Short-term rentals must register with Indianapolis under new law

Indianapolis has passed a new law requiring short-term rentals (STRs) to register with the city and pay a one-time $150 fee. Owners with multiple properties must obtain a permit for each, and the city can revoke an STR permit for three violations of the STR ordinance. The new requirements will go into effect at the beginning of 2025.

The ordinance was proposed as a way to gather data about STRs and make sure the city has contact information for STR operators. 

“Many of these Airbnbs are owned by out of state, non-existent landlords who don’t respond, and this is simply about providing a registry and a permitting process,” said Councilor Kristin Jones, the proposal’s sponsor.

The town of Speedway, which has significant STR activity from visitors attending the Indianapolis 500 and other racing events, created a similar registry in 2023. Indianapolis STRs have been in high demand this year for events, with Taylor Swift’s concert in November 2024 driving a 7,000% increase in online searches for area STRs.

In Indiana, STRs are defined as living quarters that are rented for terms of less than 30 days at a time through an STR platform such as Airbnb or Vrbo. A state law passed in 2018 protects STR use of an owner’s primary residence. 

Local governments are allowed to require a special exception, special use, or zoning variance for STRs that are not the primary residences of their owners. However, local governments may not ban STRs and may regulate STRs only for specific purposes, which include protection of public health and safety, nuisance issues, and protection of welfare, among others. Enforcement of STR laws must be the same as enforcement for non-STR properties. The state law also dictates that local governments may charge no more than $150 for STR permits. Local government ordinances passed before January 1, 2018, as well as homeowners association rules can be stricter than what the 2018 state law allows.

In addition to local operational regulations, Indianapolis STR hosts are required to follow lodging tax regulations. STR operators must register with the Indiana Department of Revenue and register to receive a Retail Merchant Certificate. Operators are required to collect state sales tax and Marion County innkeeper’s tax from guests and file tax returns with the state. 

In Indiana, all charges that are essential to the furnishing of accommodations and included in the room charge are taxable. This includes items such as cleaning fees, pet fees, rollaway bed fees, extra person fees, no-show fees, etc. However, forfeited damage deposits, damage fees, cancellation fees, and extra services such as laundry or dry cleaning are not subject to lodging taxes.

In Indiana, vacation rental marketplaces such as Airbnb and Vrbo are required to collect Indiana short-term rental taxes for hosts when the listing is booked. If taxes aren’t being collected, the host is responsible for collecting and remitting them to tax authorities.

Avalara MyLodgeTax can help STR hosts automate lodging tax to streamline and simplify lodging tax compliance. For more on lodging taxes in Indiana, see our state vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.