State of South Dakota Short-Term Rental Regulations

South Dakota is known for its wide open spaces, beautiful scenery, and friendly small towns. In recent years, short-term vacation rentals have become increasingly popular across the state, providing visitors with comfortable and convenient lodging options. However, the regulations surrounding short-term rentals in South Dakota can be confusing and uneven between different cities and counties.

What is Considered a Short-term Rental

A short-term rental generally refers to a furnished residential property leased out for less than 30 consecutive days. This includes:

Definition and Rental Period Length

• Vacation rentals leased for a few nights or weeks at a time through platforms like Airbnb, VRBO, and others.
• Nightly and weekly rentals are considered short-term. Anything over 30 days is typically classified as a long-term rental.
• South Dakota laws do not provide a statutory definition distinguishing short-term from long-term rentals. Local jurisdictions make this determination.

Types of Rentals

• Entire houses, apartments, condos, cabins, and other residential units used for short-term stays.
• Private or shared rooms within a residential property.
• Alternative accommodations like RVs, tents, and tiny homes are also used for short-term rental.

Geographic Oversight

• There are no statewide short-term rental regulations in South Dakota. Rules can vary significantly between cities, counties, and unincorporated areas.
• In Sioux Falls, short-term rentals are treated like regular rentals with no special permits or processes.
• Meanwhile, other cities like Lead have enacted licensing and inspection requirements tailored specifically for short-term rental hosts.

Checking local city and county rules is an important first step for hosts looking to operate short-term rentals. The requirements can be quite different across South Dakota.

Starting a Short-term Rental Business

Depending on location, hosts interested in starting a short-term rental business face a patchwork of requirements. Here are some steps to get up and running properly:

Registration, Licensing, and Application Process

• Research local zoning codes and permit rules for rentals under 30 days. Some areas require special licensing.
• If required, submit a short-term rental permit application along with any fees to the appropriate city/county agency.
• Register the business with the South Dakota Secretary of State's office to obtain a tax ID number.
• Pass any required inspections for fire safety, building codes, etc.

Getting Started Tips

• Clarify HOA rules if renting in a subdivision or condo complex. Many prohibit short-term rentals.
• Evaluate insurance needs and adjust homeowner's policy if needed to cover short-term rental risks.
• Ensure all lodging taxes can be properly collected and remitted per state and local requirements.
• Set house rules, security protocols and have an emergency contact available for guests.

Check with local officials early to avoid compliance issues when starting a short-term rental in South Dakota. Permitting rules, in particular can vary greatly.

Housing Rules and Requirements

South Dakota housing and zoning laws influence the operation of short-term rentals across the state. Key regulations include:

Occupancy Limits

• Many cities limit overnight occupancy to 2 persons per bedroom plus 2 additional overnight guests. Children under 12 may be exempt.
• No more than 5 unrelated adults as permanent residents is common. Different limits can apply for short-term overnight stays.
• Exceeding maximum occupancy can risk fines, license revocation, or even eviction of guests.

Fire Safety and Inspections

• State law does not mandate safety inspections for short-term rentals as with hotels. Some cities do require them, though, for licensing.
• Working smoke detectors are required in all rental units per state law. Some cities also require carbon monoxide detectors and fire extinguishers.
• Routine self-inspections of smoke alarms, exits, lighting, and house numbers are a good practice.

Insurance Requirements

• Standard homeowners insurance often excludes short-term rentals. "Homeshare" endorsements may be needed.
• Host guarantee programs offered by rental platforms provide liability coverage and property damage protection.
• Require guests to agree to rules and safety policies in rental contracts to reduce risks.

Familiarizing yourself with the most up-to-date housing codes and safety laws is important for compliance. Rules about maximum occupancy, smoke detectors, inspections, and insurance requirements impact many aspects of operating short-term rentals.

Short-term Rental Taxes

One major requirement for short-term rental hosts in South Dakota is properly collecting and remitting all applicable taxes. This includes:

State Taxes

• South Dakota has a state sales tax of 4.5%. Short-term rental hosts must collect and submit this tax.
• Sales tax also applies to any fees, like cleaning and pet fees.
• Airbnb and other platforms now handle state sales tax payments on behalf of hosts in South Dakota.

Local Taxes and Fees

• Cities and counties may have additional local taxes on short-term lodging. This varies across the state.
• Sioux Falls charges a 1% lodging tax and a $2 per room BID fee. But other areas have no local fees.
• Unlike hotels, short-term rentals are often exempt from local tourism and promotion taxes.

Reporting and Remittance

• State sales taxes are reported and paid on hosts' behalf by the rental platforms if booked through their sites.
• Hosts must obtain a tax license and submit returns manually for direct bookings.
• Local taxes and fees are generally still the host's responsibility to calculate, report, and remit properly.

Non-payment of required taxes on short-term rentals can lead to interest, penalties, or legal action if not addressed. Both state and local tax obligations need to be determined early on when starting a short-term rental business. This ensures full compliance.

Operating short-term rentals comes with unique regulations, permits, taxes, and safety requirements to consider. While state laws in South Dakota are limited, city and county rules can impose a range of standards hosts must meet.