County lodging tax affects short-term private cabin rentals

Lake cabin/Wikimedia
Lake cabin/Wikimedia

Renting out your cabin or vacation home for less than 30 days at a time is a permitted use in Cook County, according to Tim Nelson, the county’s zoning officer. However there are some strings attached. One is collecting the county lodging tax and the other is licensing and inspections with the state – primarily the Department of Health.
 
The amount of tax depends on where your property is located, according to Auditor-Treasurer Braidy Powers. If you are within the boundaries of an authorized Lodging Tax District the tax is 4%. In all other areas of the county the rate is 1%. State General Sales Tax also applies to lodging rentals.
 
The rental property owner collects the tax from the guest and it is then paid to the Auditor’s office which in turn pays the appropriate tourism association. The associations use those funds to promote tourism benefiting the rental properties that participate in the lodging tax program. It’s mandatory and there are penalties for late payments.
 
For the first time, the state recently sent more than 600 letters to property owners across Minnesota who rent their cabins for a week or less. The state wants cabin owners to pay an annual licensing fee and have a regular inspection to ensure that the building complies with state and local health, safety and zoning rules. The same law applies to hotels, motels and resorts.
 
In 2009 the Auditor’s office searched a number of web sites and found 16 properties providing short-term online lodging. Those 16 properties were not members of nor affiliated with local tourism associations and were not collecting lodging taxes. 
 
According to Powers, after being notified of local ordinances, all16 businesses chose to comply with the law. The result was an additional $5,197.27 of lodging tax sent to county tourism associations. Powers said that leads him to wonder who else is out there providing lodging.
 
To that end in June of this year Powers sent out letters to local tourism associations saying they would probably be in the best position to discover new lodging facilities. He suggested it would be to their benefit if they kept his office informed of any new businesses from which the lodging taxes could be collected.
 
A survey of one vacation rentals by owner website this week shows 31 rentals available in Lutsen and 15 in Grand Marais, including the Gunflint Trail.
 


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