Guide to Minneapolis Short Term Rental Regulations Updated for 2025 If you own (or plan to own) a property in Minneapolis and want to run it as a short-term rental (STR), there’s a substantial regulatory framework to navigate. The rules are intended to balance hosting opportunities with neighborhood stability, safety, and housing supply. Here’s a more in-depth look at what you need to know. What Counts as a Short-Term Rental in Minneapolis An STR is any residential unit (or part of one) leased out for less than 30 consecutive days. Even if you’re renting part of your home (a room, basement, etc.), the unit must still adhere to applicable safety, zoning, and licensing standards. Because state-level taxation and lodging laws apply to all STRs in Minnesota, you’ll have to comply at both city and state level regulations. Short Term Rental Licensing, Registration & Eligibility in Minneapolis Minneapolis divides short-term rentals into categories based on ownership/occupancy status. Each comes with different processes, fees, and constraints. CategoryWhen It AppliesLicensing / Registration RequirementAdditional NotesOwner-occupied, occupant stays during guest visitsYou live in the same unit and remain present while guests stayYou must register with the city (not a full license) Lower barrier; safety, insurance, and neighbor rules still applyOwner-occupied, but absent during guest stayYou own the home, but leave during guest staysYou register and pay a fee (recent references show ~$46)Treated differently than fully non-owner unitsNon-owner-occupied units / whole propertiesYou do NOT live in the unit being rented (i.e. rentals, investment properties)Must obtain a standard rental license under Minneapolis’s rental/STR licensing process More inspections, more requirements, more oversight Caps and Limits on Short Term Rentals Each property owner is limited to one short‐term rental property beyond their primary residence. Each property owner is limited to one short‐term rental property beyond their primary residence. In buildings of 20 or more units, no more than 10% of units may operate as STRs. Condo association rules, HOA rules, or lease rules can override city law (i.e. prohibit STRs even if city allows them). Minneapolis vacation rental regulations have changed over time, it’s best to determine whether a unit was permitted under past rules or must comply with current rules. Some owners have hoped for being grandfathered in but have found that they’re in violation. Application Requirements & Compliance for STRs To receive or maintain an STR authorization, Minneapolis requires a set of documentation, inspections, and operational commitments. Below is a breakdown of major requirements: Key Application Documents & Plans Management Plan: You’ll need a written plan detailing how you’ll run the STR—guest screening, noise rules, trash, maintenance, neighbor communication, emergency contacts. Neighbor Notification: Send a letter (or use the template found in the application packet) to neighboring properties (typically within 50 feet) informing them of your intent to operate. You can use the Minneapolis address portal to find neighbor contact information. Floor Plan / Exit Routes: Include a layout of the unit showing exits, escape routes, and post one inside the unit. Liability Insurance: You must show proof of coverage—often the city expects enough to cover guest injury, property damage, etc. Inspection / Safety Compliance: The unit must comply with housing maintenance, fire, and safety codes (working smoke detectors, CO detectors, egress windows, etc.). License Display & Listing Disclosure: Once licensed or registered, your STR license/registration number must appear in all online listings and advertisements. Minneapolis Short Term Rental Fees, Renewals, and Tiering Short Term Rental Fees The most up to date information on STR fees can be found on the Minneapolis Rental License Fees page , but currently, the fee structure looks like this. The full license fees for non-owner units vary depending on building size, number of licensed units, and property “tier” (which reflects prior violations or building condition). Fee Type / Tier1-3 Unit Buildings4+ Unit BuildingsNotes / Additional DetailsShort Term Rental Registration$58No fee to change a current regular rental license to a short-term licenseBase License Fee (Tier 1)$89 building fee + $37 per unit$152 building fee + $11 per unitBase License Fee (Tier 2)$95 building fee + $68 per unit$179 building fee + $26 per unitBase License Fee (Tier 3)$110 building fee + $173 per unit$210 building fee + $89 per unitSupplemental Fee (Tier 1)$0$0Supplemental Fee (Tier 2)$110$315Supplemental Fee (Tier 3)$221$525Administrative Fee (New Owner / After Purchase)Starts at $250 + $20 per additional unitApplies similarlyMust apply within 60 days of closing or this fee is charged Change of Ownership Inspection Fee$450$450Applies when a rental property changes ownership (with certain exceptions)Conversion Inspection Fee$1,000$1,000For properties converted to rental or not licensed for past 12 months (with exceptions)Late Renewal Penalty25% of license fee25% of license feeApplies to renewal received after March 15 (licenses expire end of February)Prorated License (submitted Sept 1 – Feb end)50% of full annual fee50% of full annual feeThe annual fee is halved if applying in that window Renewal & Ongoing Compliance STR licenses/registrations must be renewed annually. You must maintain compliance with safety, insurance, and property maintenance standards throughout. Update contact or ownership changes within ten days or per city rules. Be ready for periodic inspections or compliance audits. Tiering & Violation History The city uses a tier system to manage properties with repeated violations. Properties with high violation scores or poor upkeep may be placed into higher tiers, resulting in: Higher fees More scrutiny Conditional licensing Potential council-level review for renewal or revocation A proposed ordinance in October 2025 would require Tier 3 properties (40+ violation points) to go before City Council for any license renewal. Zoning & Land Use Constraints You can’t run an STR anywhere just because you own a building. Minneapolis’s zoning code dictates where and how STRs are allowed. The property must be zoned for residential use or in a zone where STRs are permitted. In some zones, an STR might be a conditional use or require special approval. The 10% cap for large buildings helps avoid densification of STRs in multifamily zones. For homesteaded (your primary residence) units, zoning restrictions tend to be more permissive, but you still need registration and safety compliance. If you’re converting a long-term rental or vacant home into an STR, confirm zoning and permitted use before investing in furnishings, listing, or marketing. Taxes & Financial Implications Operating an STR in Minneapolis means dealing with several layers of taxes; state, county, metro, and city. Missing or misapplying one can result in penalties. State-Level Taxes Minnesota charges a 6.875% state sales tax on short-term rentals less than 30 days, or 30+ days when the lease doesn’t require advance notice. This tax applies to the total amount paid by guests—including nightly rates, cleaning fees, extra charges, platform fees. Platforms like Airbnb and VRBO may collect and remit state taxes on your behalf, depending on how they are classified under Minnesota law as “accommodations intermediaries.” County & Metro Taxes Hennepin County levies a small sales tax (0.15%) on top of the state tax, plus a transit sales tax (~0.5%). The Minneapolis–Saint Paul metro area also has housing sales tax (0.25%) and transportation sales tax (0.75%) that may apply to STRs. City Lodging & Entertainment Taxes Minneapolis has a 3% lodging tax on large accommodations (properties with more than 50 rooms). There’s also an entertainment tax of 3% applicable city-wide to STRs. The maximum combined city lodging-related tax rate is capped at 6.5%. Total Tax Burden Example When you layer state, county, transit, metro, and city taxes, the effective tax rate on an STR in Minneapolis can approach 14.525% in some cases (if all applicable taxes apply). Deductions & Expense Allocation To offset tax burdens, you can deduct operational costs such as: Mortgage interest Property taxes Insurance (STR-specific) Utilities Cleaning, maintenance, supplies Repairs, improvements Depreciation (for property and furniture) Platform or management fees Professional services (accountants, legal) If you personally use the property too, you’ll need to apportion expenses between personal and rental use. Consult a tax professional familiar with STRs in Minnesota. Enforcement, Penalties & “Gotchas” The city of Minneapolis doesn’t treat noncompliance lightly. If your STR operation is flagged, here’s what you could face and how to avoid trouble: Enforcement Actions Warnings / Notices: Initial non-compliance often triggers a citation or notice to correct. Fines: Operating without a license, failing to display the license, or violating capacity rules can incur fines. Probation or Suspension: Repeated or serious violations could lead to conditional operations or temporary suspension of rights. Revocation: The city can revoke your STR license, ending your ability to rent short-term legally. Council Review: High-violation (“Tier 3”) properties may need City Council approval for renewal. Common Compliance Pitfalls Not updating your listing to include the STR license/registration number Guest counts above allowed occupancy Failing to maintain safety equipment (smoke detectors, CO detectors, exits) Ignoring neighborhood complaints (noise, parking, trash) Lapses in liability insurance Letting the property fall into disrepair, triggering building code violations Operating more than one STR beyond your primary home Exceeding the 10% cap in large buildings Recent & Upcoming Changes to Watch The city introduced an ordinance (2022-00089) that strengthened housing maintenance code compliance for rentals, including for STRs. Minneapolis Legislative Information Starting March 1, 2025, Minneapolis adopted new landlord-tenant rules: mandatory rental disclosures and a 30-day pre-eviction notice (rather than 14 days). These may indirectly affect STR operators who also run long-term rentals. The proposed 2025 “Slumlords Tier Oversight” ordinance would require leasing viability for any Tier 3 property to pass through City Council. Finance & Commerce The city is also intensifying scrutiny and signaling stricter enforcement under new renter protections ordinances. Want To Remove The Hassle From Your Short Term Rental? Interested in having your property professionally managed by the local Minneapolis short term rental experts from SkyRun? Learn how your property could be earning more. Get the profitability, care, and local expertise that you deserve.
