Executive Summary

Short-term rentals are explicitly ALLOWED in Madison, MS, though they are subject to comprehensive regulations under the Rental Inspection and Property Licensing Act (RIPLA), effective November 16, 2021. The city has established a clear regulatory framework that permits STR operations while ensuring compliance with safety standards and community welfare requirements.

Starting a Short-Term Rental Business in Madison, MS

Step-by-Step Process

1. Property Acquisition & Zoning Verification

   • Verify that the property is zoned appropriately for rental use
   • Confirm the property meets city standards for rental operations
   • Review local zoning maps through the Community Development Department

2. License Application Process

   • Submit a written application for a Rental License signed by the owner or agent
   • File application with the City of Madison Building & Permits Department
   • Schedule inspection after all required documents are submitted

3. Inspection & Compliance

   • Property must pass inspection before receiving Certificate of Compliance
   • Address any identified deficiencies prior to operation
   • Ensure all safety standards are met

4. Final Activation

   • Obtain Certificate of Compliance (expires 1 year from issue date)
   • Power transfer to tenant names only after all provisions are fulfilled
   • Begin rental operations

Required Documents, Permits, Licenses, and Guidelines

Essential Requirements

1. Rental License (Primary Permit)

   • Application fee: $500 (cash or check to City of Madison)
   • Required for each separate rental location
   • Must be current and valid to operate legally

2. Financial Security

   • $25,000 bond, collateral, or letter of credit must be posted with application
   • Serves as surety for compliance with city regulations

3. Documentation Requirements

   • Warranty deed (copy required)
   • Rental application (city-provided form)
   • Completed Rental Application Packet
   • Proof of insurance meeting city requirements

4. Inspection Requirements

   • Mandatory property inspection before operation
   • Certificate of Compliance issued upon successful inspection
   • Re-inspection fee: $250 if initial inspection fails or owner doesn't appear

Annual Renewal Process

• Certificate of Compliance expires after 1 year or upon lease termination (whichever occurs first)
• New Certificate required before reletting any rental unit
• Owner must notify city of intent to relet and obtain new certificate

Specific Regulations for Short-Term Rentals

Madison City Regulations (RIPLA)

Permitted Property Types:

• Single-family dwellings
• Multiple household dwellings
• Properties must meet all zoning requirements

Key Operational Requirements:

• No power transfer to tenants until all provisions are fulfilled
• Owner notification required within 30 days of property sale
• New owner must follow rental permitting procedures if reletting

Inspection Protocol:

• Initial inspection required for all properties
• Re-inspection available if property fails first inspection
• Owner or agent must be present during inspection
• Fee assessed for failed inspections or no-shows

Madison County Regulations

• County-level regulations align with Madison City requirements
• City of Madison Building & Permits Department maintains primary oversight
• No separate county licensing requirements identified

Mississippi State Regulations

Tax Obligations:

• State Sales Tax: 7% on gross revenue for properties with 5+ rooms
• Local Lodging Taxes: 1-3% of gross revenue (varies by jurisdiction)
• Registration Required: Mississippi Department of Revenue account needed

New Legislation Impact (SB 2805 - Effective July 1, 2024):

• Clarifies STRs are included in hotel definitions for tax purposes
• Platforms with annual sales exceeding $250,000 must register with DOR
• Requires collection and remittance of local tourism taxes
• Estimated industry revenue in MS: $180.9M (2024)
• Potential tax revenue from full compliance: $17.5M

Tax Collection Requirements:

• Collect lodging taxes at time of booking
• Submit returns by 20th of following month
• Maintain detailed records and provide guest receipts
• NAICS Code: 721199 (All Other Traveler Accommodation)

Contact Information for Local Authority

Primary Contact: City of Madison Building & Permits

Physical Address: 120 Montgomery Street Madison, MS 39110

Phone: (601) 856-7116

Mailing Address: PO Box 40 Madison, MS 39130

Department: Building & Permits - Rentals Division

Online Resources:

• City website: madisonthecity.com
• Permit information: madisonthecity.com/departments/permits/
• Rental-specific guidance: madisonthecity.com/departments/permits/rentals/

Mississippi Department of Revenue

For State Tax Registration and Compliance

• Website: tap.dor.ms.gov
• Contact for tax account registration and lodging tax guidance

Key Investment Considerations

Financial Requirements

• Initial Investment: $500 permit fee + $25,000 security bond
• Annual Operating Costs: Annual permit renewal + compliance maintenance
• Tax Burden: State and local taxes on gross revenue

Compliance Timeline

• Initial Setup: 2-4 weeks (including inspection scheduling)
• Annual Renewal: Required for continued operation
• Property Sale: 30-day notification requirement for license transfer

Risk Factors

• Non-compliance penalties and potential operation suspension
• Inspection failure requiring re-inspection fees
• Tax collection and remittance obligations
• Community impact and neighbor relations

Market Opportunity

• Madison positioned in growing Mississippi STR market
• Strong tourism infrastructure supports demand
• Clear regulatory framework provides operational certainty

Sources and References

1. City of Madison Official Website

   • madisonthecity.com/departments/permits/rentals/
   • Rental Ordinance (RIPLA): madisonthecity.com/wp-content/uploads/Rental-11-16-21.pdf
   • Application Forms: madisonthecity.com/wp-content/uploads/Rental-Application-Packet.pdf

2. Lodge Compliance Platform

   • lodgecompliance.com/local-jurisdiction/madison-county-ms/
   • Regulatory compliance guidance and checklist resources

3. Mississippi Tourism Association

   • State of Short Term Rentals in Mississippi Report (2025)
   • Legislative updates and tax compliance guidance

4. Mississippi Department of Revenue

   • State tax registration and remittance requirements
   • Tourism and economic development tax information

5. Industry Analysis

   • Steadily Insurance STR Legal Guide: steadily.com/blog/airbnb-short-term-rental-laws-and-regulations-in-mississippi/
   • Market data and regulatory trends

Disclaimer: This guide provides general information for investment planning. Specific compliance requirements may vary based on individual property circumstances and updated regulations. Consult directly with Madison City authorities and legal professionals for detailed guidance on your particular investment situation.