What you need to know about the rise of short-term rentals

What you should know about short-term rentals.

BOISE -- As Idaho becomes a desirable destination for businesses and events, more and more people are visiting.

Traditionally, those people would be staying in hotels. But now, short-term vacation rentals are popping up all over the state, providing tourists more options. As with anything that's relatively new, short-term rentals present a whole new set of challenges.

In Ada County alone, more than 300 short-term rentals are listed just on one site. The majority of the rentals are in Boise - and they're popping up in Nampa, Meridian and Eagle as well. But as the market continues to grow, major issues are popping up, too - from hosts not collecting taxes, to battles with homeowners' associations and neighbors.

Andrea Oncken has been a short-term rental host for almost two years.

"I do like it but it's a lot of work," she said.

She turned her former charming, four-bedroom home in Boise's North End into a short-term rental.

"I wasn't ready to sell. It's a good investment - this home - so I decided to keep it and then, of course, somehow pay the mortgage on two homes," Oncken said.

She chose to use the short-term rental site Airbnb,

"They're just easy," she added. "They kind of handle all the details."

Airbnb isn't the only option; other popular sites include VRBO (owned by HomeAway), Vacasa and FlipKey (owned by Trip Advisor), to name a few.

The Idaho State Tax Commission says they are finding that many homeowners on those sites aren't aware that they need to charge certain taxes.

"These taxes apply whether you're a hotel chain, a bed and breakfast, or a private residence," Idaho Tax Commission Public Information Officer Renee Eymann told KTVB.

This is the requirement in Idaho: Anyone who provides and charges for temporary lodging - meaning 30 days or less - has to collect and remit 6 percent sales tax, 2 percent travel and convention tax and any resort city or auditorium district sales tax that applies. For example, the Greater Boise Auditorium District tax (5 percent) applies to rentals within the district.

"We want to make sure everybody is charging the tax because it's only fair to the others - the hotels and bed and breakfasts that are already charging the tax. Otherwise they're at an unfair advantage with the private homeowners," Eymann said,

In December, Airbnb started collecting occupancy tax as part of users' online transactions. But that agreement doesn't apply to all of the other rental sites out there.

"Right now it's the homeowner's responsibility to collect those taxes," Eymann added.

Hosts must also report the income they get from short-term lodging rentals on their income tax returns.

The Felkins have been renting out a studio apartment-style property off Warm Springs in Boise for nearly four years on multiple rental platforms. 

"We have a separate business account for this, so the income and expenses all go through that separate business account," Daniel Felkins said.

Along with making sure they were staying on top of the required taxes, both Felkins and Oncken say they spoke with all their neighbors.

"We're very concerned about making sure this would be a welcome thing in the neighborhood and a resource for the neighborhood, not a detriment or detractor to the neighborhood," Felkins added.

"It's really well received," Oncken said. "It's not [in] an HOA, right, so I don't have a neighborhood association that I have to ask about so I've just talked to my neighbors."

But short-term rentals are becoming a controversy in some neighborhoods across the Valley, pitting absentee homeowners against neighbors, especially in neighborhoods with Homeowners' Associations, or HOAs.

Sarah Ellis with Park Pointe Management says they're hearing a few issues stem from safety concerns.

"I think neighbors want to know who their neighbors are. Do those cars belong there, do those people belong there?" Ellis said.

Noise is also a factor.

"People who come in on short-term rentals may not be the best neighbors in the world," managing member of Trout Law, PLLC, Kim Trout, said.

A few newer associations have Covenants, Conditions & Restrictions (CC&Rs) that explicitly state homeowners can't operate short-term rentals. But the problem lies in neighborhoods whose covenants don't state that.

"They would need to amend their CC&Rs. Generally, that includes a supermajority of owners in writing that have to approve," Ellis added.

In June 2015, Trout represented a man against his homeowners association in Adams v. Kimberley One Townhouse Owner's Association in a case that went all the way to the Idaho Supreme Court. That case set the stage for what has followed: a battle of regulation of short-term rentals.

Essentially, the court ruled in favor of an HOA's ability to amend their CC&Rs to prohibit short-term rentals. According to Trout, the Supreme Court said that because Adams bought his home at the time the neighborhood's CC&Rs were in place, he was bound by those rules, which - like most covenants - included the right of homeowners in the association to amend the provisions in their CC&Rs.

"They concluded that his contractual right as it existed at the time of purchase could be defeated by a vote of the majority of owners in the association," Trout added.

However, shortly after, the Idaho Legislature struck that down by amending Idaho Code Section 55-115. The law now says an HOA can't change their rules to prohibit short-term rentals and enforce it against a homeowner unless that person agreed to it in writing.

The statute says, in part:

"No homeowner’s association may add, amend or enforce any covenant, condition or restriction in such a way that limits or prohibits the rental, for any amount of time, of any property, land or structure thereon within the jurisdiction of the homeowner’s association, unless expressly agreed to in writing at the time of such addition or amendment by the owner of the affected property. Nothing in this section shall be construed to prevent the enforcement of valid covenants, conditions or restrictions limiting a property owner’s right to transfer his interest in land or the structures thereon so long as that covenant, condition or restriction applied to the property at the time the homeowner acquired his interest in the property."

Until a city government or the state takes the issue up again and creates some sort of balance between homeowners' rights to rent out their property and the rights of impacted neighbors to have peace and quiet, fights between owners renting out their homes and HOAs will likely play out for a while, Trout says.

"It's a fascinating problem," Trout added. "One that's not going to go away immediately."

The Idaho House Revenue and Taxation Committee voted in favor of a bill on Wednesday that would add a new chapter to Idaho code, titled "Short-term or vacation rental marketplaces."

House Bill No. 216 would also ensure that taxes on short-term rental properties are being collected and remitted by rental marketplaces the same way as hotels.

It would also prohibit cities and counties from outlawing rental marketplaces while protecting homeowners' property rights, whether that be the host or their neighbors. The bill's statement of purpose says this legislation protects property owners by allowing local governments to regulate short-term rentals only in cases where it is in the interest of the public health, safety and welfare. 

The proposed bill states, in part: 

"Neither a county nor a city may enact or enforce any ordinance that has the express or practical effect of prohibiting short-term rentals or vacation rentals throughout the jurisdiction of such county or city. Notwithstanding the foregoing prohibition, a county or city may implement such reasonable regulations as it deems necessary to safeguard the public health, safety and general welfare in order to protect the integrity of residential neighborhoods in which short-term rentals or vacation rentals operate. A short-term rental or vacation rental shall be classified as a residential land use for zoning purposes subject to all zoning requirements applicable thereto."

House Bill No. 216 is now moving to the full House of Representatives for a vote. KTVB will stay on top of any developments with its status.

© 2017 KTVB-TV


JOIN THE CONVERSATION

To find out more about Facebook commenting please read the
Conversation Guidelines and FAQs

Leave a Comment