Rules of thumb for running a short-term or midterm rental in Louisville, from the permits to the tax paperwork. Use them with our free tools, and confirm anything specific to your property with the city, your insurer, and your CPA.

Before you buy

• Confirm the permit track first. In Louisville Metro, an owner-occupied primary residence in a residential zone, or any non-residential zoned property, can use administrative registration at $250 a year. A home you do not live in, in a residential zone, needs a conditional use permit with a public hearing, a timeline that often runs around six months, and a 600-foot spacing rule. Check with our rules checker.
• Check whether the address sits in a small city that bans short-term rentals, and read the HOA or condo documents. Those rules apply whatever the city allows.
• Stays of 30 nights or more fall outside the short-term rental ordinance. That is a real advantage for midterms.

Underwriting

• Underwrite the low end. AirROI shows about 38% occupancy and $30,700 a year for Louisville, AirDNA shows 56% and about $40,000. Use the low number.
• Price Derby weekend as its own line. The average three-night Derby weekend stay in 2026 was about $2,552, against roughly $761 the week before and $735 the week after.
• Run both strategies on the same property with the revenue calculator.

Operations

• Get insurance that explicitly covers short-term rental use. Standard homeowner and landlord policies usually exclude it.
• Louisville requires working smoke and carbon monoxide detectors and a fire extinguisher.
• Louisville charges an 8.5% transient room tax on stays under 30 nights. Platforms usually collect it, but you still register and file an annual net profit return. Fines for skipping registration start at $125.
• Midterm tenants may carry tenant protections a short-term guest does not, so use a lease written for midterm use.

Taxes

• Keep a time log from day one. Dates, tasks, minutes.
• Test the rules with the short-term rental qualifier and the real estate professional checker.
• Estimate the depreciation with the cost segregation calculator, and plan the exit before you buy with the 1031 estimator.
• Kentucky does not follow federal bonus depreciation, so ask your CPA whether they track both.
• Keep a separate bank account for each property or LLC.

Frequently asked questions

Should I start with a short-term or a midterm rental?

Run both on the same property. Short-term can earn more per night with more rules and turnover, and midterm trades some income for steadier stays and fewer rules.

Where can I read more?

Start with the short-term rental guide and the midterm rental guide.

Is this tax, legal, or insurance advice?

No. Winner Realty is a real estate brokerage, not a CPA firm or an insurer. Confirm with the right professional.