Short-Term Rental Unit Act defines a short-term rental unit as a residential dwelling - whether a single-family dwelling or a unit in a multi-dwelling such as an apartment building, a condominium, a cooperative, or a timeshare - that is rented out fully or partially for a fee for a period of less than 30 consecutive days.

This definition classifies short-term rentals as a type of hotel. Hotel means any building providing sleeping accommodations for guests, travelers, or semi-permanent residents for commercial purpose.

Yes, the transfer of short-term rental license is not allowed even when the ownership of the short-term rental property is transferred. The new property owner will need to apply for a new license.

Yes, sales tax has to be paid on this type of business both at the state and the local level. The state sales tax rate is set at 7%. In addition, there is a county sales tax whose rate is 2.25% and a city sales tax of 0.5%. The total state and local sales tax rate averages 9.75%. There is also a local occupancy tax to be collected on reservations in Tennessee. The tax varies by city and county. It is typically from 0%-8% of the listing price including any cleaning fees for reservations 29-30 nights and shorter. A tax tare of 5% applies to Covington

Yes, both individual and businesses are permitted to operate short term rental in the city.

By apply through this link: https://portal.iworq.net/COVINGTON/new-permit/600/4053%20

Yes, there's a need for neighborhood approval. There's Covington’s Neighborhood Development Code

(aka Zoning) that provides the guidelines that regulate development within the city.

1. Short-term rental owners and hotel are prohibited from operating without installing a smoke alarm in every room that is ordinarily used for sleeping purposes; When activated, the smoke alarm shall initiate a warning sound that is audible in the sleeping rooms of the living unit.
2. A short - term rental or hotel owner that has a fossil-fuel-burning heater or appliance, a fireplace, or other feature, fixture, or element that emits carbon monoxide as a byproduct of combustion must install an approved carbon monoxide alarm within ten feet (10′) of each room used for sleeping purposes.

Tennessee 7%, Tipton 2.25%, Covington 0.5% -

Occupancy Tax - 5%

As such, leases with operators of short-term rental facilities must be drafted with the ADA requirements in mind.

As such, if the short-term rental provides “guest rooms for sleeping” for short-term stays where the occupant does not have the right to return after the conclusion of his or her stay and offers hotel-like conditions or amenities such as the ones described above, it could qualify as a “place of public accommodation” to which the ADA applies.

Tenure. A short-term rental tenant shall not stay more than 29 consecutive days in duration.

5. Number of Tenant Rooms. A short-term rental shall have no more than four tenant rooms. Each floor of the

building shall have a functioning carbon monoxide alarm. Each tenant room and each hallway shall have a

functioning smoke detector.

6. Number of Occupants. Each short-term rental tenant room shall be limited to a maximum of two adults, over

18 years old (e.g. a short-term rental unit with two tenan

could have a maximum of four adult shortterm rental tenants at one time).

7. Building and Property Maintenance. All short-term rentals shall be in compliance with the City's Building and

Property Maintenance codes.

8. Signs. One wall sign a maximum of one square foot in area is permitted on a short-term rental property if no

other signage is permitted per Division 13, Signs.

9. Inspection. Each short-term rental shall be subject to inspection by the Chief Building Inspector prior to the

issuance

e of an annual business license, and at all renewals, and all short term rentals shall be subject to

Chapter 110 of the City Code, License Fees and Taxes, regarding rental licensing.

10. Insurance. Each short-term rental host shall obtain and maintain, at the host’s sole expense, liability

insurance to cover the injury or death of a tenant while the tenant is in, on, or about the short-term rental

property.

11. Parking. Regardless of other provisions in this NDC, such as Division 11, Parking, Lo

, Loading, and Circulation,

each short-term rental that is conditionally approved or is within an area with a residential parking program

shall:

a. Provide one off-street parking space for each tenant room, which may be provided on the property of

the short-term rental or on a separate property within the boundary of the surrounding residential

parking program; or

b. Provide one residential parking pass for each tenant room; or

c. Demonstrate that there is sufficient available on-street parking,

within 600 feet of the short-term rental.

Short-term rental is permitted in both residential and mixed-use districts in the city as conditional or limited use.

Yes, sales tax has to be paid on this type of business both at the state and the local level. The state sales tax rate is set at 7%. In addition, there is a county sales tax whose rate is 2.25% and a city sales tax of 0.5%. The total state and local sales tax rate averages 9.75%. There is also a local occupancy tax to be collected on reservations in Tennessee. The tax varies by city and county. It is typically from 0%-8% of the listing price including any cleaning fees for reservations 29-30 nights and shorter. A tax tare of 5% applies to Covington

Yes, you are required to obtain zoning license, business license and short term rental license to operate the business in the city.

Occupancy tax is collected directly by short-term rental unit marketplaces and remitted to the relevant Department of Revenue. If you rent outside these marketplaces, you need to collect and remit the occupancy tax yourself. The occupancy tax is paid based on the listing price including cleaning fees.

The zip codes prohibited for STR use are located in the Commercial district of the City.

The following types of properties can be used as a short-term rental duplex, accessory buildings, single-family dwelling, condominium, cooperative, and multi-family dwelling can be used as owner-occupied and non-owner-occupied short term rental.

Yes, there is limitation on the number of occupants allowed in a short-term rental property.

1. You are required to obtain a license for every unit before that unit can be advertised or rented.
2. You are required to renew the license annually.
3. there is a maximum limit of two short term rental unit per structure.
4. Short term rental owners are limited to obtain a maximum of four non-host-occupied licenses.
5. You are required to employ a local agent to increase responsiveness to concerns if you are an out-of-town operator.

You are required to pay $30 for a Short term rental license fees, application fee for a conditional zoning permit from the city’s architectural review board is $600 and a $15 business license registration fee must be paid to the county and/or municipal clerk for each new business. Once you register for business tax, please contact the individual county and/or municipal clerk to arrange for payment of this required fee and to obtain your business license. It takes up to 10 business days for the Department of Revenue to register your business.

NOTE: The licensing application fees was voted to be $500 per unit with an annual renewal fees of $250 and it was supposed to take effect from November, 2023 but this was postponed until further notice. So this increase may come to effect in the nearest future.

• Check with the City’s Neighborhood Development Code (i.e. “zoning”) to make sure they’re in a permitted zone and follow applicable parking requirements.
• Secure an occupational or “business” license from the Finance Department.
• And secure an annual City Short-Term Rental Dwelling License from the Neighborhood Services Department for each parcel.
• There is a minimum requirement for registration and filing of $10,000 in taxable gross receipts per jurisdiction. Vacation rental property owners and management companies are classified as providers of services, which means that they fall under Classification 3 for business tax purposes.

$1,000 per-day fine, a one-year ban on applying for a license, and a tax audit for failure to get the mandatory license and zoning approval, and for not paying the required license fee.

Yes, enforcement of short-term rental regulations falls on the city’s code enforcement board, which uses a three-strike rule when enforcing violations.

Dan Wood

Zoning Administrator

permit@covingtonky.gov

859-292-2135

Commercial districts of the city are exempted from obeying short term rental regulation as the business in prohibited in the zone.

You are required to pay $30 for a Short term rental license fees, application fee for a conditional zoning permit from the city’s architectural review board is $600 and a $15 business license registration fee must be paid to the county and/or municipal clerk for each new business. Once you register for business tax, please contact the individual county and/or municipal clerk to arrange for payment of this required fee and to obtain your business license. It takes up to 10 business days for the Department of Revenue to register your business.

NOTE: The licensing application fees was voted to be $500 per unit with an annual renewal fees of $250 and it was supposed to take effect from November, 2023 but this was postponed until further notice. So this increase may come to effect in the nearest future.