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Short-term rental restrictions blamed for Kelowna’s soft tourism season

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By Klaudia Van Emmerik Global News

At Priest Creek Family Estate Winery in Kelowna, B.C., sales have been plummeting for two summers in a row now.

“Last year they were 30 per cent,” said winery owner Darren Sawin. “This year, we are probably down another 10 per cent on top of that.”

According to Sawin, the slowdown in tourism coincided with provincial restrictions on short-term rental accommodations in May 2024.

“We noticed it immediately.  Our sales dropped.  Our traffic dropped,” Sawin said.   “We used to have lineups out the door and now our bar is empty.”

The winery is far from alone, as a number of restaurants and boat rental companies have reported feeling the hit, too.

The economy is believed to be a big factor but according to tourism officials, the rental restrictions are also having an impact.

“If we had that additional accommodation that had kitchenettes in them, we would see people wanting to book those,  so there is that layer of guest that isn’t here,” said Ellen Walker-Matthews on Monday, the CEO and president of the Thompson-Okanagan Tourism Association (TOTA).

In an email to Global News, Kelowna mayor Tom Dyas said,  “While we have heard from some businesses reporting a busy season and others indicating a slower pace for them, it is important to wait for the official tourism data before drawing conclusions about the season’s performance.”
Dyas added, ‘We look forward to reviewing the full report when it is released and continuing to work collaboratively with the tourism industry to support a strong and sustainable local economy in Kelowna.”

The provincial restrictions were implemented in an effort to bolster the long-term housing supply amid a severe shortage and bring down housing costs.

They prohibit short-term rentals in secondary homes, allowing them only in principal residences.

B.C.’s minister of housing Christine Boyle said she does sympathizes with tourism-reliant businesses struggling.

“Very aware of it and very sympathetic to these challenges,” Boyle said.

But the minister stood firm on the restrictions, saying they are having the desired effect as vacancy rates rise across the province.

Boyle said that includes Kelowna, where securing affordable housing has been a huge challenge including for those who are the backbone of the tourism industry.

“That industry, along with many others, was struggling to find a workforce who could afford local homes,” Boyle said. “We know that tourism and hospitality not only rely on spaces for visitors, but rely on the availability of affordable housing for their own workers.”

Boyle added that municipalities can opt out of the principal residence requirement once a community maintains a minimum 3 per cent vacancy rate for two consecutive years.
According to the Canada Mortgage and Housing Corporation (CMHC),  Kelowna’s vacancy rate jumped to 3.6 per cent last October.

If it stays above that threshold until October 2026, the city will have the option to opt out.

Dyas said that while the city is  encouraged by the positive trends in the vacancy rate, it is too early to predict whether Kelowna will meet the threshold to apply for an exemption or to speculate on potential changes.

“We will continue to closely monitor the situation and advocate for an approach that reflects the unique needs of our community,” Dyas added.

But even if Kelowna does opt out, Sawin said rebuilding tourism numbers won’t happen overnight.

“It’s going to be a couple of years before people get the message and come back,” Sawin said.

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How a UK accreditation program raises the bar for short-term rentals

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Article Written By: by Paris Achen | Hosting and Management, Property Care, Short-Term Rental Regulation, STR Advocacy 101

When Merilee Karr co-founded the Short Term Accommodation Association (STAA) in the UK in 2017, she kept hearing the same frustrating refrain from government leaders and traditional hospitality groups: short-term rentals had no standards. Never mind the growing ranks of professional operators or the increasing list of safety regulations already on the books. The narrative persisted, and it was hurting the industry’s credibility.

“It used to drive me crazy when they’d say there are no standards in your industry,” Merilee recalled, “because A, there are a bunch of regulations that do apply to our industry, but B, there are also a lot of companies in the industry who are absolutely driving very high standards.”

Rather than fighting the perception through debate, Merilee and STAA decided to do something bigger – launch a third-party accreditation program that would meet the hospitality sector where it already was, with high standards backed by industry expertise and neutral third-party verification.

“We wanted to have an independent, third party, which was not the association…because otherwise you end up in a conflict of interest that the association is marking its own members, and you don’t want to score them down because they’re going to get angry.” 

STAA explored partnerships with three accreditation providers before choosing Quality in Tourism (QiT), a UK-based accreditation body with decades of experience evaluating hotels and hospitality providers, including through the VisitEngland program. 

Together, STAA and QiT created the Safe, Clean, and Legal short-term rental accreditation designed to reflect the professionalism, safety, and quality already present in much of the industry but often invisible to policymakers and consumers.

Unlike self-certifications, which Merilee said often amount to checking your homework, this accreditation involves in-person inspections by QiT, which evaluate properties on everything from health and safety compliance to cleanliness, guest communications, and operational processes. The accreditation criteria vary according to the jurisdiction, but at minimum, applicants could be required to provide documentation of public liability insurance, employers liability insurance, risk assessments, fire safety measures such as PAT testing or electrical installation checks, Gas Safe certificate, Wholesome Water Report, site license, planning permission, local legislative requirements such as boarding permits or operating certificates, and other compliance records.

What surprised Merilee was how much overlap there was between STRs and hotels when it came to accreditation criteria.

“To my surprise, it was 95% the same,” Merilee said.

The unique aspect of accrediting vacation rentals is judging whether a property is a three-star, four-star, or five-star, which requires more subjectivity than assessing hotels. 

Today, any STR property in the UK can seek accreditation from QiT. Operators must complete an online application form, pay the fee, and upload copies of their required documents to their dedicated QiT member portal. A QiT assessor will then visit the property to assess whether it meets the standards of the Safe, Clean, and Legal accreditation. The fee starts at 99 British pounds ($134) but varies depending on the number of properties in the portfolio. For larger agency-level accreditation (Quality Accredited Company or QAC), prices start at 1,200 British pounds ($1,626).

More than 15,000 individual properties hold an STR accreditation from QiT. The number is likely much higher, given that the QAC accreditation is for property agencies. QiT doesn’t have a definitive figure for how many properties each of these agencies represents, as it changes constantly, but some have thousands of properties in their books, said QiT COO Ruth Robinson.

Once approved, hosts and operators receive a badge they can display on their websites, listings, and marketing materials to signal quality, safety, and trust to potential guests.


The badge became a lifeline and a lever for growth when the COVID-19 pandemic shut down most of the tourism economy.

Thanks to its independently verified standards, the STR industry in the UK was able to make a case for reopening a whole month before hotels. Operators who could demonstrate compliance through accreditation were allowed to open their doors to guests, while hotels remained shuttered.

That accreditation also opened another door: the UK’s National Health Service (NHS) urgently needed places to house frontline workers during the early months of the pandemic. With hotel space limited, professional STR operators across the UK stepped in, donating more than 20 million British pounds ($25.7 million) in free stays through a program called NHS Homes.

“Our frustration at that time was, well, the government was paying the Holiday Inn and different people to house NHS workers, and they weren’t paying our sector,” Merilee recounted.

NHS officials told the STAA they couldn’t pay for STR bookings because the industry had no standards, Merilee recounted. In fact, the STAA did have standards through the accreditation program, but not all short-term rentals in the NHS Homes program had accreditation.

The STAA and Crown Commercial Service (the UK Government procurement arm) negotiated an arrangement in which the NHS would buy stays in short-term rentals, provided that only accredited properties were offered through the NHS Homes program.

“We were able to…have one contracting party with the government, and we could bring everyone in under the association who was accredited to be able to sell it to government for the first time,” Merilee explained.

Trusted Stays became the distribution network for accredited STR operators in the UK to contract directly with the government. Operators who achieved accreditation could list their properties on Trusted Stays, which distributed inventory to government agencies and major travel management companies via the Global Distribution System (GDS), a platform that centralizes travel services like flights, lodging, and car rentals in one place so that travel agents can quickly compare prices. This was the first time accredited short-term rentals became accessible for government bookings, corporate stays, and business travel at scale. Suddenly, companies like Amex Travel, a travel agency for American Express clients, and CWT (formerly Carlson Wagonlit Travel), a major corporate travel agency, could now see and book vacation rentals just like they would a hotel. It also made STR listings accessible to companies that handle their own travel planning and send out requests for proposals to choose preferred accommodations for their employees.

“We put that accreditation in the photos on any of the platforms where we operate,” Merilee said. “It is something that we get feedback from customers that they value.”

Looking ahead, Merilee believes accreditation will be central to the evolution of short-term rentals. As more jurisdictions seek to regulate the industry, having a credible, independently verified badge can help distinguish between professional operators and bad amateurs.

“Accreditation is a great way to [ensure compliance] without…having to have a whole body of inspectors,” Merilee said. “It’s also then industry-funded. So, you don’t need to raise money to pay for government to be doing inspections when actually industry goes out and does it themselves.”

For operators, accreditation helps them stay in compliance and constantly improve their business

“Accreditation is more like an inexpensive consultant coming, looking at your portfolio, looking at your processes, and saying, look, if you can improve here, here, and here, we’ll accredit you,” Merilee said.

She has embraced that approach as CEO of UnderTheDoormat Group and Veeve, both of which have maintained accreditation at all of their properties since 2017.

“I’ve always appreciated accreditation, especially as an owner of a business,” she said. “It’s an external third party who are telling my team how they can get better, and that is invaluable.” This is many of the reasons why its so important to make sure that you get your property Verified, Trusted, and Accredited.

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Here’s Why Honolulu Doesn’t Enforce Law Against Short-Term Rental Companies

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By Ben Angarone

The head of Honolulu’s permitting department told the City Council last week why the city doesn’t enforce a 2019 law that bars companies such as Airbnb and Vrbo from allowing people to book illegal short-term rentals.

Department of Planning and Permitting Director Dawn Takeuchi Apuna said the city agreed not to enforce a provision in the law in order to settle a lawsuit filed by a group representing owners of vacation rentals.

She told Civil Beat in an interview after the hearing that the city probably won’t act anytime soon to enforce the portion of the law that requires hosting platforms to submit monthly reports on bookings. 

“It’s very risky, because they’re going to probably sue us,” she said, referring to the Kokua Coalition, the group that went to court to block parts of the 2019 law.

That’s not what she told Civil Beat in May when a reporter asked about the law. She said the permitting department prefers to treat companies like Airbnb as partners rather than adversaries, and that the department works with them to keep scofflaws off the platform.

Department officials have not explained why they didn’t say anything until last week about the agreement not to enforce the law.

After the council meeting, Civil Beat sent an email asking when Takeuchi Apuna, who wasn’t with DPP when the law was passed, had learned about the lawsuit.

Spokesperson Curtis Lum sent a written statement attributed to Takeuchi Apuna that said, “The Department of Planning and Permitting was part of that suit, so DPP and Corporation Counsel were obviously well aware of that suit and settlement from its inception.”

Civil Beat called Lum and sent a follow-up email to ask why no one had mentioned the settlement before. Takeuchi Apuna responded Wednesday morning in an email, saying her initial answer in May of why they don’t enforce against the platforms was accurate despite not being exhaustive.

“This term is one of many – not the only – policy considerations for us in determining whether we should or should not enforce against the platforms,” she said.

Holding platforms accountable – and using those reports to see if vacationers were booking unregistered short-term rentals – was a big part of the 2019 law.

Instead, the city goes after owners of illegal rentals. But city officials have acknowledged it’s hard to crack down on them, in part because operators learn to evade detection. Some list their properties when city investigators aren’t on the clock. Some jump to another platform if their listings are shut down on one website. One operator racked up almost $1 million in fines before the city moved to foreclose on his property.

Though some say illegal short-term rentals aren’t as common as when the council passed the 2019 law, they’re still a problem. Inside Airbnb, an organization that works to combat the negative effects of short-term rentals, says the site has about 7,900 listings on Oʻahu.

About 1,800 properties are registered with the city as short-term rentals, and more than 700 additional units were grandfathered in decades ago. Another group — more than 1,800 units — aren’t registered but operate legally within hotels. Conservatively, that would mean hundreds of illegal rentals are still operating in the city.

Lawsuit Followed Ordinance

The city’s short-term rental law attempted to balance the negative effects of short-term rentals, such as a diminished housing supply, with the economic benefits to property owners who rent to vacationers.

It took effect Aug. 1, 2019. The same day, the Kokua Coalition, doing business as the Hawaii Vacation Rental Owners Association, went to federal court to block parts of it.

The law allows short-term rentals of less than 30 days only in Oʻahu’s resort zones and some surrounding areas, and only if they register with the city. Registering triggers a higher property tax rate.

The law bars hosting platforms such as Airbnb and Vrbo from collecting a fee to book an unregistered short-term rental. Those platforms are required to register with the city and to submit monthly reports detailing bookings in the city.

Violating any of those provisions carries a fine of $1,000 to $10,000 per day.

In its lawsuit, the Kokua Coalition claimed that the city’s initial enforcement effort, before the law took effect, was “sloppy.” Hundreds of people operating legally were erroneously threatened with $10,000 fines, they alleged.

They also argued that the requirement for monthly reports violated state and federal protections of the privacy of electronic communications as well as the Fourth Amendment’s protection against unreasonable searches and seizures.

About two months later, the vacation rental owners and the city reached a deal to end the suit.

In the agreement, which was included in a court order dismissing the case, the city acknowledged that courts have blocked other cities from enforcing similar ordinances. The agreement noted court orders in New York City, Boston, Portland, Oregon, and Los Angeles.

“Based on its understanding of the current state of the law and its interests in avoiding unnecessary litigation, DPP does not currently intend to enforce” the provision allowing it to penalize platforms that fail to provide monthly reports, the agreement says.

The city agreed to give the Kokua Coalition 60 days’ notice if it intended to enforce that provision, which would give the group a chance to sue to stop it.

City’s Explanation Changes

Some cities have decided to hold platforms accountable for illegal listings, which two law professors have held up as a best practice.

Civil Beat asked DPP about the 2019 law several times in early May, both by email and in interviews. We first inquired how many times the city has fined hosting companies; Lum, the spokesperson, said it had never done so. We asked to see the monthly reports; Takeuchi Apuna said they had never received any.

When we asked how many platforms had registered, spokesperson Davis Pitner said none had done so.

No one mentioned the lawsuit.Asked why the platforms weren’t submitting monthly reports, Takeuchi Apuna said the department didn’t need them to do its job.

“If reports are something that would help us better enforce, then we would probably ask for that,” she said.

During last week’s council meeting, however, Takeuchi Apuna testified during a presentation on DPP’s strategy for short-term rental enforcement that the department doesn’t get booking reports because of the court order in the Kokua Coalition lawsuit. If the city tried to get them, “they will be ready to litigate,” she said.

She reiterated her belief that the city doesn’t need the reports: “We believe the reporting info may be helpful, but it’s not crucial based on the type of enforcements we currently are exercising.”

The lead lawyer for Kokua Coalition, Greg Kugle, said he didn’t have time to talk about the case. Efforts to reach officers in the group were unsuccessful. Another lawyer declined to comment.

That agreement between the city and Kokua Coalition doesn’t stop the city from enforcing other parts of the 2019 law, however: the provisions allowing the city to penalize hosting companies for failing to register and for facilitating bookings of illegal rentals.

In May, Takeuchi Apuna explained the city’s lack of enforcement of those provisions by citing a federal law that shields tech companies from liability when it comes to free speech, saying it could apply to vacation rental platforms.

Council member Tyler Dos Santos-Tam said he was surprised to hear Takeuchi Apuna’s new explanation. He said he had tried to get those booking reports sometime last year and was told the department didn’t have them. He didn’t pursue the matter.

Despite the privacy concerns claimed by vacation rental owners, he said he thinks the city should request the data anyway.

“I think we need to go back and find as much information as possible, and get the platforms to give us this information in a reasonable way,” he said.

One option, he said, would be to get anonymized data, which would enable the city to see where rentals operate and how long guests stay in them. That, he said, could inform future legislation.

When there is uncertainty in the STR market, you can be sure that having an Accredited property is the gold standard and helps with staying at the top of mind in the Vacation Rental Space.

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Are You Breaking Costa Rica’s Short-Term Rental Laws Without Knowing It?

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By: OSA Property Management

Are you unknowingly breaking Costa Rica’s rental laws? Many property owners operate short-term rentals without realizing they’re violating local regulations.

At Osa Property Management, we’ve seen the consequences of non-compliance firsthand. This post will guide you through the key legal requirements, common violations, and how to stay on the right side of the law.

What Are Costa Rica’s Short-Term Rental Laws?

Costa Rica’s short-term rental laws present a complex landscape for property owners. In 2019, Law No. 9742 established a framework for non-traditional accommodations, applying to rentals under one year and regulating the vacation rental market.

Licensing and Registration Requirements

Property owners must obtain proper licenses to operate legally. The Costa Rican Tourism Institute (ICT) mandates all short-term rental properties to register and secure a tourism license. This process requires owners to fill out an electronic form (in Spanish only) available at www.ict.go.cr and include information such as the property details.

Local municipality registration is also necessary. Each area may have specific requirements and fees. Popular tourist destinations like Jaco or Manuel Antonio often require special licenses for short-term rentals. Non-compliance can result in substantial fines or property closure.

Tax Obligations for Short-Term Rentals

Tax compliance is essential for short-term rental owners. As of 2025, the first 3.8 million colones (about $7,600 USD) of annual rental income is tax-exempt. Income beyond this threshold faces progressive tax rates from 10% to 25%.

Short-term rentals (less than one month) now incur the standard 13% Value Added Tax (IVA), while long-term residential rentals remain exempt. Owners must file monthly income declarations (Form D-125) and meet quarterly tax installment deadlines. Neglecting these obligations can lead to severe penalties and legal issues.
Zoning and Property Use Restrictions

Zoning laws significantly impact short-term rental operations. Properties in Costa Rica typically fall under residential or commercial zoning. Residential zones often impose stricter limitations on short-term rentals, while commercial zones offer more flexibility.

Some areas, particularly in tourist hotspots, have specific zones for vacation rentals. Property owners should check with local authorities about zoning restrictions before starting a short-term rental business. Operating in a non-approved zone can result in fines and forced property closure.

Understanding and complying with these laws allows property owners to operate successful and legal short-term rentals in Costa Rica’s thriving tourism market. However, the complexity of these regulations often leads to unintentional violations. Let’s explore some common mistakes property owners make and their potential consequences.

Common Rental Law Violations in Costa Rica

Costa Rica’s rental laws present a complex landscape, and many property owners unknowingly violate them. These violations can lead to severe consequences, impacting both business operations and legal standing. Let’s explore some of the most frequent infractions and their potential repercussions.

Unlicensed Operations

One of the most common violations involves operating without proper licenses. The Costa Rican Tourism Institute (ICT) requires all short-term rental properties to register and obtain a tourism license. Additionally, local municipalities often have their own registration requirements. Failure to secure these licenses can result in hefty fines and even forced closure of properties.

In popular tourist areas like Jaco or Manuel Antonio, operating without a special short-term rental license can lead to penalties of up to 10 times the cost of the license itself. Properties have been shut down during peak tourist seasons, resulting in significant financial losses for owners.

Unreported Rental Income

Another frequent violation involves the failure to report rental income accurately. As of 2025, the first 3.8 million colones (approximately $7,600 USD) of annual rental income is tax-exempt. Many property owners, especially those new to the market, neglect to file monthly income declarations using Form D-125 or miss quarterly tax installment deadlines.

The Costa Rican tax authority (Dirección General de Tributación) has increased its scrutiny of short-term rentals. In a recent crackdown, they identified over 500 properties with unreported income, resulting in back taxes and penalties totaling millions of colones.

Health and Safety Violations

Ignoring health and safety standards not only endangers guests but can also lead to severe legal consequences. Costa Rica’s Ministry of Health conducts regular inspections, especially in tourist-heavy areas. Common violations include lack of fire safety equipment, inadequate sanitation facilities, and failure to maintain proper waste management systems.

A recent case in Guanacaste saw a property owner face fines of over $5,000 USD and a temporary closure order for multiple safety violations, including non-functional smoke detectors and inadequate emergency exits.

Zoning Infractions

Operating a short-term rental in a non-approved zone constitutes a serious violation that often goes unnoticed until it’s too late. Some residential areas prohibit or severely restrict short-term rentals. For instance, certain parts of San José only allow short-term rentals in buildings specifically zoned for such use.

Violating zoning laws can result in daily fines, forced eviction of guests, and even legal action from neighbors or homeowners’ associations. In extreme cases, property owners may need to convert their property back to residential use, incurring significant costs.

The consequences of these violations can be severe and long-lasting. Fines can range from a few hundred dollars to tens of thousands, depending on the nature and duration of the violation. Repeat offenders may face criminal charges and permanent bans from operating rental properties.

Moreover, violations can damage reputations in the rental market. Many booking platforms now require proof of legal compliance, and negative reviews from guests who discover they’re staying in an illegal rental can devastate a business.

Navigating these complex regulations challenges many property owners, especially those unfamiliar with Costa Rican law. This complexity underscores the value of partnering with professional property management companies that stay up-to-date with changing regulations and ensure full compliance. Such partnerships allow property owners to focus on growing their rental business without legal worries, setting the stage for our next discussion on how professional management can safeguard your investment.

How Professional Management Ensures Legal Compliance

At Osa Property Management, we have developed a comprehensive approach to navigate Costa Rica’s complex rental laws. Our 19 years of experience have taught us that compliance isn’t just about avoiding fines-it’s about building a sustainable, profitable rental business.

Navigating the Licensing Process

Securing the right licenses is essential, but it often confuses property owners. We have streamlined this process by maintaining strong relationships with local municipalities and the Costa Rican Tourism Institute (ICT). Our established channels help property owners reduce license acquisition time significantly.

We don’t just file paperwork-we anticipate potential issues. When stricter zoning regulations are introduced, we proactively adjust our clients’ rental strategies to prevent disruptions to their income streams.

Mastering Tax Compliance

Tax laws for short-term rentals in Costa Rica present numerous challenges. We use a system that tracks rental income in real-time, which ensures accurate monthly declarations. This approach helps our clients avoid potential fines and stay compliant with tax regulations.

We also stay ahead of tax law changes. When new taxes (such as the Value Added Tax) apply to short-term rentals, we immediately adjust pricing strategies. This helps our clients maintain profitability without violating new regulations.

Prioritizing Guest Safety and Property Maintenance

Regular property inspections fulfill legal requirements and are essential for guest satisfaction and long-term profitability. Our team conducts monthly inspections and addresses potential issues before they become costly problems.

We partner with local safety experts to ensure all properties meet the latest standards. This approach helps our clients achieve high pass rates on health and safety inspections (often exceeding regional averages).

Staying Informed on Regulatory Changes

Costa Rica’s rental laws evolve constantly. We dedicate resources to monitor these changes and understand their implications for property owners. This proactive approach allows us to implement necessary adjustments quickly, keeping our clients’ properties compliant and profitable.

Professional property management isn’t just about convenience-it’s a strategic investment in your rental business’s long-term success and legal compliance. By maintaining high standards and staying ahead of regulatory changes, we allow property owners to focus on providing exceptional experiences for their guests and maximizing their returns.

Final Thoughts

Costa Rica’s rental laws present challenges for property owners, but compliance protects investments and enhances guest experiences. Professional property management companies offer expertise in navigating these complex regulations, saving time and reducing stress. These experts handle licensing, registration, tax compliance, and ensure properties meet health and safety standards.

Osa Property Management brings 19 years of experience in Costa Rica’s rental market. Our team understands local regulations and helps optimize property performance while maintaining compliance. We provide comprehensive services tailored to specific needs, from marketing to maintenance and financial management.

Successful property management in Costa Rica balances profitability with legal compliance and community respect. The right partner (like Osa Property Management) can help achieve this balance and maximize your Costa Rican property investment. Our expertise in areas such as Tarcoles, Jaco, Dominical, Manuel Antonio, Ojochal, and Uvita ensures capable handling of your property, regardless of location.

For more details on verifying your property and staying compliant with Costa Rica’s evolving STR regulations, visit BRNX Travel’s Compliance/Verified? – BRnX Travel to see how we help hosts meet legal standards before going live. 

Colorado short-term rental owners, advocates rally against “heavy-handed regulation” from lawmakers

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Author: Jason Blevins

Colorado is the birthplace of short-term rentals. And the state is ground-zero for local regulation of the booming industry.

After several years of reactive, defensive responses to increased regulation and taxation legislation, the state’s short-term rental owners and managers are organizing with an educational campaign and lawmaker lobbying plans. Colorado House Speaker Rep. Julie McCluskie, a Democrat from Dillon, earlier this month warned that short-term rental legislation “is highly likely” in either the special session or next year’s session. 

“We know that short-term rentals have become a significant part of the guest experience,” she said at a rally of short-term rental owners, managers and representatives from Vrbo in Silverthorne last week. “In order for our tourism economies to thrive, we need short-term rentals in places where the world wants to be.”

With no short-term rental legislation in this week’s special session where lawmakers hammered out a plan for property tax relief, “it does feel like we dodged a bullet,” said Julie Koster, the executive director of the Colorado Lodging and Resort Alliance and the Summit Alliance of Vacation Rental Managers. 

Property owners and short-term rental advocates are planning to lobby and court policymakers heading into next year’s legislative session, hoping to stifle increased limitations on vacation rentals. Earlier this year, as the legislature debated Senate Bill 33 — legislation that would have quadrupled property taxes on vacation rental homes — McCluskie fielded more than 2,000 emails from constituents in one week. The third-term representative said she has never received so many emails.

She urged the short-term rental advocates gathered inside the Silverthorne Pavilion earlier this month to reach out now to lawmakers and share data — not just anecdotes — about vacation homes that rent to visitors. 

“Short-term rentals are the new frontier for how we experience life. People are letting go of buying things and they are embracing ‘What happened to me yesterday,’” she said. “How do we ensure that there are short-term rentals available? How do we find balance?”

Balance is the top talking point for owners and managers who rely on vacationers renting private homes. The owners on Tuesday discussed the need for all owners to pay lodging taxes and comply with local regulations as they lobby local and state lawmakers to steer clear of what they call “heavy-handed regulation.”
Senate Bill 33, which was voted down by the Senate Finance Committee, posed “an existential crisis” for the short-term rental industry in Colorado, said Tim Rosolio, who heads up vacation rental partnerships for Vrbo parent the Expedia Group. 

“In Colorado, we kind of got to the brink there,” he said.

The crackdown on short-term  rentals in cities like New York, Chicago and San Francisco is spilling into resort markets and it’s important that owners and managers organize to help build rules that protect the industry while alleviating concerns from neighbors and contributing revenue to housing challenges. 

“The answer is not ‘no regulation,’ Rosolio said. “It’s important for us to land on something that is balanced … while making sure that we understand what a big economic driver short-term rentals and tourism are for the community.”

Tourism slowdown in 2024 

Colorado overnight visitors spent $6.3 billion on lodging in 2023, generating $1.8 billion in local and state tax revenue and supporting 9,450 jobs. Visitors spent $28.2 billion in total in 2023 and vacationers who rented privately owned homes spent $4.1 billion.

In nine Western Slope mountain counties anchored by ski areas, visitors in short-term rental homes and condos — not hotels and motels — spent $1.2 billion in 2023, up from $1.1 billion in 2022 and 2021. That compares to $2.3 billion spent on traditional hotels and motels in 2023 and 2022. 

Since 2019, the number of vacationers renting private homes has increased by 27%. 

The taxes generated by tourism in Colorado equate to about $308 per resident. But in places like Summit County, the $96.3 million in state and local taxes paid by tourists in 2023 equals more than $3,150 per resident. 

The Colorado Tourism Office collects annual spending figures and shares that data far and wide. That is part of the office’s mission to empower local communities so they can share their own plans for balancing the quality of life for local residents with tourist-based economies. 

“What is the value of tourism? Where are you on the tourism cycle in your communities” said Colorado Tourism Office boss Tim Wolfe, who says the revival of international tourism is a key component for sustainable visitation in high-profile destinations like metro Denver and Summit County. He’s seeing more communities backing away from intense regulation of short-term rental properties as visitation and lodging tax collections ebb in the first half of 2024. 

Proposition 123, passed by voters in 2022, last year directed $80 million toward affordable housing across the state. That river of revenue is flowing again this year as more housing plans unfold, Wolfe said. 

“Are we giving this a chance to take root or are we going to pass three more things before this actually has a chance to take root and start generating housing,” Wolfe told the vacation rental advocates, urging a wariness of statewide regulation that could slow the flow of tourists into Colorado. “We have to be careful. If we make dramatic changes this (slowdown in visitation) could continue to accelerate.”

Hundreds of property owners and managers have united as part of the Colorado Lodging Resort Alliance, which rallied dozens of advocates to urge opposition to Senate Bill 33 earlier this year. 

The group is again rallying its troops to thwart legislation that could impact vacation rentals. The Colorado Association of Ski Towns advocating for legislation that would enable local communities to ask voters to approve a tax on vacant homes that could include properties that are rented to vacationers. Another proposal by Colorado Counties Inc. would raise the cap on lodging taxes levied by counties to 6% from 2%, just like Colorado municipalities. 

“This could give counties the opportunity to increase revenue for advertising and marketing local tourism, housing, childcare services, and facilitating and enhancing visitor experiences benefiting their county residents,” reads a legislative position statement from Colorado Counties Inc. 

“There are some scary things out there looming around on the horizon,” Koster said.

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Short-Term Rentals in Costa Rica: The Fine Line Between Economic Potential and Community Impact

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by Casey Halloran

In this article, Casey Halloran examines the implications of short-term rentals in Costa Rica and offers some strategies for sustainable tourism management to preserve both local communities and the “pura vida” spirit.
Tourism in Costa Rica is at a critical juncture. Like other countries that rely on tourism, the rapid expansion of short-term rental properties, facilitated by platforms like Airbnb, presents both opportunities and challenges. While this growth offers economic benefits, it also risks altering the fabric of local communities and fostering resentment towards tourists—a situation Costa Rica must avoid to maintain its “pura vida” reputation.

Recent events in European tourist destinations like Barcelona and Mallorca in Spain serve as cautionary tales. In Barcelona last month, locals protested against tourism, with some even spraying water at tourists. In Mallorca, residents struggle with soaring housing costs and overcrowding, leading to calls for “Less Tourism, More Life.” Costa Rica, famous for its “pura vida” ethos, faces the challenge of maintaining this balance while managing its short-term rental market.

This article examines the scale of the short-term rental phenomenon in Costa Rica, its potential for generating significant revenue, and its impact on local communities. By understanding these factors, we can explore strategies to harness the economic benefits of tourism while preserving the unique character that makes Costa Rica a beloved destination.

The Scale of Short-Term Rentals in Costa Rica

The vacation rental market in Costa Rica has experienced massive growth, estimated to be worth around $800 million per year. According to data from Costa Rica Investments, there are 35,950 short-term rental listings across the country in August 2024.

Certain destinations stand out for their high concentration of rentals. The Central Pacific community of Jacó leads with some 2,904 average monthly listings, followed by Tamarindo in Guanacaste with 2,263. Other popular locations include Cahuita on the Caribbean coast, San José, and Cobanó (encompassing Santa Teresa and Montezuma on the Nicoya Peninsula), all with over 2,000 average monthly listings. Except for San José, these are all small communities.

And the numbers are increasing, too. The number of listings in Jacó have increased by 13% over the past year. Tamarindo has seen a 19% increase in listings, while Cahuita has over 27% more listings than a year ago. The community of Bahia Ballena, on the southern Pacific coast, has seen short-term rental listings grow by more than 35%.

On average, some 40% of listings across Costa Rica are available year-round. In Jacó, this figure rises to 49%, and in Tamarindo, it’s 46%. These numbers suggest a significant portion of properties are dedicated short-term rentals rather than occasionally rented primary residences, impacting housing availability for local residents.

The market also shows varying degrees of professionalization. Across the country, only 4% of listings are professionally managed. This rises in places like Tamarindo (22%) and Jacó (20%). In Costa Rica, individual owners overwhelmingly manage properties, often as a side hustle, largely untaxed and unregulated.
The Untapped Potential: Tax Revenue and Economic Impact

While the growth of short-term rentals presents challenges, it also offers a significant opportunity for increased tax revenue. This $800 million industry operates largely outside the formal tax structure, representing a substantial potential resource for both national and municipal governments.

Conservative estimates suggest that proper regulation and tax collection from short-term rentals could result in an annual windfall of up to $100 million for the Costa Rican government. This figure is based on the application of Costa Rica’s 13% Value Added Tax (IVA) to the rental income generated by these properties. For a country in dire need of funds for infrastructure, education, and social programs, this represents a considerable potential boost to public coffers.

The potential for significant tax revenue from short-term rentals is not theoretical. In December 2023, Airbnb agreed to pay €576 million ($620 million) to Italian tax authorities to settle a dispute over uncollected taxes from hosts. This case demonstrates the substantial sums at stake when taxing short-term rentals. While Costa Rica’s market is far smaller than Italy’s, the principle remains the same: proper regulation and tax collection can yield significant revenue for the government.

The impact on local municipalities in Costa Rica could be transformative. In Tamarindo, the annual revenue potential per property reaches $62,863, while in Nosara, it’s $67,441. These figures represent crucial funds that could be reinvested into local infrastructure, security measures, and sustainability initiatives—vital for securing the future of tourism in these areas while improving the quality of life for residents.

Bringing short-term rentals into the formal economy could level the playing field with traditional lodging options. Hotels and registered accommodations are subject to strict regulations and tax obligations, while many short-term rentals operate in a regulatory grey area. This disparity creates an unfair advantage, with some estimates suggesting that the lack of regulatory compliance gives short-term rentals a 25-35% cost advantage over traditional lodgings.

The Italian case highlights the importance of clear legislation. Italy requires landlords to pay a 21% tax on their earnings from short-term rentals, with plans to increase this to 26%. It shows how a clear legal framework can facilitate tax collection from platforms like Airbnb.

The goal isn’t to stifle the short-term rental market but to integrate it responsibly into the broader tourism ecosystem. By implementing fair regulations and tax structures, Costa Rica can ensure that the benefits of this booming sector are shared more equitably among all stakeholders – from property owners and platforms to local communities and the government.

The Community Impact: Housing and Local Dynamics

While the economic potential of short-term rentals is significant, their rapid growth is not without consequences for local communities. The “Airbnb Effect” is reshaping neighborhoods across Costa Rica, particularly in popular tourist destinations.

One of the most pressing issues is the impact on housing availability and affordability for long-term residents. A significant portion of the housing stock in places like Jacó, Tamarindo, and elsewhere is being diverted from long-term residential use to short-term tourist accommodation. The bottom line is that beach communities in Costa Rica are small, and the proliferation of short-term rentals puts pressure on the local housing market. As more properties convert to vacation rentals, fewer homes are available for long-term residents, many of whom work in the tourism industry that serves these visitors.

The result is a paradoxical situation where tourism industry workers struggle to find affordable housing in the very communities where they work. This can lead to longer commutes, reduced quality of life, and potentially a shortage of workers in key tourism-related jobs.

The influx of short-term rentals can also alter the character of communities, something seen in Europe, where whole neighborhoods in some cities no longer have locals living in them. With a constant turnover of visitors, the sense of community that once defined these areas can erode. Local businesses may shift their focus to cater to tourists rather than residents, further changing the fabric of these communities.

There’s also the question of equity. While some property owners benefit from the lucrative short-term rental market, others in the community may bear the costs in terms of reduced housing options and changing neighborhood dynamics. This disparity risks creating a two-tiered system within communities, potentially fostering resentment between those who profit from tourism and those who feel displaced by it.

These issues are not unique to Costa Rica. Many popular tourist destinations worldwide have similar challenges to deal with. However, Costa Rica’s reputation for “pura vida” and its historically harmonious relationship between locals and visitors make addressing these issues particularly crucial.

Potential Solutions: Balancing Growth and Community Preservation

As Costa Rica grapples with the challenges posed by the fast-growing short-term rental market, it should explore potential solutions that can harness the economic benefits while mitigating negative impacts on local communities:

  1. Enforcement of Existing Laws: Costa Rican law already stipulates that the minimum rental term is three years, with tenants having the right to stay for this duration. The only legal way to offer accommodations for less than a year is to register as a tourism business with the ICT (Costa Rica Tourism Board). Stricter enforcement of this existing law could significantly impact the short-term rental market.
  2. Registration and Licensing: Requiring short-term rental owners to register as tourism businesses could level the playing field with hotels and regulated rentals. This would not only facilitate tax collection but also ensure compliance with safety standards and local regulations.
  3. Platform Accountability: Requiring platforms like Airbnb to share data with local authorities and ensure their listings comply with local regulations could significantly aid enforcement efforts. This could include verifying that listed properties are registered with the ICT.
  4. Addressing Seasonal Pricing Fluctuations: Current practices of dramatically changing rental prices based on high or low seasons are technically illegal but widely practiced. Developing mechanisms to enforce consistent pricing or regulate seasonal changes could help stabilize the local housing market.
  5. Community Benefit Funds: A portion of the tax revenue generated from short-term rentals could be earmarked for community development projects, affordable housing initiatives, or infrastructure improvements in the most impacted areas.
  6. Primary Residence Requirement: To discourage the conversion of long-term housing into full-time short-term rentals, Costa Rica could require that short-term rental operators live in the property as their primary residence for a significant portion of the year. This aligns with the suggestion for travelers to seek out Airbnb rentals where the owner actually lives.
  7. Education for Tourists: Encouraging tourists to stay in hotels, guest homes, or rentals managed by ICT-registered agencies could help support regulated businesses. This could be part of a broader education campaign about responsible tourism in Costa Rica.
  8. These measures could represent a starting point for Costa Rica to balance the growth of the short-term rental market with the needs of its communities.
  9. Preserving “Pura Vida” Through Responsible Tourism Management
  10. Costa Rica stands at a crossroads with its short-term rental market. The potential for significant economic gains is clear, but so are the risks to local communities and the cherished “pura vida” lifestyle. By learning from other tourist destinations and implementing thoughtful, balanced regulations, Costa Rica can chart a path that maximizes the benefits of tourism while minimizing its drawbacks.
  11. The goal should not be to stifle the short-term rental market but to integrate it responsibly into the broader tourism and housing ecosystems. This requires a concerted effort from government authorities, platforms like Airbnb, local communities, and tourists themselves.
  12. Costa Rica can learn from Spain and take proactive measures. The main grievance in Barcelona and Mallorca is not tourists staying in hotels, but tourists staying in Airbnbs and squeezing locals out. By addressing the challenges of short-term rentals head-on, Costa Rica can ensure that its tourism industry continues to thrive, benefiting all its residents and preserving the unique charm that makes it a beloved destination for travelers worldwide.

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Navigating the Waters of Short-Term Rental Properties: Further Guidance for Canadian CPAs

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In an ever-evolving tax landscape, those of us with clients owning or considering ownership in short-term rental properties face new challenges and legislative complexities. With the federal government, the provinces as well as municipalities implementing their own measures to regulate short-term rentals, it’s imperative to stay informed and proceed with caution.

2023 brought significant changes that could well impact the viability of short-term rental investments for your clients – we’ve had clients sell properties no longer as profitable as they were now spooked by pending legislation. Notably, the federal government’s draft legislation, effective January 1, 2024, proposes denying income tax deductions for expenses related to “non-compliant short-term rentals”. A non-compliant rental is defined as a property offered for rent for less than 90 consecutive days in jurisdictions where such rentals are either not permitted or fail to meet registration, licensing, and permit requirements.

Emerging trends in legislation

In British Columbia, for example, the Short-Term Rental Accommodations Act (STRAA) introduces a “principal residence requirement” for short-term rentals starting May 1, 2024. Rentals are prohibited for less than 90 consecutive days unless they occur in the host’s principal residence or in a permitted secondary suite on the same property.

Municipal and provincial regulations

These can vary significantly, creating a complex web of compliance requirements. For instance, cities like Vancouver, Montreal, Toronto, and Calgary have bylaws affecting short-term rentals. When advising clients, be vigilant. Understanding these regulations is key to advising clients effectively, especially as non-compliance can result in denied tax deductions.

Unintended consequences

The conversion of short-term rental properties to long-term rentals may appear to be a solution for some taxpayers facing tightening regulations. However, this transition is not without its GST implications under the “change in use” rules of the Excise Tax Act. Such a change can have financial impact to clients unaware of the consequences of such a decision. And it’s easy for us to miss such a change in the busyness of tax season. When such a change does occur, ensure timely remittance of any deemed GST collected during such conversions.

More unintended consequences

For example, efforts to comply with one set of regulations may inadvertently lead to non-compliance with another. BC’s STRAA’s 90-day rental period creates potential conflicts with other legislation, such as Vancouver’s Vacancy Tax By-Law, Speculation and Vacancy Tax Act (SVTA), or the Underused Housing Tax Act (UHTA), which consider shorter rental periods as contributing to occupancy. Expect more conflict and confusion to come to other jurisdictions across the country as all levels of government step up to the trough. This situation in British Columbia may well serve as an indicator of things to come in other jurisdictions, emphasizing the need for a proactive and informed approach across Canada.

In navigating these turbulent waters, prudence, education, and diligence are key. Educate your clients well in advance about these developments and the importance of compliance to avoid penalties and maximize the potential of their investment. Consider a section in your T1 tax checklist such as “NEW for 2024” to give clients advanced notice and opportunity for questions. Ensure you proactively communicate via email or other means to get ahead of the potential risks of clients making uninformed decisions.

Don’t take the complexity of short-term rental properties for granted. The interplay between federal, provincial and municipal legislation underscores the importance of staying informed and prepared for the evolving regulatory environment.

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indicted in $8.5 million Airbnb, Vrbo scam linked to 10,000 reservations across 10 states

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Author: Cara Tabachnick

Two men were indicted by a federal grand jury as the masterminds behind a vast online rental properties scam that raked in more than $8.5 million, and was linked to 10,000 reservations across 10 states, the U.S. Department of Justice announced Thursday. 

Shray Goel, 35, of Miami, and Shaunik Raheja, 34, of Denver, operated a short-term house rental business used to defraud Airbnb, Vrbo and guests renting properties through those platforms, according to the indictment. Goel was initially charged on Dec. 13, but Raheja was added to a superseding indictment on Wednesday, which also alleged the short-term rental property scam included discrimination against Black people.

When guests searched for rental housing in these areas, they found multiple listings of Goel and Raheja’s properties as the business would run “secret bidding wars,” the indictment said.  Operators used fake host names, and in certain instances, other people’s identities, to list properties. 

Goel, Raheja and others who worked with them are alleged to have owned and leased properties throughout the U.S. for the rental business, including properties in Los Angeles, Denver, Chicago and Savannah, Georgia. By 2019, the business managed almost 100 properties across the United States.

Some renters who believed they booked a property would at the last minute receive a cancellation with “bogus last-minute excuses,” the indictment said. These guests would be steered to inferior rental properties, still paying the same prices. 
These “bait and switch” methods allowed Goel and Raheja to keep their properties full at the highest listed prices possible, the indictment said. Operators also tried to avoid renting to guests they perceived were Black, the indictment said. 

“The conspiracy charge alleging that the defendants discriminated against potential renters based on their skin color is a reprehensible abuse which must not be tolerated in the United States,” said Donald Alway, the assistant director in charge of the FBI’s Los Angeles field office.

In 2023, Airbnb said it removed 59,000 fake listings and prevented another 157,000 from joining the platform. The company said it planned to use AI to verify listings in its top five countries, which are the U.S., the U.K., Canada, France and Australia. 

Airbnb and Vrbo are cooperating with the government in the investigation, the Department of Justice said. 
The indictment charges Goel and Raheja with conspiracy to commit wire fraud and 13 counts of wire fraud. Goel is also charged with two counts of aggravated identity theft.

The conspiracy and wire fraud charges each carry a statutory maximum penalty of 20 years in federal prison. There is a two-year mandatory consecutive sentence for the counts of aggravated identity theft.

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