Help! The city wants to fine me $1000 per day

[Shari157]

Has anyone ever “beat the system?” Clark County in Nevada is not allowing short term rentals. One of my wonderful neighbors reported me and now if I don’t comply within 2 weeks, I have to pay $1000 per day in fines. I don’t want to shut my page down and cancel over 20 guests for upcoming trips. What do I do? 

[Sarah977]

@Brian2036 C'mon Brian, listing a place on a booking platform for rent to strangers isn't anything like having friends over to your home who want to chip in to help out with utilities, or whatever.

[Brian2036]

@Sarah977 

I think it’s exactly like having friends or relatives as overnight guests, whether they give you money or not.

We used to have a neighbor about a mile or so away who entertained guests in her dilapidated trailer nearly every night and sometimes more frequently on weekends.

 I don’t suppose that she was charging them rent but they were definitely paying for something.

Or possibly they were just distributing charity and she had a special way of expressing her gratitude.

Certain people who were not me complained to the County Sheriff who told them to mind their own business. She wasn’t breaking any laws, at least not publicly.

She had a right to use her home as she saw fit as long as she didn’t disturb the peace while doing so or actively and publicly solicit for prostitution.

In Griswold v. Connecticut, 1965, the Court held that the right of privacy within a person’s home predated the Constitution. The ruling asserted that the First, Third, Fourth, and Ninth Amendments also protect a right to privacy.

This case generated a number of progeny including Roe vs. Wade and Hardwick vs. Georgia.

 I would argue that entertaining guests in one’s home, regardless of whether they pay, is a fundamental privacy issue.

 I would have to carefully deconstruct the Nevada law to identify the defects, but knowing well how inept legislators are when it comes to writing laws and regulations, I’d be willing to bet that I could find something that would render it void for vagueness, if not clearly unconstitutional.

[Anonymous]

@Brian2036   The argument that you're just "entertaining visitors in your private home" only works if you're offering a private room in your own residence. That case becomes pretty weak when you're renting out an entire unit that you don't live in, and even weaker when you're doing so on a Fortune 500 listing platform. 

[Gianni265]

@Anonymous No, it doesn't work even in that case if you get paid more than what you spend, if there is a profit then.

[Las-Vegas3]

NAILED IT 

[Mark116]

@Sarah977  My understanding is the legal issue is where exactly does a short term rental fall...is it to be treated like a regular residential property rental, in which case, there are no permits, no paperwork, no inspections and no limits beyond existing laws on noise, etc.  and the many regulations that apply to public spaces do not apply.   OR, is it a 'commercial' enterprise to be treated like a hotel or a regular business.  Rental property is treated and taxed different from a regular business, its considered passive income.  If it's a commercial business then it has to meet many more and different standards including handicapped access, hard wired fire alarms and sprinklers, can't be in a residential zone w/out an exemption.  

[Gianni265]

@Mark116 rules are made on the basis of habits. If today there is the habit of traveling and using a private home even for a few days, it is right that the rules change and also protect this aspect, also in favor of travelers.

[Brian2036]

@Gianni265 

As one of my favorite law professors was fond of saying, “I sense a vast pool of ignorance here.”

[Gianni265]

@Brian2036 

yes it's true, once I found someone who compared the airbnb business to renting with friends without compensation or with only small reimbursements.

Then he continued with an absurd discourse on the right to privacy, as if a drug dealer could work at home only if he doen't disturb the peace of the neighborhood and not favor prostitution, and argued that he could easily make invalid a law of a state.

I hope his law professor isn't reading it.

[Brian2036]

@Mark116 @Sarah977 

The tax laws are confusing and purposely complicated, but rental income is not necessarily passive income. The test is whether the recipient “materially participated” in the activity that generated the income.

If you pay a management company to do everything for you and you only cash the checks, the IRS will argue that you don’t materially participate, therefore you cannot deduct expenses in excess of income.

If you clean the house, manage bookings and accounts, welcome guests, buy supplies, etc. you should be able to claim a loss in a bad year and use it to offset other income. 

If you do that every year the IRS will become grumpy, declare that your business is “economically imprudent,” and disallow all deductions in excess of income.

Lately the IRS has carved out a special place for taxpayers to report earnings on STR’s and I fell into that trap last year. If you use that handy little section of the tax code you are, in effect, agreeing that your Airbnb business is a hobby, not a business, and that the income is passive.

 I use tax software, my tax return is extremely complicated, and by the time I got done I didn’t really care anymore.

It was only later that I discovered that most of the expenses I had so carefully documented did not count because I agreed that my rental receipts were passive income.

Next time I will try it both ways and see what the difference is.

[Shari157]

I have complied.  I only offer long term rental now.  I make 1/3 of what I use to make.  I do not like being regulated. I have called and spoke to my councilman several times.  He will do nothing. It does go to vote but the big casinos obviously are in their ear and they vote no.  I've asked if I can speak at an upcoming meeting and he said no.  There is a group that is advocating for short term rentals to be allowed in Clark County  and I asked for their contact and the councilman would not give me any contact information for them.  FYI, short term rental is permitted in Henderson, NV and the city of Las Vegas just not in Clark County.  Hitting walls here.

[Brian2036]

@Shari157 

The casinos want to keep their victims close to the action.

[Anonymous]

Oh you poor thing, you don't like being regulated? Whatever meanie put a gun to your head and forced you to start a business in a regulated industry should really quit that at once! 

[Brian2036]

@Shari157 

According to this article the problem is about to end:

https://www.shelterrealty.com/2021/07/02/clark-countys-short-term-rental-ban-set-to-end-in-2022-new-...

Apparently the law was not effective and there are still about 6,000 STRs ignoring the law as it now stands.

Sometimes civil disobedience works.