State of New Mexico Short-Term Rental Regulations

From the majestic mesas and canyons of Santa Fe to the slopes of Taos Ski Valley, New Mexico attracts millions of annual visitors drawn to its vibrant cultural sights, outdoor adventure, and unique landscapes. When traveling to popular destinations like Albuquerque, White Sands, and Carlsbad Caverns, many opt to stay in short-term vacation rentals for added amenities, space, and convenience. For property owners, listing extra rooms or a secondary home on sites like Airbnb, Vrbo, and Vacasa allows them to generate attractive income amid this tourism demand. However, hosts must navigate New Mexico’s patchwork of local rules and state statutes governing short-term rentals.

Defining Short-term Rentals in New Mexico

While statutes provide some definitions, jurisdictions in New Mexico take varied approaches to classifying and regulating short-term vacation rentals. However, commonalities exist.

State Definitions of a Short-term Rental

New Mexico defines short-term rentals in certain sections of the law, like the state tax code, but definitions are not universal. The threshold is typically under 30 consecutive days.

Local Control Over Definitions

Cities, towns, and counties have the authority to define short-term rentals as they see fit through local ordinances if they choose to regulate them. Thirty days or less is the most common.

Types of Rentals Included

Listings may be for a single room, entire home, apartment, condo, cabin, or other residential space. Duration under 30 days classifies them as short-term rentals.

Starting a Short-term Rental Business in New Mexico

Launching a compliant short-term rental business in New Mexico takes research, planning, permitting, registration, and coordination across state and local requirements.

Checking Local Zoning and Regulations

Review specific municipal or county ordinances to see if short-term rentals are allowed in the property's zoning district and if any local permits or licenses are required. Also, check HOA bylaws.

Applying for Any Required Local Permits

Obtain any necessary local short-term rental permits, licenses, or registrations if mandated for your jurisdiction. Requirements vary widely across New Mexico.

Registering with the New Mexico Taxation Department

You must collect and remit all applicable state lodging and gross receipts taxes. Registration ensures you meet tax obligations.

Researching Relevant HOA Regulations

Confirm that condo association or neighborhood HOA bylaws permit short-term rental of units. Get HOA approval in writing if needed before listing the property.

Building Projected Budgets and ROI

Carefully research and factor in all projected costs like licensing, taxes, furnishings, cleaning, utilities, and insurance to estimate your potential return on investment.

State Regulations on New Mexico Short-term Rentals

While granting local control over most issues, the New Mexico state government does impose some consistent definitions and requirements on short-term rentals across the state.

State Tax Requirements

The state requires hosts to collect and remit all applicable lodger’s taxes and gross receipts taxes on short-term rental revenue. This supports state and local government services.

Safety and Health Inspection Authority

Under state environmental laws, New Mexico’s Environment Department oversees minimum baseline health and safety standards for short-term rental properties.

Limitations on Local Authority

Cities and counties have significant autonomy over short-term rental rules. However, any restrictions must be reasonable per state statutes limiting property rights infringement.

No State Licensing or Permitting

Unlike many other states, New Mexico does not currently mandate hosts obtain a statewide short-term rental license, permit, or registration. However, local permits are often required.

Local Rules for New Mexico Short-term Rentals

Cities, towns, counties, and villages across New Mexico take varied approaches to short-term rental oversight, leading to a complex patchwork of hyper-local regulations that hosts must navigate.

Common Types of Local Regulations

Popular tourist areas in New Mexico commonly require registration and permitting, restrict locations through zoning, cap total rentals, and levy local taxes on short-term rentals operating in their jurisdiction.

Local Permitting and Licensing Fees

Municipalities with short-term rental regulations typically charge annual licensing, permitting, or registration fees ranging from $25 to $100+ per rental property, payable to the local government.

Safety and Health Inspection Processes

Some cities require short-term rentals to pass a local inspection focused on fire safety, smoke detectors, sanitation, cleanliness, and more as part of the permitting approval process before hosting guests.

Penalties for Violations

Fines for violating local ordinances vary widely but may include penalties of $200+ per violation for issues like operating without a permit. Severe cases may warrant court action.

Taxes on Short-term Rentals in New Mexico

New Mexico imposes various state and local taxes on short-term rental properties that hosts must factor into their pricing and budgets. Understanding this complex web of lodging taxes is crucial for Airbnb or vacation rental success.

State Lodger's Taxes

New Mexico charges a statewide lodger's tax on all short-term room rentals of 30 days or less. Rates range from 5-7% based on location. For example: Taos charges a 5% lodger's tax on all stays under 30 days. Albuquerque imposes a 7% lodger's tax on short-term rental transactions in addition to gross receipts tax. Santa Fe levies a 5.975% lodger's tax on all lodging under 30 days. Ruidoso applies a 5.5% lodger's tax to vacation rental stays under 30 consecutive days. So, hosts must research the specific state lodging tax rate that applies in their city or county.

Gross Receipts Taxes on Short-term Rentals

New Mexico also charges a gross receipts tax on the total gross rental income from short-term properties statewide. Rates range from 5.125% to 8.6875%, depending on location. For instance: Taos Ski Valley has an 8.6875% gross receipts tax on all STR revenue. The city of Taos levies a 5.125% gross receipts tax on short-term rental earnings. Santa Fe charges an 8.4375% gross receipts tax on all lodging revenue under 30 days. So, hosts must factor in their applicable local gross receipts tax rate when pricing and budgeting.

Local Lodging Taxes

A few popular tourist cities and counties in New Mexico charge additional local room taxes on short-term rentals beyond state lodging taxes. These range from 1-5%. For example: Taos Ski Valley imposes a 2% Village Lodgers' Tax on Airbnb rentals. The city of Las Cruces levies a 5% Convention Center and Tourism Fee on stays under 30 days. However, most New Mexico jurisdictions currently do not assess supplemental local lodging taxes. Carefully researching the combination of state and local lodging taxes imposed on short-term rentals across New Mexico is crucial for hosts to achieve tax compliance, avoid non-payment penalties, and appropriately set rental rates.

Reporting and Remittance Deadlines

Hosts must report occupancy data, taxes collected, and taxes owed to the New Mexico Taxation Department on either a monthly or quarterly basis, depending on revenue size.

Insurance Considerations for New Mexico Short-term Rentals

Evaluating insurance needs often gets overlooked when launching a New Mexico STR business. Here are some key factors hosts should consider:

Reviewing Existing Homeowners Insurance

Standard homeowners insurance typically excludes commercial activity like short-term rentals. Verify if your current policy provides coverage.

Exploring STR-Specific Insurance Policies

Consider insurance designed specifically for short-term rentals that bundles liability, property damage, lost income, liability gaps, and other protective coverage missing from standard policies.

Navigating New Mexico’s complex patchwork of hyper-local regulations takes diligence but puts hosts on solid legal and financial footing. Do extensive homework before listing any properties, understand tax obligations, and adequately insure your business. Compliance takes effort but allows your New Mexico STR to operate smoothly and profitably while providing memorable experiences for travelers from across the globe.