A residence can be beautifully designed, well located and carefully kept, and still be unable to host a single guest legally. Short-term rental rules are set city by city, sometimes street by street, and they change often. For an owner, they are as important as the floor plan.
This guide explains the main categories of rules and shows how several real markets apply them. It is a starting point, not legal or tax advice. Rules described here were current in the official sources we reviewed, and every owner should confirm the specifics with the relevant city, county or state authority and with their own advisors before listing a home.
Permits and registration
Most cities that regulate short-term rentals require a permit, license or registration before a home can be listed. The details vary widely.
In New York City, Local Law 18 created a registration system for short-term rentals, run by the Mayor’s Office of Special Enforcement 1. The law prohibits booking platforms from processing transactions for unregistered short-term rentals, and enforcement began on September 5, 2023 2. The underlying rules are strict. The city states that short-term rentals are legal only if the host is living in the same unit with the guests, that there is a limit of two guests not counting children under four, and that hosts may not rent out an entire apartment or home for fewer than 30 days 1.
Austin requires an operating license for residences rented for less than 30 consecutive days. The city reports that, from October 2025, licenses became valid for two years instead of one, and the required local contact must live in the Austin metro area. The city also set July 1, 2026 as the date it would begin asking platforms to remove unlicensed listings 3.
Nashville requires anyone renting through short-term rental websites to obtain a permit from the Metro Codes Department before listing, and sets a maximum stay of thirty consecutive days for any guest 4.
Platform collection does not always end an owner’s obligations.
Zoning and caps
Permits are only part of the picture. Zoning can determine whether a permit is available at all.
Nashville offers owner-occupied and non-owner-occupied permits. According to Metro Codes, non-owner-occupied permits are not permitted in AR2A, R, RS or RM zoned properties, and existing permits in those zones are not transferable if the property is sold 5. For a buyer, that single line can change the value of a home.
Palm Springs takes a different approach and limits how often a home may be rented. The city’s owner authorization form states that a standard vacation rental may be rented only 26 times in a calendar year, after a transition for earlier permittees that ended on January 1, 2026. Homeshare properties are not subject to that annual limit 6.
Occupancy and hotel taxes
Short-term rental income is usually subject to lodging taxes similar to those paid by hotels. Who collects them, and who files, differs by place.
Palm Springs requires a Transient Occupancy Tax of 11.5 percent plus a 1.0 percent Tourism Business Improvement District assessment on stays of 28 consecutive days or less, with monthly returns 6. In Austin, all short-term rentals must collect Hotel Occupancy Tax; since April 1, 2025, booking platforms collect and remit it on owners’ behalf, though owners must still file quarterly reports 3. Nashville requires permit holders to remit business, sales and hotel occupancy taxes to the city and state 4.
The lesson is simple. Platform collection does not always end an owner’s obligations. Filing, registration and record-keeping can remain the owner’s responsibility.
When state law sets the frame
Some states limit what cities may do. Arizona is the clearest example. Under Arizona Revised Statutes section 9-500.39, a city or town may not prohibit vacation rentals or short-term rentals. It may require a permit or license, with a fee not to exceed the actual cost of issuing it or $250, whichever is less. Owners must provide emergency contact information, notify adjacent and facing single-family neighbors before the first rental, and carry at least $500,000 in liability insurance or advertise through a platform that provides equal coverage. A city may suspend a permit after three verified violations within twelve months, for up to twelve months 7.
Scottsdale applies that framework locally. The city charges $250 per property for its annual license, requires an Arizona transaction privilege tax license listing Scottsdale as a region code, and asks owners to notify neighbors within 30 days of receiving the license, including a twenty-four-hour emergency contact 8.
Homeowners association rules
City approval does not override private covenants. Many residences sit within associations whose declarations govern leasing, minimum lease terms and use.
Courts read those documents closely. In Tarr v. Timberwood Park, decided in 2018, the Supreme Court of Texas held that a covenant requiring residential use did not, by itself, prohibit short-term rentals of the home at issue. The court confined its reading to that community’s covenants, and associations have since been advised to adopt specific language if they wish to restrict short-term rentals 9. An owner should read the current declaration, any amendments and the rules, and ask the association whether changes are under consideration.
Operating requirements
Beyond permits and taxes, cities often set rules for how a rental is run. Palm Springs requires a responsible person aged 25 or older for each occupancy and expects owners to respond within 30 minutes when contacted about a hotline complaint. Its occupancy limits vary by bedroom count 6. Austin requires neighbor notification at every license renewal 3. These obligations need a local presence and a clear response plan, not just paperwork.
What this means for you
Before buying a home to rent, or before listing one you own, assemble four things: the current municipal rules, the zoning for the parcel, the association documents and the tax registration requirements at city, county and state level. Confirm each with the relevant authority and your own legal and tax advisors, because rules change and the official text controls.
Owners who join the Aukeo Residences Partner Program can expect us to ask for these documents early. A residence that is fully compliant is one we can present with confidence, and one guests can book without uncertainty.