due to its serious legal implications.

    Understanding the Limits of Seller Concessions

    Commercial real estate attorney Carrie Rosati clearly explained to Avery Carl that there are usually limits on how much money a seller can give back to a buyer for expenses like closing costs and prepaid items. These limits typically range from 2% to 6% of the property’s price, and the exact percentage depends on the type of loan. This system is in place to protect the fairness of the deal and prevent artificially inflated property values.

    The Dangerous “Cash Back Hack”

    However, some investors are trying to get significantly more cash back than these rules allow. The podcast described a strategy where a buyer offers the seller the asking price (for example, $500,000) but secretly arranges for a much larger amount (like $100,000) to be paid back at closing. This secret cash back agreement is hidden from the lender, often by using a separate LLC to make it look like a deal with an unrelated company.

    Carrie Rosati didn’t mince words: “This is so not a gray area. This is this is clear mortgage fraud.” This strong warning from a seasoned legal expert should make anyone considering this tactic think twice.

    As Ms. Rosati expertly explained, this scheme works by “artificially inflating the value of the property” to get a bigger loan than the property is actually worth. Lenders rely on loan-to-value ratios (the amount of the loan compared to the property’s value), and this practice undermines that basic principle. She also pointed out that borrowers usually tell the lender they’ve disclosed all parts of the purchase agreement and that the stated price is the real price. By hiding a separate agreement for a large cash back, these statements become false.

    Why This Matters: A Reminder of the 2008 Crisis

    Avery Carl wisely connected this practice to the issues that contributed to the 2008 financial crisis. When property values are inflated, and loans are based on these inflated numbers, it creates a situation where “the bank has 10 $500,000 loans out on what are essentially $400,000 properties.” This excessive borrowing means lenders don’t have enough security if borrowers can’t repay their loans. If many borrowers default, the bank can’t recover the full loan amount, which can lead to significant financial instability – something we definitely want to avoid repeating.

    Serious Consequences: Federal Crimes

    The risks of engaging in such a scheme go far beyond just having your loan called back. As the highly experienced Carrie Rosati emphasized, “These are the kinds of things the government investigates. And you don’t want to be in that position. It’s a It’s a really bad idea.” She further clarified that mortgage fraud isn’t just a state crime; it’s also a federal offense, which can lead to severe penalties, including large fines and even jail time.

    A Word of Caution and Wise Advice

    While the idea of extra cash back might seem appealing, especially for investors trying to maximize returns or manage their budget, it’s essential to understand the significant legal dangers involved. Ms. Rosati wisely advises, “If you think you’ve got if you think you’ve you’ve figured something out before you before you sign on the dotted line and you put yourself at risk, call a lawyer, pay him for an hour time of consultation, ask him the question.”

    It’s always best to seek professional legal advice before entering any transaction that might be legally questionable. Being open and honest with your lender is crucial. Trying to deceive them for a short-term gain can have severe long-term consequences. Remember, the goal is to build lasting wealth through smart and ethical investment strategies, not to endanger your financial future with risky and illegal schemes.

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  • Real Estate Depreciation: What’s Happening Now and What Might Change in 2025

    Real Estate Depreciation: What’s Happening Now and What Might Change in 2025

    Hi everyone, Jed Collins here, your guide to the rules and policies around short-term rentals. Today, we’re going to talk about something called depreciation. It’s a way for people who own buildings to lower their taxes over time. Think of it like saying a building slowly loses value as it gets older, and the tax rules let you count that loss.

    Right now, in early 2025, there are rules about how much of a building’s cost you can deduct each year. But things might change later this year! Let’s break it down in a simple way.

    How Depreciation Works Today

    Usually, when you buy a building, you can’t just say it all went away in one year for tax purposes. Instead, you have to spread out the cost over many years. This is called depreciation.

    There are different ways to do this. One common way is called MACRS (it’s a long name, so don’t worry about remembering it!). MACRS says how many years you have to take to lower the value of your building for taxes. For a place where people live, like an house, it’s usually 27 and a half years. For other buildings, like stores or offices, it’s often 39 years.

    Another rule is called bonus depreciation. This lets you take a bigger chunk of the cost off your taxes in the first few years. For things bought in 2025, you can deduct 40% of the cost right away! This is less than before. For example, if you bought something for $100,000 in 2022, you could deduct the whole $100,000 right away. In 2023, it was 80%, and in 2024, it was 60%. Now it’s going down to 40%.

    There’s also something called Section 179. This lets some businesses take the full cost of certain things off their taxes right away, up to a certain amount each year. For 2025, that limit is $1,250,000. But there are rules about what kind of property this works for, and your business has to have enough income.

    What Could Change in 2025?

    Now, here’s where it gets interesting. The people in charge of making laws about money (like taxes) have been talking. They made a plan in April 2025 that could lead to some big changes later this year.

    One of the big ideas is to bring back 100% bonus depreciation! That means if you buy something that qualifies, you could deduct the entire cost in the first year, just like it was in the past. Some people are even saying this could go back to January 20, 2025.

    This is a big deal for people who invest in buildings. If they can deduct more money sooner, it can help them save on taxes and have more money to use for other things.

    What This Means for You

    If you own or are thinking about buying a short-term rental, these possible changes could be important.

    • If 100% bonus comes back: You might want to think about buying things or making improvements sooner rather than later to get the bigger tax break.
    • Even with 40% bonus: It’s still a good idea to understand how depreciation works. There are even ways to study your building to find parts that can be depreciated faster, called cost segregation.

    But remember, these are just possibilities right now. The laws could stay the same. So, it’s important to keep an eye on what happens and talk to a tax expert to see what’s best for you.

    Get out full report here.

  • Short-Term Rentals in New Braunfels: What You Need to Know

    Short-Term Rentals in New Braunfels: What You Need to Know

    Let’s talk about the rules for short-term rentals (STRs) – like Airbnb and VRBO – in New Braunfels, Texas. It can seem like a lot, but we can break it down in a way that’s easy to understand.

    What’s a Short-Term Rental?

    In New Braunfels, a short-term rental is a house or a two-family house that people rent out for less than 30 days at a time. Think of it like a hotel, but it’s someone’s home. This doesn’t include regular hotels, motels, or apartments that rent for longer periods. If you advertise your house online for short stays, you need to follow these rules!

    Getting Permission: The Permit

    If you want to run a short-term rental in New Braunfels, you need to get a special permission slip from the city called a permit. You can’t just start renting without it. You have to apply online through the city’s website.

    To get a permit, you’ll need to show them some important papers, like:

    • Proof that you own the house.
    • A drawing of your property showing where the house is and where people can park their cars (not in the garage!).
    • A drawing of the inside of your house, showing all the rooms and where people sleep.
    • Proof that you have insurance in case something goes wrong.
    • The name and phone number of someone who can be there quickly if there’s a problem.
    • A letter if someone else is helping you manage the rental.
    • A paper that tells renters the rules and who to call if there’s an emergency.
    • Information about your water and other bills.

    There’s also a fee to apply for the permit and another fee every year to keep it active. Someone from the city will also come to check your house to make sure it’s safe for renters. Once everything is okay, you’ll get your permit!

    Where Can You Have a Short-Term Rental? Zoning Rules

    This is a big one. The city has rules about where you can and cannot have short-term rentals based on how the land is zoned (what the city says that area can be used for).

    • No STRs in Normal Neighborhoods: If your house is in an area zoned for regular houses (like where most people live), you usually can’t have a short-term rental. This is something people are fighting about in court right now.
    • STRs in Some Business Areas (Maybe with Extra Steps): In some areas zoned for businesses, you might be able to have a short-term rental, but you might need to get another special permission called a “Special Use Permit” (SUP). This is like asking the city extra nicely if it’s okay.
    • No SUP Needed in Certain Business Areas: There are a few specific business zones where you might not need the extra SUP, but you still need the regular permit.
    • Getting a Special Use Permit (SUP): Getting an SUP can take a while (maybe three months!) and cost extra money. The city will tell your neighbors you want to do this, and there will be public meetings where people can say if they agree or disagree. You’ll need to give the city a lot more information about your property. Even if you do all this, the city might still say no.
    • No STRs in Floodways: If your house is in an area that floods easily (a floodway), you can’t have a short-term rental, no matter what the zoning is.

    How to Check: The city has a cool online map where you can type in an address and see if short-term rentals are allowed there.

    Rules for Running Your Rental

    Once you have your permit, you need to follow some rules to make sure everything runs smoothly and doesn’t bother the neighbors:

    • How Many People Can Stay? You can have two adults for every bedroom, plus two more adults in the whole house.
    • Parking: You need to have at least one parking spot outside the garage for each bedroom.
    • Noise: You have to follow the city’s general rules about noise. If your renters are too loud, people can complain to the police.
    • Trash: You and your guests need to follow the regular trash rules for houses in the city.
    • Safety: You need to have things like smoke detectors and fire extinguishers that work. You also need to have a plan for how people can get out of the house in an emergency, and it needs to be easy for guests to see.
    • Insurance: You need to keep your insurance up to date.
    • Someone to Call: You need to have a person who is available 24/7 and can get to the property within an hour if there’s a problem.
    • Things to Show: You need to put your permit sticker on the property and give your guests the information sheet with the rules and emergency numbers.

    The city also suggests having a written agreement with your renters.

    Paying Taxes: Hotel Occupancy Tax (HOT)

    If you rent your place for less than 30 days, you have to collect a special tax from your guests called the Hotel Occupancy Tax (HOT). There are a few parts to this tax:

    • State Tax: Texas charges a 6% tax.
    • City Tax: New Braunfels charges a 7% tax.
    • County Tax (Maybe): If your property is in a certain part of the city (Guadalupe County), you might have to collect another county tax.
    • Water District Fee (Usually Not in the City): There’s another fee for properties near the lake, but this usually doesn’t apply to rentals within the city.

    Important! You are the one who needs to collect and send the city’s 7% tax (and the county tax if it applies). Websites like Airbnb and VRBO might collect the state tax, but they usually don’t handle the city’s tax for you. You have to do it yourself through the city’s online portal every month, even if you didn’t have any renters that month. If you don’t pay on time, you’ll have to pay extra fees! The city can also check your records to make sure you’re paying the right amount.

    What Happens if You Break the Rules?

    The city has people who check if short-term rentals are following the rules. If people complain about your rental or if you don’t have a permit, you could get in trouble. This could mean getting fines or even having your permit taken away. If you don’t pay your taxes, you’ll also have to pay penalties and could even face legal charges.

    Things Are Changing: New Rules and a Court Case

    The rules for short-term rentals in New Braunfels have been updated recently, and there’s a big court case going on right now. Some people think the city’s rule that bans short-term rentals in regular neighborhoods is unfair. The court case is still ongoing, so the rules might change in the future.

    What Should You Do?

    If you’re thinking about running a short-term rental in New Braunfels, it’s really important to:

    • Check the City’s Website: The city has a lot of information online about the rules.
    • Use the Online Map: See if short-term rentals are allowed where you want to operate.
    • Read the City’s Guide: They have a special guide for short-term rentals.
    • Talk to a Lawyer (If Needed): If you have questions about the rules or the court case, it’s a good idea to talk to a lawyer who knows about this stuff.
    • Contact the City: You can also call the city if you have specific questions.

    It’s important to follow all the rules so you can run your short-term rental safely and without problems!

    Learn More Here: City Of New Braunfels

  • Dallas’s Ongoing Short-Term Rental Saga: A Year After the Ban

    Dallas’s Ongoing Short-Term Rental Saga: A Year After the Ban

    The Ban That Wasn’t: A Recap

    In June 2023, the Dallas City Council voted to adopt zoning ordinance amendments intended to significantly restrict short-term rentals, primarily targeting single-family residential zones. This decision followed numerous complaints from residents regarding noise, parking issues, and general disturbances associated with short-term rental properties operating in their neighborhoods. The aim was to preserve the character of residential areas and address concerns about neighborhood stability.

    The city’s approach involved amending the zoning ordinance to limit where STRs could operate and establishing operational requirements for those permitted in designated zones (such as multi-family, commercial, and mixed-use districts). These requirements included registration with the city, property inspections, the designation of a local responsible party, and adherence to occupancy limits and noise restrictions.

    Legal Roadblocks: The Temporary Injunction

    However, the implementation of these changes faced immediate legal challenges. The Dallas Short-Term Rental Alliance, representing rental operators, filed a lawsuit in October 2023, arguing that the new regulations violated the Texas Constitution and constituted an illegal taking of property rights. They sought a temporary injunction (a court order prohibiting a specific action until a trial can be held) to prevent the city from enforcing the restrictions.

    In December 2023, a Dallas County district court granted this temporary injunction, effectively putting the enforcement of the more restrictive STR regulations on hold. The court found that the rental operators had presented sufficient evidence to suggest they would likely succeed in their argument that the city’s ordinance was unconstitutional and would suffer “imminent and irreparable harm” if the changes were enforced (Order on Temporary Injunction, December 6, 2023).

    The Latest Setback: Appellate Court Ruling

    Adding another layer to this complex situation, the Dallas Fifth Circuit Court of Appeals recently upheld the lower court’s decision to grant the temporary injunction (Fifth Court of Appeals Opinion, February 7, 2025). The appellate court panel agreed with the trial court’s assessment that enforcing the new restrictions immediately could cause irreparable harm to the STR operators while the legal case proceeds. The court specifically noted the language of the ordinances, which stated they would “take effect immediately,” potentially infringing on the operators’ property rights before a full legal determination could be made.

    This ruling means that, for the time being, short-term rentals can continue to operate throughout Dallas, even in areas where the city intended to significantly limit them. The appellate court’s decision underscores the legal complexities surrounding the regulation of short-term rentals and the challenges municipalities face in implementing broad restrictions.

    Enforcement of Existing Ordinances

    While the intended limitations on STRs in certain zones remain unenforceable due to the injunction, the City of Dallas has indicated that it will continue to enforce its existing ordinances related to minimum property standards, noise disturbances, and private nuisances (City of Dallas Short Term Rentals Home Page). This means that even though STRs can currently operate more broadly than the city intended, they are still subject to regulations aimed at ensuring basic safety and preventing disruptive behavior.

    Between June 2023 and September 2024, the city received approximately 160 STR-related complaints, primarily concerning noise, operational issues, parking, and litter (D Magazine, February 10, 2025). This suggests that while a move to restrict STRs was pursued, some level of regulation and enforcement remains necessary to address community concerns.

    The Path Forward: Uncertainty Remains

    The recent appellate court ruling does not represent a final verdict on the legality of Dallas’s efforts to restrict short-term rentals. It merely allows STRs to continue operating while the underlying lawsuit proceeds through the courts. The city has several options, including appealing the appellate court’s decision to the Texas Supreme Court or focusing on the trial for the actual lawsuit, the date for which has not yet been set.

    Some members of the City Council have also expressed a willingness to reconsider the approach taken and explore alternative strategies, such as enhanced enforcement of existing regulations or the development of a more nuanced ordinance through further engagement with stakeholders (D Magazine, February 10, 2025).

    The legal battle in Dallas reflects a broader debate occurring in cities across Texas and the nation regarding how to balance the rights of property owners to utilize their property as short-term rentals with the concerns of residents about the potential negative impacts on their neighborhoods. The contrasting outcome in Fort Worth, where a district court recently upheld the city’s authority to ban STRs by structuring the ban within its zoning code (CandysDirt.com, March 13, 2025), highlights the importance of the legal framework underpinning such regulations.

    Conclusion

    For now, the short-term rental landscape in Dallas remains in a state of flux. The city’s attempt to implement significant restrictions is stalled by ongoing legal challenges, and a recent appellate court decision has affirmed the temporary reprieve for STR operators. While existing city ordinances related to property standards and nuisances continue to be enforced, the fundamental question of where and under what conditions short-term rentals can operate in Dallas remains unresolved. As the legal proceedings continue, both homeowners and short-term rental operators must stay informed about future developments that will ultimately shape the regulatory framework for this evolving sector of the housing market.

  • Decoding the Disruption: Trump’s Tariffs and the Future of Short-Term Rentals

    Decoding the Disruption: Trump’s Tariffs and the Future of Short-Term Rentals

    The implementation of the 2025 Trump Tariffs marks a notable shift in international trade policy, and as the Legal & Policy Contributor for this blog, it’s my responsibility to analyze the potential ramifications for the short-term rental (STR) market. While the tariffs are broad in scope, their impact on tourism, particularly from our neighbors to the north, Canada, warrants careful consideration.

    In early April 2025, President Trump enacted a “reciprocal” tariff plan, citing trade imbalances and unfair practices. This involved a baseline 10% tariff on most imports, effective April 5th, with higher, “individualized” tariffs for specific countries following on April 9th. While Canada wasn’t initially subject to these individualized tariffs, pre-existing duties on steel, aluminum, and automobiles remained, alongside a complex structure of tariffs and exemptions under the United States-Mexico-Canada Agreement (USMCA). Predictably, Canada responded with its own countermeasures, including tariffs on US automobiles and a range of other goods.  

    This multi-layered approach, while intended to address trade deficits, introduces considerable complexity and uncertainty, factors that often deter discretionary spending like international travel. Even with USMCA exemptions, the tariffs on key sectors, coupled with the overall trade dispute, are likely to sour the economic relationship between the US and Canada, potentially leading to a decrease in leisure travel.

    The Rising Cost of Crossing the Border

    The tariffs are expected to increase the cost of US travel for Canadians through both direct and indirect mechanisms. Directly, the tariffs will likely inflate the prices of imported goods within the US. Canadian tourists purchasing goods will likely face higher prices as American businesses pass on tariff costs. Indirectly, the 25% tariff on automobiles could eventually raise rental car prices. Furthermore, Canada’s retaliatory tariffs on US goods could increase the cost of living for Canadians, reducing their discretionary spending on travel. Economic uncertainty stemming from the trade dispute could also negatively impact the Canadian dollar’s exchange rate against the US dollar, making US travel more expensive. Experts anticipate that these tariffs will generally lead to higher prices for American consumers , and the travel industry is no exception, with potential increases in operating costs for airlines and hotels being passed on to consumers.  

    Destinations on Edge: Where Will Canadians Stay Away?

    Historically, Florida, California, Nevada, New York, and Texas have been the top US destinations for Canadian tourists seeking short-term rentals. Within these states, Orlando, Las Vegas, and New York City are particularly popular. Border states like New York and Michigan also heavily rely on Canadian tourism , with Detroit and the Wildwoods on the New Jersey Shore being notable examples. Even destinations like Virginia Beach have acknowledged the potential impact and are offering discounts to attract Canadian visitors.  

    Destinations with strong historical ties to Canada and those located near the border are particularly vulnerable. Las Vegas, with nearly half of its international airport arrivals from Canada , stands to see a significant impact on its short-term rental market.  

    The Economic Stakes: Billions on the Line

    Canada is the leading source of international visitors to the US. In 2024, Canadians made 20.4 million trips, spending $20.5 billion and supporting an estimated 140,000 American jobs. Even a modest 10% reduction in Canadian travel could result in 2 million fewer visits, a $2.1 billion loss in spending, and 14,000 potential job losses.  

    Early data from 2025 already indicates a decline in Canadian travel to the US. Vehicle crossings and air travel have both decreased , and hotel bookings from Canada to US destinations have also seen a drop. Notably, vacation rental professionals in Florida reported a 16% decline in Canadian reservations through mid-February 2025, and rental managers in Hawaii saw a 14% decrease. Border regions are also feeling the pinch, with hotel demand down in Niagara Falls, NY, and Bellingham, WA.  

    Key Table 1: Impact of Reduced Canadian Tourism on Select US States (Based on Early 2025 Data)

    StateMetricPercentage Change (Year-over-Year)Source
    FloridaDecline in vacation rental reservations-16%
    HawaiiDecline in rental bookings-14%
    New YorkDecrease in hotel room demand (Niagara Falls)-8%
    WashingtonDecrease in hotel room demand (Bellingham)-12%

    Looking North and Beyond: Alternative Destinations

    Faced with increased costs and a potentially less welcoming perception of the US, Canadian tourists have numerous alternative destinations. The Canadian government has encouraged domestic travel , and searches for domestic Airbnb stays have reportedly surged. Ontario’s cottage country is being promoted as a luxurious alternative , alongside other Canadian gems like the Cabot Trail, the Canadian Rockies, and major cities. The Canadian dollar’s parity with itself makes domestic travel financially straightforward.  

    Internationally, destinations where the Canadian dollar holds strong purchasing power, such as Australia, Egypt, and Vietnam, are becoming more attractive. Other popular alternatives include Portugal, Costa Rica, Thailand, and Mexico.  

    Economic Ripples: Regional Vulnerabilities

    The anticipated decline in Canadian tourism is expected to have a significant economic impact on the US short-term rental market, with border states and historically popular destinations bearing the brunt. Economists have warned of a potential slowdown in the US economy due to the tariffs , and the U.S. Travel Association has cautioned about substantial job losses and billions in lost spending. The early decrease in hotel demand in border regions and the drop in bookings in Florida and Hawaii are concerning indicators. Some experts believe the tariffs create an “unwelcoming environment” for foreign tourists, potentially exacerbating the decline.  

    Expert Opinions and Historical Echoes

    Industry associations like the Association of Canadian Travel Agencies (ACTA) and the U.S. Travel Association have voiced concerns about the tariffs’ impact on travel. Hotel industry data reveals a decrease in average hotel prices in major US destinations , possibly reflecting market uncertainty and softening demand. Notably, Canadian hotel searches for US destinations have significantly declined , suggesting a broader reluctance to travel south.  

    Historically, trade disputes between the US and Canada have correlated with decreased cross-border travel. During past disagreements, some Canadians informally boycotted American goods and services, including leisure trips. The early decline in Canadian travel in 2025 , the “collapse” in demand for flights between the two countries , and the surge in domestic Airbnb searches all echo this historical pattern.  

    Conclusion: Navigating the Shifting Landscape

    The evidence suggests that the 2025 Trump Tariffs will negatively impact the US short-term rental market due to a decline in Canadian tourism. Increased travel costs, a less welcoming perception, and attractive alternatives are all contributing factors. Border states and popular tourist destinations are most at risk.

    To mitigate these potential consequences, stakeholders in the US short-term rental market should consider diversifying their target markets, enhancing their value propositions, implementing strategic marketing, collaborating with tourism boards, and maintaining flexibility in their pricing and service offerings. While the long-term effects remain to be seen, proactive adaptation will be crucial for navigating this evolving landscape.

    Don’t Just Take my word for it, here are some helpful links.

    Where Have All the Snowbirds Gone? Canadians Cold on U.S. Travel: https://www.ctvnews.ca/canada/article/where-have-all-the-snowbirds-gone-canadians-cold-on-us-travel/

    How US-Canada Trade War Affects Tourism, Hospitality and Aviation Industry: https://www.travelandtourworld.com/news/article/how-us-canada-trade-war-affects-tourism-hospitality-and-aviation-industry-everything-you-need-to-know-about-aggressive-trump-tariff-policy/

    Canadian Travel to the United States Softens: https://nastra.org/canadian-travel-to-the-united-states-softens/

    As Canadians Cancel Trips Due to Trump, the U.S. Tourism Industry Could Lose Billions: https://www.cfpublic.org/2025-03-06/as-canadians-cancel-trips-due-to-trump-the-u-s-tourism-industry-could-lose-billions/

    Anger Against Trump is Forecast to Cost the US International Visitors: https://apnews.com/article/us-travel-canada-europe-international-tourism-22294ec17518cd28450cb3c0227b8351

    Tariff Ripple Effect: US Hotel Prices Adjust as Canadian Travel Interest Plummets: https://www.mylighthouse.com/resources/blog/tariffs-us-hotel-prices-impact/