A short-term vacation rental (also called a vacation rental or STR) is most often defined as a rental of a residential dwelling unit or accessory building for periods of less than 30 consecutive days. Vacation rentals have exploded in popularity. Otter Tail County has an estimated 300-plus vacation rentals, predominately on lakes. Recently, the Minnesota Department of Revenue issued a memo directing all county assessors to reclassify property whose primary use is as a short-term rental to the commercial classification for the 2020 property assessment. Recently, questionnaires were sent to the owners of short-term rentals that are currently licensed through public health.  At the request of Otter Tail County Commissioners, county assessors plan to work with rental property owners to come into compliance with the state’s request.

“We want property owners to be aware that this is a direct requirement from the State and not a mandate from the county,” said Commissioner Wayne Johnson. “We are working with the county’s assessor’s office and public health department to make this a fair process for everyone-ensuring all parties are informed of the changes to come in 2020.”

On Dec. 3, the Otter Tail County Assessor’s Office mailed a questionnaire to owners of short-term rentals. A short-term rental is one that utilizes the property primarily as a rental for 30 consecutive days or less. Such properties will be reclassified as commercial property for the 2020 property assessment. Any property owner that has a vacation home rental licensed by the Otter Tail County Public Health Department was mailed the survey. The purpose of the questionnaire is to gather information to help county assessors determine the primary use of their property.

“Minnesota law requires all property to be classified according to its primary use.  In response to the memo from the Minnesota Department of Revenue regarding short term rentals the assessor’s department sent out a questionnaire to assist our department in determining the primary use of each property” stated county assessor Doug Walvatne. “Previously, all rental homeowners were classified as residential and not commercial which in general would result in a lower tax obligation-so in 2020 this will change for those whose property are reclassified as commercial.”

Documents that may be used by county assessors include licensure from the public health department, booking records, and occupancy, income and expense records of the property. According to the Minnesota Department of Revenue, short-term rental properties cannot be classified as residential or as an apartment. Residential non-homestead and apartment classifications require a property to be rented by a tenant for 30 consecutive days or more.

For more information visit ottertailcounty.mn.us or call the Otter Tail County Assessor’s Office at 218-998-8010.


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