Lexington Short-Term Rental Regulations

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Permit & Licensing

Short-Term Rental Special Fees License (Hosted STR); zoning use is an Accessory Use for occupancy up to 10, or a Conditional Use Permit from the Board of Adjustment if occupancy exceeds 10

The property must be your primary residence. This means investment properties are not eligible for this permit type.

Short-Term Rental Special Fees License plus a Conditional Use Permit from the Board of Adjustment (Un-Hosted STRs are a Conditional Use in most residential zones); subject to a Dec. 2024 density cap limiting Un-Hosted STRs to 2% of dwelling units within 1,000 feet in residential zones, plus a 600-ft spacing rule between conditional-use STRs

This permit type does not require primary residence. Zoning restriction: Conditional Use Permit from the Board of Adjustment required in nearly all residential zones; prohibited outright in Agricultural Buffer (A-B) and Agricultural Natural-Areas (A-N) zones; Principal Use only in commercial zones (B-2 series, I-1, I-2, CC, MU-3); capped at 25% of units on multi-family lots in B-1/P-1/MU-1-3 zones; subject to Dec. 2024 600-ft spacing rule and 2%-per-1,000-ft density cap in residential zones.

Application Process

Complete the online short-term rental zoning verification form (Division of Planning); obtain a Zoning Compliance Permit and a Business License (if not already held); apply for the Special Fees License at str.lexingtonky.gov with a site/floor plan, $1M liability insurance certificate, safety-compliance affidavit, and (for Hosted STRs) two documents proving primary residency; pay the $200/$100 fee; the Division of Revenue follows up for additional details and payment

Note: Document requirements vary by permit type. See individual permit sections above for eligibility details.

Tax Obligations

Combined rate: 15.5% of gross rental income.

Collection: Hosting platforms (e.g., Airbnb, VRBO) must collect and remit all local transient room tax on rent they charge or collect; if a platform does not charge or collect the rent, the licensee must collect and remit the tax themselves

Filing: Local transient room tax due to the urban county government by the 20th day of the month following the month of collection; the Kentucky 1% state transient room tax and 6% sales tax are also reported monthly

Rental Limits

Lexington does not impose an annual cap on the number of nights you can rent.

Occupancy & Density Limits

2 individuals per bedroom plus 2 additional, or 10 total, whichever is less (for accessory/principal uses); the Board of Adjustment sets occupancy for conditional-use permits and may allow more if overcrowding is not a concern

Zoning & Restrictions

Owner-occupied: Accessory Use (administrative, no hearing) in single-family and multi-family residential zones when occupancy is 10 or fewer; Conditional Use Permit from the Board of Adjustment required when occupancy exceeds 10; Principal or Accessory Use in most commercial/mixed-use zones. Governed by LFUCG Zoning Ordinance Sec. 3-13: Hosted STRs (occupancy ≤10) are an Accessory Use in single-family and most multi-family residential zones; Hosted STRs (occupancy >10) and Un-Hosted STRs in residential zones require a Conditional Use Permit from the Board of Adjustment; Un-Hosted STRs are prohibited in Agricultural Buffer (A-B) and Agricultural Natural-Areas (A-N) zones; a Dec. 2024 amendment (Ord. No. 139-2024) added a 600-ft spacing rule between conditional-use STRs and capped Un-Hosted STRs at 2% of dwelling units within 1,000 ft in residential zones

Insurance & Safety

Insurance

Operators must maintain at least $1,000,000 in liability insurance covering the property's use as a short-term rental.

Safety & Operating Requirements

• Sufficient smoke detectors installed and in working order (per Sec. 12-1)
• At least one functional carbon monoxide detector
• At least one maintained and charged fire extinguisher on each habitable floor
• At least one operable emergency and rescue opening (egress) in every sleeping room
• Posted licensee/operator contact info, emergency contact, police/fire/EMS numbers, trash pickup info, and an emergency evacuation plan
• Posted maximum occupancy notice and, if applicable, a copy of the conditional use permit
• No outdoor signage identifying the dwelling unit as a short-term rental

Penalties for Non-Compliance

$125 for a 1st offense, $250 for a 2nd offense, $500 for a 3rd offense, and $1,000 for a 4th or subsequent offense; unlicensed operation (violating Sec. 13-77(a)) carries a separate $500-per-offense penalty; each day a violation continues after notice counts as a separate offense

Platform Requirements

• All advertisements, including on hosting platforms, must display the STR's local registration number and state the allowed maximum occupancy and the prohibition on exceeding it
• Hosting platforms must collect and remit local transient room tax on the rent they charge or collect

Compliance Checklist

Follow these steps to legally operate a short-term rental in Lexington:

1. Determine your permit type. Lexington has 2 permit types. Identify which applies to your property (Short-Term Rental Special Fees License (Hosted STR); zoning use is an Accessory Use for occupancy up to 10, or a Conditional Use Permit from the Board of Adjustment if occupancy exceeds 10, Short-Term Rental Special Fees License plus a Conditional Use Permit from the Board of Adjustment (Un-Hosted STRs are a Conditional Use in most residential zones); subject to a Dec. 2024 density cap limiting Un-Hosted STRs to 2% of dwelling units within 1,000 feet in residential zones, plus a 600-ft spacing rule between conditional-use STRs).
2. Meet safety requirements. Sufficient smoke detectors installed and in working order (per Sec. 12-1). At least one functional carbon monoxide detector. At least one maintained and charged fire extinguisher on each habitable floor. At least one operable emergency and rescue opening (egress) in every sleeping room. Posted licensee/operator contact info, emergency contact, police/fire/EMS numbers, trash pickup info, and an emergency evacuation plan. Posted maximum occupancy notice and, if applicable, a copy of the conditional use permit. No outdoor signage identifying the dwelling unit as a short-term rental.
3. Obtain liability insurance. $1,000,000 minimum.
4. Apply for your STR permit. Submit application + $200 fee. See permit types above to determine which applies.
5. Register for tax accounts. Set up lodging tax accounts with Lexington-Fayette Urban County Government, Division of Revenue (local); Kentucky Department of Revenue (state).
6. Display your permit number. Include your permit/license number in all listings and advertisements.
7. Collect and remit taxes. 15.5% on all bookings.
8. Renew annually. $200 renewal fee.

Frequently Asked Questions

Do you need a permit to run an Airbnb in Lexington?

Yes. Lexington requires a short-term rental permit to operate an Airbnb or Vrbo, and there are 2 permit types — one requires the property to be your primary residence, and another allows non-owner-occupied (investment) use. See the permit types above to find which applies to your property.

How much does a short-term rental permit cost in Lexington?

A short-term rental permit in Lexington costs $200.

Does Lexington require a short-term rental to be your primary residence?

It depends on the permit type. At least one Lexington permit requires the property to be your primary residence, while another allows non-owner-occupied (investment) use — see the permit types above.

How many days a year can you short-term rent in Lexington?

Lexington does not cap the number of nights per year you can short-term rent, though permitting, zoning, and occupancy rules still apply.

What taxes do you pay on a short-term rental in Lexington?

Short-term rental stays in Lexington are subject to a combined 15.5% in lodging taxes. This combines 4% Lexington-Fayette Transient Room Tax (general fund, KRS 91A.390) + 2% Lexington Center Corporation Transient Room Tax (KRS 153.450) + 2.5% Lexington Convention Center Transient Room Tax (KRS 153.450(3)) + 1% Kentucky Transient Room Tax + 6% Kentucky Sales Tax. The host is responsible for collecting and remitting them.

What happens if you run a short-term rental without a permit in Lexington?

$125 for a 1st offense, $250 for a 2nd offense, $500 for a 3rd offense, and $1,000 for a 4th or subsequent offense; unlicensed operation (violating Sec.