Indiana Short-Term Rental Rules: A Comprehensive Guide

Quick Answer: Indiana's Short-Term Rental Landscape

Indiana's state-level approach is hands-off. There is no statewide registration, operating license, or comprehensive preemption law. Rules are set by the governing jurisdiction: city, town, or county.

This results in significant variation. A property in Indianapolis faces a detailed permitting process with primary-residence requirements. A cabin near Lake Monroe outside Bloomington's city limits may fall under Monroe County rules instead. A condo in Carmel may be subject to HOA covenants stricter than city requirements.

The state's direct involvement is limited to taxation. Indiana collects sales tax on STR revenue, and counties collect innkeeper's tax. These obligations apply statewide.

Before listing a property in Indiana, answer these four questions:

• Is the property zoned to allow STR use?
• Does the municipality require a permit or license?
• What occupancy, parking, and noise rules apply?
• What taxes must you collect and remit, and to whom?

The following sections detail each point.

Indiana's State-Level Approach to Short-Term Rentals

No Statewide Preemption or Licensing

Indiana has no law preempting local STR regulation, nor a statewide STR registry. Local governments derive zoning and land-use authority from Indiana Code Title 36 (Local Government), granting cities, towns, and counties broad power to regulate land use (IC §36-7-4 et seq.). This authority is the primary tool municipalities use to control STRs, including defining permitted uses in residential zones.

Legislative discussions about limiting local STR restrictions, often from property-rights advocates, have occurred, but no preemption statute has passed. Consult the Indiana General Assembly's bill tracking system (iga.in.gov) for recent session activity.

State Taxation: The One Area of Direct State Involvement

Indiana imposes two taxes STR operators must handle.

Sales Tax. Indiana levies a 7% sales tax on accommodations rented for fewer than 30 days (IC §6-2.5-4-4). This applies to gross receipts from STRs. Operators must register with the Indiana Department of Revenue (IDOR) via the INBiz portal (inbiz.in.gov) to collect and remit this tax.

Innkeeper's Tax. Separate from sales tax, IC §6-9 authorizes counties to impose a local innkeeper's tax on short-term accommodations. This county-level tax, enabled by state statute, varies in rates and remittance procedures by county. Specific rates are detailed in the tax section.

Platform Collection. Platforms like Airbnb and Vrbo have voluntary collection agreements with Indiana and many counties, collecting and remitting sales tax and some innkeeper's taxes on behalf