Overview: Are Short-Term Rentals Allowed in Chancellor, SD?

Short-term rentals (STRs) are allowed in Chancellor (Lincoln County, South Dakota). No city- or county‑specific STR ordinance was identified in the provided sources. As a result, STRs in Chancellor operate under state law and general zoning, taxes, and health/safety expectations that apply statewide. Notably, South Dakota has no uniform, statewide licensing or inspection framework specific to STRs, and rules vary across municipalities. The state has seen rapid STR growth (Airbnb and VRBO listings rose from 1,487 in 2017 to 3,668 by August 2021) while oversight remains patchwork.

• Bottom line: You may operate an STR in Chancellor without a local STR license; however, you must comply with South Dakota tax obligations and any applicable county zoning and state health/safety expectations. Neighboring cities (e.g., Lennox) have adopted STR ordinances with standards such as property maintenance code compliance, sales tax license verification, and restrictions on signage.

Source: KELOLAND.com (May 5, 2022).

How to Start a Short-Term Rental Business in Chancellor, SD

Given the absence of Chancellor-specific rules, the practical path is to satisfy state requirements, align with county zoning, and follow best‑practice standards visible in nearby municipalities:

1. Verify zoning and use eligibility

• Contact Lincoln County Planning and Zoning to confirm the subject property’s zoning and any use limitations for short-term rentals. If the property is in a planned unit development (PUD) or homeowners association (HOA), obtain written approvals and review covenants, conditions, and restrictions (CC&Rs).

2. Register for South Dakota state taxes

• Obtain a sales tax license from the South Dakota Department of Revenue (DOR). Platforms like Airbnb and VRBO generally collect and remit South Dakota sales tax on your behalf; confirm setup in your host dashboard and maintain records.
• If you sell lodging in South Dakota (including via STR platforms), you must register and collect state sales tax (including tourism tax components) and any applicable municipal gross receipts taxes when the platforms do not do so.

3. Set up occupancy, safety, and guest policies

• Establish occupancy limits consistent with life-safety best practices (e.g., adequate egress, smoke/CO detectors, fire extinguishers). While South Dakota does not require routine state health inspections for STRs, you should adopt hotel‑standard safety measures and keep documented cleaning and sanitation protocols. Consider aligning with the International Property Maintenance Code (IPMC) standards—used in Lennox’s STR ordinance as a benchmark—covering safe egress, lighting, sanitation, rodent control, and maintenance.

4. Insurance and operations

• Secure appropriate STR or landlord/tenant liability coverage and confirm that your homeowners policy doesn’t exclude short‑term rentals. Many hosts add an umbrella policy.

5. Platform setup and guest management

• List on Airbnb/VRBO and configure tax remittance settings per your DOR registration. Provide clear house rules, emergency contacts, and local resources (trash, parking, quiet hours). Keep a guest log and house manual for compliance and operational consistency.

6. Taxes and fees beyond sales tax

• Room/occupancy taxes and Business Improvement District (BID) fees in South Dakota vary by municipality. In Sioux Falls, a 1% room/occupancy tax and a $2 per room BID fee apply to lodging; however, STRs using Airbnb/VRBO were reported not to pay those fees as of the KELOLAND report, while other stakeholders expressed the view that STRs should contribute if they benefit from tourism marketing. Chancellor has no known city-level room/BID taxes; verify with Lincoln County before assuming any local lodging taxes or fees.

Sources: KELOLAND.com; SF Simplified (interview with SoDak Stays).

Required Documents, Permits, Licenses, and Guidelines

• State sales tax license (South Dakota DOR). If you operate via Airbnb/VRBO, confirm their tax remittance setup for South Dakota and maintain receipts/reports.
• Zoning confirmation (Lincoln County). Confirm whether a Conditional Use Permit (CUP) or other land use approvals apply to your zoning district.
• Local business license (if applicable in the future). No city license is required in Chancellor today per the sources.
• Health and safety standards (best practice). Align with IPMC-like expectations: safe egress, functional smoke/CO detectors, fire extinguishers, sanitation, pest control, and structural maintenance. Where nearby cities require it (e.g., Lennox), you must also display proof of a sales tax license and refrain from exterior signage.
• Platform compliance. Airbnb and VRBO host applications, insurance options, and house rules should be documented and consistently applied.

Sources: KELOLAND.com; Lennox Ordinance No. 644; SF Simplified.

Specific Regulations for Short-Term Rentals: City, County, and State

City of Chancellor

• No STR-specific ordinance was identified. Chancellor STRs are subject to state law and county zoning. Adjacent municipalities like Lennox do regulate STRs (e.g., sales tax license proof, IPMC compliance, no signs)—useful as a benchmark for what South Dakota cities may consider.

Lincoln County

• Bed and breakfasts and similar lodging uses are often addressed via Conditional Use Permits (CUPs). In Minnehaha County, Airbnb/VRBO operators follow the CUP process applicable to bed and breakfasts. Lincoln County may have similar expectations depending on zoning; confirm with the county planning office. As of the sources, no Lincoln County CUP requirement was specifically verified for STRs, so treat this as a due‑diligence item.

State of South Dakota

• Sales tax: The South Dakota Department of Revenue collects sales taxes from STRs operating through Airbnb and VRBO, including state, tourism, municipal, and municipal gross receipts taxes where applicable. Hosts operating outside these platforms must register and collect applicable state/local sales taxes.
• Health and safety: Unlike hotels, STRs are not regularly inspected by the South Dakota Department of Health. Lead has adopted its own STR licensing that requires proof of health inspection (or city inspection as backup). In Chancellor, adopt hotel‑level life‑safety practices even if inspections are not mandated.
• Room/occupancy and BID fees: Many South Dakota cities charge a room/occupancy tax and BID fees to support tourism marketing. Sioux Falls reports those taxes/fees do not apply to STRs through Airbnb/VRBO as of the KELOLAND report, while local stakeholders suggest they should, indicating policy may evolve. Chancellor currently has no known city-level lodging taxes.

Sources: KELOLAND.com; Lennox Ordinance No. 644.

Contact Information: Local Authority in Charge of STRs

Because Chancellor does not regulate STRs, the relevant authorities are state and county:

South Dakota Department of Revenue

• Phone: Not provided in the sources. Visit sd.gov/dor or search “South Dakota Department of Revenue sales tax license” online.
• Notes: Register for a sales tax license and confirm sales tax collection/remittance for STRs, including tourism tax components and municipal gross receipts where applicable.

Lincoln County Planning and Zoning (South Dakota)

• Phone: Not provided in the sources.
• Email: Not provided in the sources.
• Website: Not provided in the sources. Search “Lincoln County South Dakota planning and zoning” for current contact information.
• Purpose: Confirm zoning, permitted uses, and whether any CUP or other approvals are required.

City of Chancellor (Clerk/Administration)

• Phone: Not provided in the sources.
• Email: Not provided in the sources.
• Website: Not provided in the sources.
• Purpose: General municipal inquiries and verification of any future STR-related policies.

Sources: KELOLAND.com.

Links to Source Pages (IMPORTANT)

• Rules vary on short-term rentals in South Dakota (KELOLAND.com Original): www.keloland.com/keloland-com-original/rules-vary-on-short-term-rentals-in-south-dakota/
• Get smart about short-term rentals with Kayla Huizing (SF Simplified): www.sfsimplified.com/get-smart-about-short-term-rentals-with-kayla-huizing/
• Lennox, SD – Ordinance No. 644 (Short-Term Rentals): core-docs.s3.us-east-1.amazonaws.com/documents/asset/uploaded_file/3836/Lennox/5032217/Ordinance_644_-_Short_Term_Rentals.pdf

Notes and investor reminders

• Due diligence in Chancellor should start with Lincoln County zoning confirmation and DOR tax registration.
• Expect policy variability. Many South Dakota cities are still refining STR rules; nearby Lennox’s ordinance illustrates how quickly standards (e.g., proof of sales tax license, property maintenance code adherence, signage bans) can be codified.
• Adopt a hotel-level safety mindset. Even without mandatory inspections, implementing robust life‑safety and sanitation practices reduces risk and improves guest experience.