Are short term rentals, like AirBnB really commercial real estate?
This is a question that many communities are now asking. This report from Asheville, North  Carolina provides plenty of detailed data suggesting the conversion of  residential units to short term use dramatically changes their value  with suggestions for upping the tax rates. Here in Hawaii we are observing the same patterns.  [https://wlos.com/news/local/short-term-rentals-buncombe-county-commissioners-considering-classification-changes-taxes-commercial-residential-property-asheville-north-carolina-aribnb](https://wlos.com/news/local/short-term-rentals-buncombe-county-commissioners-considering-classification-changes-taxes-commercial-residential-property-asheville-north-carolina-aribnb?fbclid=IwAR1fjIMPY-5jB18DneQMfjwCMYS3rIR0Zwx8_bQlEuNRtXnGr8MXzI1T1yY)
[{"id": "ir5xkn0", "text": "By definition? No. Could they be considered commercial by municipal ordinance? Sure.", "replies": [], "depth": 1}, {"id": "ir612ty", "text": "The real estate is residential.  The STR is a commercial business like a hotel/motel  and should be taxed accordingly.", "replies": [{"id": "ir6bavf", "text": "But isn't that the underlying question? Is it the characteristics of the building or the occupants that make something \"residential\"? \n\nThere's two (maybe 3) separate tax questions. Income (short term occupancy taxes already exist), property type (commercial real estate rates &amp; potentially business property/tools &amp; machinery taxes depending on location), and the advantages given to \"residential\" property expected to be used as a home (utility rates, local municipal services offered/availability, insurance ratings etc.).", "replies": [{"id": "ir6fjkj", "text": "As u/gaelorian stated the government can classify/tax as they want but the STR next door to me is not more valuable since I could do the same in any house in the neighborhood. They are valued the same and would be taxed the same.\n\nNow in Hawaii there are properties called  Condotels that are taxed higher and valued differently because they can legally rent out by the day whereas other condos can only rent out by the month or longer.\n\nThe Illikai, the building Jack Lord is seen on the roof in the original Hawaii 5-O is a condotel and is taxed quite a bit higher.  The value would also be higher because of the ability to STR.  But I recently learned if you wanted to reside there full time you could petition for a lower tax rate.  But you could still sell at a higher value because the buyer could convert it back to a STR.\n\n\nIt would get real messy", "replies": [{"id": "ir6makz", "text": "In Hawaii it is already very messy; there are numerous categories for condotels and other kind of legal short term rentals. \n\nHere on Maui, where the visitor count is high and the housing shortage is acute, the county has passed regulations making **six months** the mandatory minimum lease for residential property, and has attempted to severely restrict the use of cottages, accessory dwellings, ohana, and similar units for short term use. \n\nThis is a coin with two sides. In some ways it's good because it keeps the intrusive AirBnBs out of local neighborhoods where they create multiple problems, (noise, traffic, parking to name a few); but in other ways it's bad, because it means there is no legal place for local visitors (from other islands who need a place to stay for a night or two), that does not cost $300/night or more, much much more. \n\nThe draconian rules encourage a lot of cheating.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ir76gaz", "text": "By the pure definition? *yeah* STR\u2019s are commercial. \n\nAny property not used as a residence, that has \u201ccommerce\u201d (money income) value is commercial. \n\nHow they are valued and taxed is irrelevant, but how they are **zoned** may be eventually. So far, virtually no city in America has a specified \u201cstr\u201d use in their zoning code, and are not quick to convert individual homes to hotel use, since they don\u2019t fit.", "replies": [{"id": "ir9euaw", "text": "Guess my region is the outlier. STRs are throughly covered in the zoning ordinances and require a robust approval process.", "replies": [{"id": "irax6yp", "text": "BUT are they classified as commercial or residential? Some ZA's do cover the use and limitations but do so as a sub-class use only allowed under certain R zonings. I've rarely seen them classified as their OWN zoning code or switched to the same as traditional hospitality/hotel land use.", "replies": [{"id": "irbegze", "text": "It\u2019s listed as a use that requires conditional approval across a range of zoning district classifications, including residential and commercial districts. They\u2019ve been approved in single-family homes and all sizes of multifamily (most I\u2019ve seen was ~50 units in a 200-unit complex). Their use category remains the same just the property has a conditional use for STR. I haven\u2019t seen specific uses get their own exclusive zoning district classifications. Even the \u201cSingle Family\u201d districts allow some limited non-residential uses. \n\nA specific example is an office building that was converted into a four-unit STR. It is classified as a residential use in a commercial zoning. Anything larger would be classified as an apartment complex. It does not mention the STRs though it is approved for them.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ir8dmqj", "text": "Not CRE until it\u2019s tracked by CoStar", "replies": [], "depth": 1}]