Do you need a license to run a short-term rental in Minneapolis or St. Paul?
Yes — both cities require one, and the rules are stricter than most first-time investors expect. Minneapolis requires a full non-homestead Short-Term Rental License for any property you don’t personally live in, caps you at one non-homestead short-term rental beyond your own home, and layers zoning approval on top. St. Paul runs a separate system entirely: an annual host license, $300,000 in liability insurance, and a current Fire Certificate of Occupancy for non-owner-occupied units. Confirm licensing eligibility and zoning before you write an offer on a property you’re planning to run as a short-term rental.
By Hammer Group | September 2, 2026
If you’re eyeing a duplex in Northeast or a bungalow near the lakes with an Airbnb listing already attached to the sale, the number that should stop you isn’t the price — it’s the license. Minneapolis and St. Paul both regulate short-term rentals through licensing, not a ban, but the systems are different enough between the two cities that copying what worked for a friend’s rental in one market can get you denied in the other.
The Cap Most Investors Don’t See Coming
Minneapolis splits short-term rental compliance into two tracks:
- Registration — a lighter process for owner-occupied homestead properties, where you live on-site and rent a spare room or your whole home occasionally.
- License — required for non-homestead properties, meaning anywhere you don’t live yourself.
Here’s the part that catches people off guard: Minneapolis caps you at one non-homestead short-term rental beyond your own homestead. That cap follows you personally, and it follows across LLCs — setting up a second entity to hold a second property doesn’t create a second allowance. If you’re building a small portfolio, this is the ceiling, not a starting point.
Licensing fees run on a tiered structure as of the July 2026 schedule: Tier 1 buildings (one to three units) run $98 plus $41 per unit, climbing to $121 plus a supplemental fee at Tier 3. On top of the license, guests pay a combined lodging tax of roughly 12.025% — worth building into your rental income math before you assume a nightly rate translates directly to revenue.
Zoning can override the license. A property has to be zoned for residential use to qualify at all, and in some districts, a short-term rental is a conditional use requiring separate approval rather than something the license alone unlocks. This is the step out-of-market or first-time investors miss most often — the license application can look straightforward right up until the zoning review stops it.
St. Paul Plays by Different Rules
If you’re comparing a Minneapolis property to one across the river, don’t assume the compliance path is the same. St. Paul requires:
- An annual Short-Term Rental Host License — $45 per unit
- $300,000 in liability insurance
- A current Fire Certificate of Occupancy for non-owner-occupied units
- A host registry and a guest-facing informational posting at the property
The bigger difference is what happens if you skip it. Minneapolis treats unlicensed operation as a civil violation. St. Paul makes it a petty misdemeanor — a criminal exposure Minneapolis’s fine structure doesn’t carry.
What Happens If You Skip It
Minneapolis licenses the short-term rental booking platforms themselves, not just individual hosts, which makes an unregistered listing far easier for the city to spot than in a market that relies purely on neighbor complaints. Civil fines for operating without a license escalate from roughly $500 toward a $2,000 cap, and a repeat violation within 24 months doubles the prior fine up to that same ceiling. The city can also deny, refuse to renew, suspend, or revoke a license outright for ordinance violations — which means a property that’s already generating STR income can lose that income stream mid-hold if compliance slips.
This isn’t theoretical friction. One widely shared account from a Minneapolis renter described a building where roughly half the units were being run as unauthorized short-term rentals by a management company, with recurring guest-related property damage and disruption for the long-term residents next door. Whatever side of that you’d be on, it’s the exact scenario the licensing system exists to catch — and the exact reason lenders, associations, and cities are paying closer attention to non-homestead STR activity than they were two years ago.
If you already own a west-metro home and are weighing selling versus renting it out as a long-term rental instead of a short-term one, the licensing and lock-in math is different — that decision runs through §121 capital gains timing and standard rental licensing, not the STR-specific rules here.
Buying With an Existing STR Attached
If the listing already operates as a short-term rental, don’t assume the license transfers with the sale. Confirm directly with the city whether the license is tied to the owner, the property, or both — and get it in writing before you count on day-one rental income. This is also where checking a property’s HOA or association documents matters: many west-metro associations prohibit short-term rentals outright regardless of what the city allows, similar to the reserve-study and governing-document review any townhome or condo buyer should be doing anyway.
If you’re specifically evaluating whether adding an accessory dwelling unit to a property pencils as a rental play, the ADU financing rules count a portion of projected rental income toward qualification — but that projection assumes the unit is legally rentable in the first place, which loops straight back to the licensing question here.
Before You Write the Offer
- Confirm zoning first. Call the city’s short-term rental office before you tour, not after you’re under contract.
- Check the non-homestead cap. If you already own one non-homestead STR in Minneapolis, a second won’t clear licensing no matter what entity holds title.
- Ask what track the current owner used. Registration and license are not interchangeable, and a seller’s compliant registration doesn’t transfer to your license application.
- Pull the HOA or association rules if the property is a condo or townhome — an association ban overrides a city approval.
- Price the real cost. Add the license fee, lodging tax, and (in St. Paul) the $300,000 liability policy into your return projections before you make an offer, not after.
Every one of these checks takes a phone call or a records request — not a large lift, but one that has to happen before earnest money, not after. If you’re weighing a specific property against these rules, that’s exactly the kind of walkthrough worth doing with someone who knows both cities’ systems before you’re locked into a purchase agreement.
Frequently Asked Questions
Can I buy a second home in Minneapolis and rent it out short-term?
Only up to the non-homestead cap. Minneapolis allows one non-homestead short-term rental beyond your own homestead property, and that limit applies to you personally across any LLCs you might use to hold title.
Does an ADU count toward the non-homestead short-term rental cap?
An accessory dwelling unit is a separate structure but is generally treated under the same non-homestead licensing rules if it’s not owner-occupied — confirm directly with the city’s Short-Term Rental Office, since ADU-specific STR guidance is still evolving alongside the 2026 owner-occupancy changes.
What’s the difference between STR registration and an STR license in Minneapolis?
Registration applies to owner-occupied homestead properties where you live on-site. A license is required for non-homestead properties — anywhere you don’t personally live — and comes with the non-homestead cap, tiered fees, and stricter zoning review.
Can my HOA ban short-term rentals even if the city allows them?
Yes. City licensing and association rules are separate systems, and an HOA or condo association can prohibit short-term rentals in its governing documents regardless of what the city permits. Always review the association’s declaration and rules before assuming a city license is enough.
How much does a Minneapolis short-term rental license cost?
As of the July 2026 fee schedule, a Tier 1 building (one to three units) runs $98 plus $41 per unit, rising to $121 plus a supplemental fee at Tier 3 — on top of a combined lodging tax of roughly 12.025% collected from guests.
The Bottom Line
The license itself isn’t the hard part — it’s confirming, before you buy, that the property can actually qualify: the right zoning, an open slot under the non-homestead cap, and association rules that don’t override the city’s approval. Get those three answers before you write an offer, and the rest of the process is paperwork. If you’re evaluating a specific property in Minneapolis or St. Paul with a short-term rental plan attached, reach out and we’ll walk through the licensing path together before you’re under contract.
About Hammer Group
Hammer Group is a Twin Cities real estate team with Compass, helping buyers and sellers navigate the Minneapolis–St. Paul market with a calm, data-driven approach. The team focuses on luxury and move-up homes across the western suburbs.
