4 Things to Know Before Turning Your ADU Into a Short-Term Rental

Do you want to rent out your Accessory Dwelling Unit (ADU) through sites like VRBO or Airbnb? When renting out your mother-in-law suite or basement apartment to these short-term rental programs, there are four essential tasks to complete.

1. Know your HOA rules for short-term rentals. Be sure to check the rules and regulations with your to see if you are allowed to do short-term rentals.

2. Get the municipality's regulations on short-term rentals and ADUs. Simply do an internet search on ADU regulations for your location (i.e., ADU regulations in Littleton). This search will give you a list of rules and guidelines that will allow renting your ADU on a short-term basis.

3. Register your short-term rental with your municipality. With registration, you will get a business license or lodger's tax. Because you could potentially earn income through your rental, you are running a business. That income will be taxed. So if you use any short-term rental application (like VRBO or Airbnb), the site will ask for the license number of your business. Regulators on these rental sites do check to ensure that these license numbers are current and will shut down your home listing if the license number is not valid.

4. Ensure that your short-term rental complies with city regulations. Each city has different regulations for ADUs and short-term rentals, and you want to protect your investment by making sure you comply with them.