Is Rental Arbitrage Legal in Indiana?
In Indiana, state law (IC 36-1-24) lets cities regulate short-term rentals but bars rules that prohibit or unreasonably restrict them. Cities can require one permit per property and must issue it within 30 days of a complete application. No renewal fees are allowed. The state collects a 7% sales tax on accommodations under 30 days.
Requirements
- Check the rules of the city or county the property is in
- Permit through the city where required (one permit per property, issued within 30 days)
- Fee capped at $150 for initial permit or post-revocation reapplication; no renewal fee allowed
- Permits expire one year after issuance
- State sales tax registration with Indiana Department of Revenue
Restrictions
- Owner-occupied short-term rentals are a permitted residential use
- Cities may require a special exception or variance for non-owner-occupied rentals in residential zones, but cannot use zoning to prohibit or unreasonably restrict them
- Cannot operate in RVs, travel trailers, mobile homes, automobiles, shipping containers, or structures not built for permanent occupancy
Taxes and Fees
- Indiana sales tax on accommodations: 7% (on rentals under 30 consecutive days)
- County innkeeper's tax: varies by county (Marion County/Indianapolis: 10%)
- Total combined state and county: 17% in Marion County
Cities in Indiana
Next Step
Legal is one half of the decision. The other half is whether the deal earns enough to be worth the risk.
Sources
Frequently Asked Questions
- Can Indiana Cities Ban Short-Term Rentals?
- Not by zoning. State law bars cities from interpreting zoning in a way intended to or having the effect of prohibiting or unreasonably restricting short-term rentals.
- Can a City Require a Permit?
- Yes, one permit per property, and it must be issued within 30 days of a complete application. Indianapolis requires one.