Hubbard County Assessor Ginger Woodrum updated county commissioners last week about short-term residential rentals, commonly known as Vacation Rental By Owner (VRBOs).
“We sent out 129 surveys to property owners that we found on various websites,” she said. “We got, I think, a great response. We got 99 of those back by Dec. 1.”
“Wow, that’s unheard of,” said Hubbard County Coordinator Eric Nerness.
Property owners had a couple months to return the survey or automatically be classified as commercial property. They were asked about the number of days the property was rented out, used personally or empty.
Of the 99, Woodrum said 29 will need to be classified as commercial properties, per Minnesota Department of Revenue (DOR). The 30 that did not respond will also be reclassified as well.
“We will be audited on the information by the Department of Revenue,” Woodrum said.
According to the DOR, “a short-term rental property’s use is income generation through short-term lodging (less than 30 consecutive days), which is similar to a hotel property.”
Woodrum said she received a lot of phone calls and continues to do so.
County commissioner Tom Krueger asked about the criteria used to determine whether the property is a VRBO or not.
“Primary use” is the key determining factor, Woodrum explained. For example, the owner is renting it out more than using it. A homestead that is only rented out for a Fourth of July weekend would not be considered a short-term rental if the property remains the owner’s primary residence.
“I made the decision to look at it as ‘primary use’ being over 50 percent,” she said.
Woodrum added she personally reviewed the survey answers herself. “I wanted it to be looked at consistently.”
“How dramatically does this change the taxes on some of these on average? Double it?” asked county commissioner David De La Hunt.
“Yes, I could see doubling it,” Woodrum replied.
De La Hunt asked how neighboring counties are making the distinction on VRBOs.
“Each county was given the direction to do it however they choose,” Woodrum said. Assessors in a 12-county region around Hubbard shared their surveys “back and forth and made modifications, so we all sent out a similar survey. The direction we were all trying to go for was the primary use of the property 50-50.”
Woodrum also sent surveys to resorts, asking how many they rentals they had, if they rented more than 250 days per year and if they provided recreational activities.