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Tuesday, May 19, 2015

Luxury Tree House Spurs Municipalities and Owners to Review Regulations for Tree Houses and Short-Term Rentals

A nearly 200 square-foot Schaumburg luxury tree house available for rent on Airbnb for $195/night (complete with a fireplace, air conditioning, full size bed and twin sleeping loft, kitchenette with sink, microwave, fridge, wifi, and HDTV (with HBO, Showtime, Cinemax, etc.)) recently made headlines and reminded communities and property owners to review local regulations governing tree houses and short-term rentals. The owner’s Airbnb listing reports that he is permitted to rent a room in his home, and grant guests use of the tree house, in accordance with local zoning laws; however, going forward, the Village of Schaumburg is now considering new zoning regulations pertaining to setbacks, size, location, and height of tree houses in the rear yard.

While renting a room in your house might be allowed in Schaumburg, such activity might be prohibited in other communities’ home occupation restrictions for commercial activity in residential neighborhoods. Other regulations targeting transients may limit uses in residential districts to “permanent resident purposes.” Communities should review their local zoning regulations to consider the impact that sometimes extravagant tree houses might have in a residential area. Additionally, as sites like Airbnb increase in popularity, local regulations for short-term rentals may be increasingly appropriate where regular commercial transient activity might erode the residential character of a neighborhood.

In addition to zoning regulations, there may be tax implications for short-term rentals to consider. The Cook County Assessor’s office, which is in the midst of reclassifying bed-and-breakfasts from residential to commercial property, is reportedly evaluating the property tax implications of the Schaumburg luxury tree house. Additionally, the Illinois Hotel Operators’ Occupation Tax imposes a tax on the occupation of renting, leasing, or renting rooms to person for living quarters for periods of less than 30 days. This state tax is imposed in addition to whatever local hotel taxes are imposed. Anecdotally, Airbnb users simply are not paying the required taxes, but short-term lessors should be cautioned to review their local regulations because the Airbnb terms of service squarely place responsibility for compliance with zoning and tax laws on the user creating the listing. As Airbnb increases in popularity, local governments will need to develop strategies to ensure they are recovering the hotel taxes that are due, at least so local hotels are not put at an unfair disadvantage.

Post authored by Daniel J. Bolin, Ancel Glink

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