State of Alabama Short-Term Rental Regulations

In this guide, We'll break down everything Alabama hosts need to know about short-term rental regulations, taxes, licensing, and safety standards. My goal is to help you successfully launch your rental while avoiding fines and penalties. Let's dive in!

Defining Short Term Rentals in Alabama

Unlike most other states, Alabama does not have an official definition of short-term rentals or vacation rentals in its laws. However, for tax purposes, lodging tax is applied to rentals of less than 180 continuous days to transient guests. This 180-day threshold is used to differentiate short-term vs. long-term rentals.

So, in practice, any furnished Alabama rental offered for less than 180 days would be considered a short-term or vacation rental. This includes:

• Entire homes or apartments
• Private rooms  
• Guest suites
• Cabins
• Beach houses

Hotels and bed and breakfasts are also taxed differently than short-term rentals in Alabama based on length of stay.

What Qualifies as a Short-Term Rental

The state applies lodging taxes to any furnished rental offered for less than 180 consecutive days. So, while not formally defined in law, rentals under 180 days fall under short-term rental regulations in Alabama.

Some cities use shorter thresholds to define short-term rentals in local ordinances. For example, Gulf Shores considers 14 days or less rentals as short-term. Check local rules that apply to your specific area.

State Laws vs Local Ordinances

In Alabama, short-term rental activities are governed by a mix of state statutes, health department rules, and local ordinances. State laws provide a base level of regulation, but counties and cities often add their own unique rules.

As a host, it's critical you research regulations at both the state and local level before listing your property. I always contact local zoning officials first to understand requirements. This helps avoid issues.

Starting a Short-Term Rental Business in Alabama

Launching a new short-term rental in Alabama involves a few key steps for compliance. Let's look at the basics of licensing, registration, taxes, and property preparation.

Lodgings Tax Registration

Hosts must register with the Alabama Department of Revenue to collect and remit state and local lodgings taxes to legally operate. You'll receive an account number to report taxes.

Registration is free online via the Alabama Business Tax Online Registration System. It takes 3-5 days to get your number. Apply early before renting out your property.

Local Business License

Most cities and counties require hosts to get a local business license to operate a short-term rental. Fees and application requirements vary by location. 

For example, Gulf Shores charges a $100 annual business license fee. Do your homework to understand local rules.

Preparing Your Property

To meet safety requirements, verify your rental has the following:

• Smoke detectors  
• Carbon monoxide detectors
• Fire extinguishers
• Functioning appliances
• Safe conditions  

I also recommend smart home technology to remotely monitor and manage your unit. This provides more convenience for guests.

Tax Obligations for Alabama Short-Term Rentals

As a host, you must collect and remit occupancy and sales taxes. Here's what Alabama hosts need to know:

State Sales Tax

The statewide sales tax on short-term rentals is 4%. Hosts must collect this on the total rental rate charged to guests, including fees. You are responsible for filing returns and paying the state. Returns are typically due monthly. Account for taxes in your pricing.

Local Lodgings Tax

Cities and counties also collect local occupancy taxes from 1% to 11% on short-term rentals. For example, Birmingham charges 3% while Gulf Shores is 11%. Verify the rate for your specific area.

You report local taxes alongside state sales tax returns each period using the state's online filing system. 

Business License Tax

Most Alabama cities charge an annual business license tax on short-term rentals, typically $50 to $200 per property. Verify the rate when applying for your municipal business license.

Safety and Health Standards

Alabama sets legal safety requirements for short-term rentals around fire, building, and health codes to protect guests:

Fire Safety

Rentals must meet statewide fire code requirements, including:

• Working smoke alarms
• Posted egress plans
• Fire extinguishers

Properties with pools/hot tubs have additional regulations. Inspect thoroughly before hosting.

Health and Sanitation

The Health Department oversees rules for vacation rentals covering waste, insects, rodents, and cleaning of coastal properties. These help prevent the spread of diseases.

Building Safety

Ensure your rental meets stair width, railings, ramp slopes, electrical, HVAC, and plumbing codes. Address any issues to maintain safety.