Louisville Short-Term Rental Taxes and Registration: A Host's Guide
A Louisville short-term rental needs a registration and owes four taxes to two tax offices: Louisville Metro's room tax and occupational tax, and Kentucky's own room tax and sales tax. The platforms handle some of it. Hosts tend to find out which parts they don't handle from a notice.
Written by the licensed tax advisors at Framework Advisory, Louisville. Rules are from Louisville Metro's short-term rental ordinance, its transient room tax ordinance and the Kentucky Department of Revenue's transient room tax page. General information, not advice for your property.
1. What counts as a short-term rental
Under Louisville Metro's ordinance, a short-term rental is a dwelling unit, or part of one, rented for less than 30 consecutive days with no meals served. Hotels, motels, extended-stay lodging, bed and breakfasts and boarding houses are covered by other rules. The taxes below follow the same line: a continuous stay of 30 days or more is outside the room taxes.
2. Registering with Louisville Metro
- Every short-term rental in Jefferson County must be registered with Louisville Metro every year before it operates.
- The fee is $250 a year, nonrefundable. The registration names the host and an emergency contact in Jefferson County or within 25 miles of the rental.
- Registrations last one year. Renewals are accepted from 30 days before expiry; one filed after the expiration date is treated as a new application, and renting under an expired registration is prohibited.
- A change of host or owner, or of required primary residency, voids the registration.
- The Metro-issued registration number must appear in every listing. Advertising an unregistered rental is a violation, and Metro can ask the platform to take the listing down.
- The host must also register with the Louisville Metro Revenue Commission for the room tax and the occupational license tax.
The ordinance also sets safety duties (smoke and carbon monoxide alarms, extinguishers on each floor, an evacuation plan, the host's contact details posted inside) and limits a rental to one contract at a time. Zoning is its own question, and worth answering before buying a property to rent.
3. The taxes on every stay
| Tax | Rate | Paid to |
|---|---|---|
| Louisville Metro transient room taxes (five levies: 3%, 1.5%, 1%, 2% and 1%) | 8.5% of rent | Louisville Metro Revenue Commission, monthly |
| Kentucky transient room tax | 1% of rent | Kentucky Department of Revenue, monthly |
| Kentucky sales tax | 6%, on a base that includes the room taxes | Kentucky Department of Revenue |
Rent includes charges for services needed to arrange the stay, such as platform service fees. Stays of 30 days or more are excluded from the room taxes. Sources: LMCO 121.01 and 121.05; Kentucky Department of Revenue transient room tax page.
| Amount | |
|---|---|
| Rent: 3 nights at $200 | $600.00 |
| Louisville Metro room taxes, 8.5% | $51.00 |
| Kentucky room tax, 1% | $6.00 |
| Kentucky sales tax, 6% of $657.00 | $39.42 |
| Total taxes on the stay | $96.42 |
Made-up booking with no platform, cleaning or service fees. Because it was booked directly, every one of these is the host's to collect, file and pay.
Metro's filing rules. The room-tax return is monthly, due by the last day of the following month. Paying late costs a 5% penalty plus 12% simple interest a year; not filing a return costs 5% of the unpaid tax per month, up to 25%.
4. What Airbnb and VRBO handle, and what they don't
According to the Kentucky Department of Revenue, Airbnb and VRBO collect and remit the 1% state room tax for participating Kentucky hosts, and since January 1, 2023 the platforms have been required to report and pay the local room tax on the total charge, service fees included. A host doing business only through those two doesn't need a state room-tax account.
Three things still land on the host:
- Louisville's ordinance says room taxes are ultimately the host's responsibility, and a platform pays them on the host's behalf only under an agreement with Metro.
- Direct bookings, repeat guests and any other channel: every tax in the table is the host's to collect and file.
- Sales tax: check what each platform actually collects for your listing in its tax reports rather than assuming it matches the room taxes.
5. The tax on your profit
Louisville occupational license tax. The Revenue Commission treats short-term rentals as a business activity, and once you have one, all of your rental income is subject to the occupational license tax, including long-term rentals that would otherwise fall under the small-landlord exception. More in our Louisville occupational license tax guide.
Kentucky LLET. A rental held in a single-member LLC files Kentucky Form 725 and pays at least $175 a year: Kentucky LLET and Form 725.
Federal. Short-term rentals get distinctive federal treatment, especially when the average stay is seven days or less and the owner is materially involved: the short-term rental loophole, explained.
6. What we see missed most
- Direct bookings, where no platform collected anything and nobody filed the monthly returns.
- Registrations that lapsed, or were voided when the property moved into an LLC or changed hands.
- The occupational license return, and the rule that one short-term rental pulls all rental income into it.
- A Form 725 for the LLC that owns the rental.
- Room-tax refunds requested without showing the tax was refunded to the guests; the ordinance requires it.
We keep Louisville hosts' registrations, room-tax filings and income tax on one calendar, and check what the platforms actually remitted against what was owed. More for property owners: Louisville accounting for real estate investors and hosts.
7. Common questions
Do I need a permit to run an Airbnb in Louisville?+
You need an annual short-term rental registration from Louisville Metro before you operate, and the registration number has to appear in your listing. The fee is $250 a year. Zoning rules also apply, so check your property before you list it. You also register with the Louisville Metro Revenue Commission for the room and occupational taxes.
What is the hotel tax on a Louisville short-term rental?+
Louisville Metro's transient room taxes add up to 8.5% of the rent. Kentucky adds a 1% statewide room tax, and 6% sales tax applies too, figured on a base that includes the room taxes. Stays of 30 days or more are exempt from the room taxes.
Doesn't Airbnb collect all of this for me?+
Not necessarily all of it. The Kentucky Department of Revenue says Airbnb and VRBO collect the 1% state room tax for participating hosts and are required to report and pay the local room tax. But Louisville's ordinance makes the host ultimately responsible for the room tax, and a platform only pays it on your behalf under an agreement with Metro. Check each tax in your platform's reports rather than assuming, and remember direct bookings are always yours to collect.
Is short-term rental income subject to Louisville's occupational license tax?+
Yes. The Revenue Commission's instructions list short-term or transient rentals as a business activity, and once you have one, all of your rental income is subject to the occupational license tax. The small-landlord exception for residential rentals under $50,000 doesn't cover them.
What happens if my registration lapses?+
Renting under an expired registration is prohibited. Renewals are accepted from 30 days before expiry, and a renewal filed after the expiration date is treated as a new application. A new owner or host needs a new registration.
Hosting in Louisville?
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