Montana has established a statewide licensing requirement for short-term rentals, allowing local governments to implement additional regulations. This creates a multi-layered regulatory approach that requires property owners to navigate both state and local requirements, which can vary significantly between cities and counties.
This guide covers short-term rental laws in Montana, from the state's licensing system to requirements in major cities.
Understanding Short-Term Rental Laws in Montana
Montana regulates short-term rentals with a statewide Public Accommodation License requirement and significant local control at the county and city level. Operators must comply with both state and local regulations, which can vary dramatically.
The variation between cities and counties isn't merely administrative; it can determine whether a property can legally operate as a short-term rental. Some Montana communities welcome vacation rentals with minimal restrictions beyond state requirements, while others have implemented comprehensive regulations addressing zoning, permitting, and operational standards.
This regulatory approach reflects Montana's balance of state oversight and local autonomy. The state licensing system creates a consistent baseline, while local regulations allow communities to tailor additional rules to their needs. Property owners must navigate both state and varying local requirements. A rental property management strategy that works in one Montana city might be prohibited miles away in a neighboring community.
The regulatory landscape hasbecome more dynamic recently. As short-term rentals grow in popularity, particularly in tourist destinations like Yellowstone and Glacier National Parks, more Montana communities are developing regulations to address potential impacts on housing availability, neighborhood character, and local services. Regulations existing when you purchased a property may change, affecting your operational model and return on investment.
For property owners and investors, this evolving landscape makes thorough research and ongoing monitoring of state and local regulationsessential. Understanding the specific rules for your property's location is the foundation of legal compliance and successful operation in Montana's short-term rental market.
Definition of a Short-Term Rental
Montana lacks a uniform, statewide definition of short-term rentals beyond tax purposes, leaving local jurisdictions to establish their own definitions. Most communities share a common understanding of vacation rentals.
In most Montana cities and counties, a short-term rental is a residential unit rented to guests for less than 30 consecutive days. This timeframe distinguishes short-term or vacation rentals from longer-term leases, which fall under different regulations.
For tax purposes, short-term rentals are defined by stays of 29 days or less, triggering Montana's Lodging Facility Use Tax and Lodging Sales Tax.
Bozeman has developed a detailed classification system, categorizing short-term rentals into three types:
- Type 1: Owner-occupied with owner present during rental
- Type 2: Owner-occupied without owner present during rental
- Type 3: Non-owner occupied
Types of properties for short-term rentalsinclude:
- Single-family homes
- Condominiums and apartments
- Individual rooms within a dwelling
- Duplexes and multi-family units
- Vacation cabins and mountain retreats
Traditional accommodations like hotels, motels, and bed and breakfasts fall under separate regulatory frameworks with specific licensing and operational requirements. The distinction between a bed and breakfast and a short-term rental can be blurry, but usually hinges on factors like food service, management presence, and the number of units.
Some Montana municipalities mayrefine these definitions with additional criteria. For example:
- Distinctions between owner-occupied and non-owner-occupied properties
- Different classifications based on rental frequency
- Separate categories for whole-house rentals versus room rentals.
- Special designations for properties in tourist zones or resort areas
Understanding the specific definition in your jurisdiction is crucial, as it determines the regulations governing your property and the legal operation requirements. This requires consultation with state authorities and local planning departments or municipal officials to understand your property’s classification under applicable ordinances.
Starting a Short-Term Rental Business in Montana
Launching a short-term rental business in Montana requires navigating state and local regulations, with varying requirements by location. Success depends on thorough research and adherence to evolving rules as the state and communitiesrefine their vacation rental approach.
1. Research local regulations.
Before buying or converting a property to a short-term rental, investigate state requirements and local city and county regulations. Montana's two-tiered approach means state compliance isn't enough if local regulations impose additional restrictions.
This preliminary research iscrucial in Montana, where jurisdictions have implemented restrictions on short-term rentals. For example, Bozeman prohibits non-owner occupied rentals (Type 3) in residential districts, Missoula requires neighbor notification for Tourist Homes in residential districts, and Billings prohibits short-term rentals in deed-restricted affordable units.
Start your research with the Montana Department of Public Health and Human Services website for state licensing requirements, then check your local city and county government websites, focusing on planning departments, zoning offices, and business licensing divisions. Look for ordinances on short-term or vacation rentals in municipal codes related to housing, business licensing, or zoning regulations.
2. Obtain Licenses and Permits
Montana requires a state-level license for all short-term rentals, and many cities require additional local authorizations. These licenses and permits are essential for legal compliance and typically involve:
- Application forms with detailed property information
- Proof of ownership and property details
- Safety certifications or inspection reports
- Payment of licensing fees
For example:
- State: Public Accommodation License from the Montana Department of Public Health and Human Services
- Billings: City business license and annual Short-Term Rental Permit from the Planning Department.
- Missoula: Annual rental business license, Short-Term Rental Registration, and Public Accommodations License
- Bozeman: STR Hosting Permit, Public Accommodations License, fire safety inspection, and health inspection.
Application processes vary by location, with some offering online systems and others requiring in-person submissions and inspections. Processing times range from a few days to several weeks, making advance planning essential, especially for starting operations during peak tourism seasons.
3. Understand Zoning Restrictions
Zoning regulations pose a major barrier to operating a short-term rental in Montana. Many cities and counties restrict short-term rentals to specific zoning districts or impose density limitations.
For example:
- Bozeman prohibits Type 3 STRs (non-owner occupied) in residential districts, while Type 1 is allowed in all districts and Type 2 in most but not RS and R1 districts.
- Missoula requires Neighbor Notification for Tourist Homes in residential districts.
- Billings requires rentals to use only habitable space, not accessory structures.
Before purchasing or converting a property, verify that short-term rentals are permitted in your zone and if there are additional criteria like parking, occupancy, or property type restrictions. This information is usually available through city planning departments or zoning offices.
4. Comply with Safety Standards
Montana short-term rental safety requirements typically include:
- Working smoke detectors
- Carbon monoxide alarms are essential for properties with gas appliances or fireplaces.
- Fire extinguishers
- Emergency exit plans
- Building code compliance
- Maximum occupancy limits based on square footage and bedroom count.
- Proper electrical and plumbing systems.
Many jurisdictions require initial safety inspections for permit applications and periodic re-inspections for compliance. Missoula requires a Safety Self-Inspection Checklist, and Bozeman requires fire safety and health inspections. These standardssatisfy regulatory requirements, protect guests, while minimizing liability for property owners.
5. Register for Tax Collection
Short-term rental operators in Montana have several tax obligations:
- Lodging Facility Use Tax: Montana imposes a 4% tax on accommodations.
- Lodging Sales Tax: A separate 4% tax applies to short-term rentals.
- Local Taxes: Some municipalities have additional taxes.
To collect these taxes, register with the Montana Department of Revenue. Platforms like Airbnb and Vrbo collect and remit some taxes, but operators are ultimately responsible for ensuring all tax obligations are fulfilled.
Clear record-keeping is essential for accurate tax reporting, including documentation of rental income, occupancy periods, and collected taxes. Many professional hosts use specialized software to track these obligations and ensure compliance.
6. Secure Insurance
Standard homeowners insurance typically doesn't cover commercial short-term rental activities, creating a potential coverage gap for unprepared operators. Adequate insurance for Montana short-term rentals includes:
- Property coverage for the dwelling and contents.
- Liability protection for guest injuries
- Business interruption coverage
- Coverage for theft or damage by guests
Some Montana municipalitiesrequire proof of insurance with minimum coverage for the permit application process.
Many major insurers now offer specialized short-term rental policies or endorsements to standard homeowners policies. Platforms like Airbnb and Vrbo also provide limited host protection programs, but thesehave significant limitations and exclusions, making dedicated insurance advisable.
7. Establish Local Management
Some Montana cities and counties require short-term rental operators to designate a local contact person to address issues promptly. This requirement isimportant for out-of-state owners who cannot address emergencies or complaints personally.
The local contact must:
- Be available by phone.
- Respond to issues within a specified timeframe.
- Access the property.
- Be authorized to address problems.
Non-local owners need to hire a professional property manager or establish a relationship with a reliable local contact. The contact information must be provided to the permitting authority and, in some cases, to neighboring properties.
Licensing Requirements
Montana has a two-tiered licensing system for short-term rentals, with requirements at both the state and local levels. This creates a more complex regulatory framework than in states that delegate licensing entirely to local jurisdictions.
All short-term rental operators in Montana must obtain a Public Accommodation License from the Department of Public Health and Human Services. This state license establishes consistent requirements throughout Montana, regardless of local regulations.
Besides this state requirement, local licensing varies across cities and counties:
Billings
Billings has established a short-term rental licensing system:
- City business license required.
- Annual Short-Term Rental Permit from the Planning Department
- Online application via Citizen Access portal
- Limit 2 persons per bedroom.
- No parties or large gatherings permitted.
- Safety and guest information must be provided in units.
- Noise regulations are in effect from 8 pm to 7 am.
- Must comply with zoning; habitable space only, not accessory structures.
- Not permitted for deed-restricted affordable units.
Missoula
Missoula's licensing system includes:
- Annual rental business license
- Short-Term Rental Registration
- Public Accommodations License
- Annual renewal by January 31
- Must comply with zoning, including Neighbor Notification for Tourist Homes in residential districts.
- Safety Self-Inspection Checklist
- Waste management requirements
- Observe quiet hours.
- Listings must display STR registration number.
- Occupancy limited to two adults per bedroom.
Bozeman
Bozeman has one of Montana's most comprehensive licensing systems:
- City STR Hosting Permit required
- Annual renewal
- Public Accommodations License
- Fire safety inspection
- Health inspection
- Proof of application for Public Accommodations License required for permit application.
- Type 3 STRs (non-owner occupied) are prohibited in residential districts.
- Type 1 allowed in all districts, Type 2 allowed in most but not RS and R1.
- Primary residence requirement for new STRs (owner resides for at least 70% of the year)
- Maximum 2 guests per sleeping area.
- Hosting platforms must verify listings.
Great Falls
Great Falls lacks detailed city-specific short-term rental regulations beyond state requirements:
- State Public Accommodations License is required.
- State rules for public accommodations apply, including potable water, wastewater disposal, hygienic amenities, and property maintenance.
- Guest registry required.
Application processes typically involve submitting detailed information about the property and owner, including:
- Property address and specifications
- Owner identification and contact information
- Floor and site plans
- Local contact details
- Proof of insurance (if required)
- Certification of compliance with safety standards
License and permit fees vary by jurisdiction and can be substantial. These fees support rental regulations and inspection programs in most communities.
These licenses and permits typically have defined validity periods, usually one year, after which renewal is required. The renewal process involves confirming compliance with regulations, updating property information if needed, and paying fees.
License Renewals
Maintaining valid licenses and permits for Montana short-term rentals requires attention to renewal processes and deadlines at state and local levels. The timing and procedures vary between the state license and local jurisdictions.
Bozeman requires annual renewal before the license lapses, and Missoula requires renewal by January 31.
The renewal process involves:
- Submitting a renewal application before the expiration date
- Paying renewal fees, which are similar to initial application fees.
- Updating property and contact information as needed.
- Confirming continued compliance with regulations.
- In some cases, undergoing re-inspection to verify ongoing safety compliance.
Property owners and managers must track renewal deadlines, as operating with an expired license can result in penalties. Many jurisdictions impose fines for continued operation without valid licenses, and some implement additional penalties for repeat violations, including potential license revocation or disqualification from future permit eligibility.
Authorities send renewal notices as a courtesy, but the responsibility for timely renewal rests with the property owner. Changes in contact information or mail delivery issues could result in missed notifications, making proactive tracking of renewal deadlines essential.
Failure to renew can lead to license expiration, requiring a new application to resume operations. This can disrupt busy tourism seasons, resulting in lost revenue during the re-application.
The renewal process allows authorities to verify continued compliance and implement any regulatory changes since the initial license was issued. Staying informed about evolving short-term rental regulations in state law and your local jurisdiction is important.
Required Documents
Operating a short-term rental in Montana requires maintaining documents to demonstrate compliance withstate and local regulations. These materials support the initial license applications, facilitate ongoing operations, and may be requested during inspections or complaints.
Essential documentation includes:
- Proof of property ownership (deed) establishes your legal right to operate a short-term rental at the location and is important in jurisdictions with owner-occupancy requirements or restrictions on non-owner rentals.
- Property information, including address and floor plans or sketches. Many jurisdictions use this to determine maximum occupancy limits and ensure the property meets basic guest accommodation requirements.
- Owner and operator contact information, including IDs and emergency contacts, ensures authorities can reach the responsible party and verify that operators meet residency requirements for specific permits.
- Local contact information for property management or emergencies. This representative must be available to address issues promptly, especially for absentee owners who cannot respond to emergencies.
- Proof of adequate insurance coverage. Some Montana municipalities require insurance documentation, typically with minimum coverage thresholds.
- State and local tax identification numbers facilitate proper tax collection and reporting.
- Safety and compliance certifications, including fire and health inspection forms, verify that the property meets established standards for guest safety and neighborhood compatibility.
Beyond these regulatory documents, responsible operators maintain additional records to support their business operations, including:
- Guest agreements and house rules
- Cleaning and maintenance logs
- Tax payment records and receipts
- Communications with local authorities or neighbors.
Organizing these materials in physical and digital formats ensures quick access when needed. Many professional hosts create comprehensive digital filing systems with backup copies of critical documents, protecting against loss and enabling remote access.
Short-Term Rental Taxes
Montana imposes significant tax obligations on short-term rental operators, with requirements at state and local levels. Understanding and fulfilling these tax responsibilities is essential for legal compliance and financial management of vacation rental properties.
Lodging Facility Use Tax
Montana imposes a 4% Lodging Facility Use Tax on accommodations. This state-level tax applies to short-term rentals throughout Montana, creating a consistent baseline tax obligation.
Lodging Sales Tax
Montana imposes a separate 4% Lodging Sales Tax on short-term accommodations in addition to the Lodging Facility Use Tax, creating a total state-level tax of 8% on short-term rentals.
All short-term rental operators must collect these taxes from guests and remit them to the Montana Department of Revenue. Registration with the Department is necessary for proper tax collection and reporting.
Tax Collection
Major booking platforms like Airbnb collect and remit some taxes on behalf of hosts in Montana, but operators remain responsible for fulfilling all tax obligations, especially for bookings through other channels or local taxes not collected.
When platforms collect taxes, they focus on state lodging taxes, leaving local taxes to the property owner. Verify which taxes your booking platforms collect and which are your responsibility.
Income Taxes
Rental income from short-term rentals in Montana is subject to state and federal income taxes. Montana's state tax rates vary based on income, while federal rates depend on your overall income and filing status.
Short-term rental operators can reduce their tax burden through various rental business deductions, including:
- Property depreciation
- Mortgage interest
- Property taxes
- Utilities and internet
- Cleaning and maintenance costs
- Furnishings and supplies
- Platform commission fees
- Marketing expenses
- Professional service fees
Property Tax Implications
Operating a short-term rental in Montana may have property tax implications, changing the property's classification and increasing taxes. Property owners should consult local tax authorities to understand how short-term rental operations impact their property tax assessment and rates.
Taxes are reported and paid quarterly. Proper record-keeping is essential for maximizing deductions and maintaining compliance. Many professional hosts work with accountants specializing in short-term rentals to optimize their tax strategy and ensure accurate reporting.
Statewide Rules
Unlike many states that delegate regulatory authority to local governments, Montana has implemented significant statewide oversight of short-term rentals. This creates a consistent regulatory framework across the state, though local jurisdictions retain authority to implement additional requirements.
Montana's state-level approach requires all short-term rental operators to obtain a Public Accommodation License from the Department of Public Health and Human Services. This statewide licensing system establishes consistent requirements throughout Montana, regardless of local regulations.
Key elements of Montana's statewide framework include:
- Public Accommodation License Requirement: All short-term rental operators must obtain and maintain a license from the Department of Public Health and Human Services.
- Basic Health and Safety Standards: State rules ensure basic health and safety standards, including potable water, wastewater disposal, hygienic amenities, and property maintenance.
- Guest Registry Requirement: State regulations require operators to maintain a guest registry.
- Lodging Taxes: State law establishes a 4% Lodging Facility Use Tax and a 4% Lodging Sales Tax for short-term rentals, creating a consistent baseline tax obligation regardless of location.
While these state requirements create a foundation for regulation, Montana law allows local governments to create and enforce their own short-term rental regulations. Cities and counties can enact zoning, permitting, and operational requirements tailored to their needs.
This balanced regulation reflects Montana's effort to ensure a consistent minimum standard statewide while preserving local control over issues with varying impacts. The state licensing system ensures all short-term rentals meet basic health and safety requirements, while local regulations address community-specific concerns about neighborhood character, housing availability, and other impacts.
For property owners and investors, this state-level framework creates clarity and complexity. The consistent state requirements provide a clear starting point for compliance planning, but the additional layer of local regulationsrequires careful research and ongoing monitoring of location-specific requirements.
Short-Term Rental Laws by City
Montana's cities havedeveloped distinct regulatory approaches to short-term rentals, building upon the state's Public Accommodation License requirement to address their housing markets, tourism patterns, and community priorities. Understanding these city-specific regulations is essential for successful operation in different markets across the state.
1. Billings Short-term Rental Laws
As Montana's largest city, Billings has implemented regulations for short-term rentals.
Overview: While not explicitly defined, Billings follows the Montana understanding of short-term rentals as accommodations for less than 30 days. The city requires a business license and a Short-Term Rental Permit, renewed annually.
Key Regulations:
- City business license required.
- Annual Short-Term Rental Permit from the Planning Department
- Online application via Citizen Access portal
- Must comply with zoning; habitable space only, no accessory structures.
- Not allowed for deed-restricted affordable units.
- Limited to 2 persons per bedroom.
- No parties or large gatherings.
- Must provide safety and guest information in units.
- Noise regulations apply from 8 pm to 7 am.
Billings enforces these regulations through its permitting system and code enforcement. The city's approach balances tourism opportunities with residential neighborhood preservation.
Tax Rates:
- 4% Montana Lodging Facility Use Tax
- 4% Montana Lodging Sales Tax
- Local taxes may apply but are not specified.
2. Missoula Short-term Rental Laws
As Montana's second-largest city and a major cultural and educational center, Missoula has developed detailed regulations for short-term rentals.
Overview: Missoula follows the state tax definition of rentals for less than 30 days. The city has detailed short-term rental laws requiring multiple licenses and registrations.
Key Regulations:
- Annual rental business license required.
- Short-Term Rental Registration from the city
- Public Accommodations License
- Annual renewal by January 31
- Must comply with zoning, including Neighbor Notification for Tourist Homes in residential districts.
- Safety Self-Inspection Checklist
- Waste management requirements
- Observe quiet hours.
- Listings must display STR registration number.
- Occupancy limited to two adults per bedroom.
Missoula's approach reflects its position as a university city with high housing demand, balancing tourism opportunities with residential housing preservation.
Tax Rates:
- 4% Montana Lodging Facility Use Tax
- 4% Montana Lodging Sales Tax
- Lodging Facility Sales and Use Tax, paid quarterly
3. Bozeman Short-term Rental Laws
As a rapidly growing city near major tourist attractions, Bozeman has implemented one of Montana's most comprehensive regulatory frameworks for short-term rentals.
Overview: Bozeman categorizes short-term rentals into three types: Type 1 (owner-occupied with owner present), Type 2 (owner-occupied without owner present), and Type 3 (non-owner occupied). The city regulates short-term rentals based on these categories.
Key Regulations:
- City STR Hosting Permit required.
- Annual renewal
- Public Accommodations License
- Fire safety inspection
- Health inspection
- Proof of Public Accommodations License application required for permit application.
- Type 3 STRs (non-owner occupied) are prohibited in residential districts.
- Type 1 allowed in all districts, Type 2 in most but not RS and R1.
- Primary residence requirement for new STRs (owner resides for at least 70% of the year)
- Max 2 guests per sleeping area.
- Hosting platforms must verify listings.
Bozeman's approach is among the most detailed in Montana, with clear restrictions on non-owner-occupied rentals in residential areas reflecting housing availability concerns in this fast-growing city.
Tax Rates:
- 4% Montana Lodging Facility Use Tax
- 4% Montana Lodging Sales Tax
- Local taxes may apply but are not specified.
4. Great Falls Short-term Rental Laws
As Montana's third-largest city, Great Falls has less specific city-level regulations for short-term rentals.
Overview: While not defined, Great Falls follows the state definition of short-term rental for tax purposes (rentals under 30 days). Specific short-term rental laws in Great Falls were not found, suggesting hosts need to comply with state requirements.
Key Regulations:
- State Public Accommodations License is required.
- City-specific licensing requirements are not detailed in available information.
- City-specific zoning regulations are not detailed in available information.
- State rules for public accommodations apply, including potable water, wastewater disposal, hygienic amenities, and property maintenance.
- Guest registry required.
Great Falls' approach relies more on state requirements than city-specific regulations, though operators should verify this with city authorities.
Tax Rates:
- 4% Montana Lodging Facility Use Tax
- 4% Montana Lodging Sales Tax
- Local taxes may apply but are not specified.
Bottom Line
Successfully operating a short-term rental in Montana requires navigating the state's multi-layered regulations. With significant state-level requirements and varied local regulations, property owners must take a comprehensive approach to compliance and planning.
Before investing in a short-term rental property in Montana:
- Research state licensing requirements and local regulations, including business licensing, zoning, and operational standards. Consult the Montana Department of Public Health and Human Services, city planning departments, business licensing offices, and legal advisors.
- Consider location carefully - Local regulations beyond state requirements make some areas significantly more favorable for short-term rental investments than others, even within the same region. For example, Bozeman's prohibition on non-owner-occupied rentals in residential districts creates very different operational parameters than areas with fewer restrictions.
- Budget for compliance costs - Include state and local license fees, tax obligations, insurance requirements, and ongoing operational expenses related to regulatory compliance. These costs vary by jurisdiction and should be included in your financial planning.
- Implement professional management practices - Regardless of specific requirements, standards for guest screening, property maintenance, noise management, and neighbor relations help prevent problems and support your business’s sustainability.
- Stay informed about Montana's evolving short-term rental regulations at the state and local levels, with updates in response to market growth and community feedback. Monitoring communications from relevant authorities can help you stay ahead of regulatory changes.
The short-term rental landscape in Montana presents opportunities and challenges. By understanding and adhering to state and local regulations, operators can build successful businesses that positively contribute to Montana's tourism and housing economy while maintaining good relationships with communities and regulatory authorities. Proper complianceavoids penalties and supports the long-term viability of your vacation rental investment in the Treasure State.
