New Albany, Indiana Short Term Rental Regulations Guide for Airbnb hosts

This guide provides a clear, investor-focused overview of short-term rental (STR) regulations and processes in New Albany, Indiana (Floyd County). It draws exclusively from the provided content and links.

Overview: Are Short-Term Rentals Allowed in New Albany, IN?

Yes, short-term rentals are allowed in New Albany, Indiana. They are regulated under the city's existing Rental Unit Registration and Inspection Program (RURIP). This means an STR must be registered and pass inspection, similar to any other long-term rental property in the city.

A key distinction exists regarding exemptions: the RURIP "shall not apply to... Transient occupancy in a Hotel, Motel, or other similar lodging." Therefore, an operation functioning more like a traditional hotel (e.g., a property with multiple short-term rentals managed as a single business) is exempt. However, a property rented out as a single dwelling unit on a short-term basis (e.g., an Airbnb or VRBO listing) is subject to the RURIP.

How to Start a Short-Term Rental Business in New Albany

Prepare the Property: Ensure your rental property meets the city's minimum standards for habitability. Refer to the Rental Inspection Checklist for specific requirements.
Register the Property: You are legally required to register your STR property annually.
- Method 1 - Mail or In-Person: Complete the Rental Unit Registration Form and mail it with a $5.00 registration fee (checks only) to:
  - City of New Albany Attn: Rental Registration 142 E Main St, Suite 212 New Albany, IN 47150
  - Or, deliver it in person to the same address.
- Method 2 - Online (SmartGov): Complete the registration process online using the SmartGov portal. Note: An additional convenience fee applies for online registrations.
Schedule and Pass Inspection: Once your registration is received, the city will schedule an inspection of your property. You must pass this inspection to operate legally. The inspection ensures the property meets basic health, safety, and habitability standards.
Receive and Display Occupancy Permit: Upon passing the inspection, the city will issue an Occupancy Permit for the property. For multi-unit properties that pass inspection, you must post the permit in a conspicuous location. For one- and two-unit properties, you must provide a copy of the license information to each tenant.
Ongoing Compliance: You are responsible for ensuring registration information is updated annually and reporting any changes in ownership or contact information to the Rental Registration Program.

Important for Investors: A violation found during an inspection requires a follow-up inspection, which incurs a $50.00 re-inspection fee.

Required Documents, Permits, Licenses, and Guidelines

Rental Unit Registration Form: Mandatory for all owners of rental property. (Download)
Occupancy Permit: Issued by the city after successful registration and inspection. This is your legal license to operate the rental.
Rental Inspection Checklist: A detailed guide on the city's habitability standards to help you prepare for inspection. (Download)
FAQs: Provides comprehensive information about the entire process, exemptions, fees, and tenant rights. (Download)

Specific Regulations for Short-Term Rentals

City of New Albany (Local):

Registration & Inspection: All non-exempt rental properties, including STRs, must be registered annually and pass a city inspection.
Fees: A $5.00 annual registration fee per unit. A $50.00 fee is charged for any required re-inspection. Online registration via SmartGov has an added convenience fee.
Permit Display: Occupancy Permits must be displayed in multi-unit properties. Copies must be provided to tenants in one- and two-unit properties.
Exemptions: Properties operating as a "Hotel, Motel, or other similar lodging" are exempt from the program. Owner-occupied single-family homes are also exempt.
Tenant Protections: Tenants cannot be retaliated against for filing a complaint. The city prohibits retaliation and states that landlords will jeopardize their permit if retaliation occurs.

Floyd County (County):

The provided content does not contain specific STR regulations at the Floyd County level. State-level regulations (see below) would apply.

State of Indiana (State):

House Bill 1035 (2018): This state law prohibits Indiana cities from outright banning short-term rentals. It allows municipalities to regulate them through permitting and insurance requirements. New Albany's RURIP is the city's chosen regulatory framework.
Insurance Requirement: Indiana law requires operators of short-term rentals to have primary liability insurance to cover third-party claims for injury, death, or property damage during the rental period.
Tax Obligations: Operators are responsible for collecting and remitting:
- Gross Retail Tax: 7% on all rentals for 29 nights or fewer.
- County Innkeeper's Tax: A variable rate (typically 2-10%) collected on the same short-term rentals. The specific rate for Floyd County should be confirmed with the local auditor's office.
Permits: While state law governs the overall right to operate, a city-level permit (in New Albany's case, the Occupancy Permit issued through RURIP) is the primary legal document required.
Operational Guidelines (Common in Indiana Cities): State law allows cities to set local operational rules. Common examples include minimum stay requirements and restrictions on large gatherings. While the provided content does not specify such rules for New Albany, investors should confirm if any city-specific operational restrictions exist by consulting the city's ordinances or contacting the Planning and Zoning department (linked on the city's website).

Zoning: Investors must ensure their STR property is located in a zoning district where short-term rentals are a permitted use. The New Albany Zoning Ordinance is the definitive source for zoning compliance. You should consult this document or the Planning Department to confirm your property's zoning allows for a short-term rental.

Contact Information

For questions and inquiries about the Rental Unit Registration and Inspection Program, contact the City of New Albany:

Email: rentalregistration@cityofnewalbany.com
Phone: (812) 948-5333
Address: 142 E. Main St, Suite 212, New Albany, IN 47150
Office Hours: Monday - Friday, 8:00 am - 4:00 pm

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What do Airbnb hosts actually earn in New Albany?

New Albany hosts earn a median $24,989/year with $144 ADR and 58% occupancy.

Top performers pull in $39,358+ per year.

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Ask the AI Advisor about New Albany

New Albany is a small riverfront city in southern Indiana, serving as the county seat of Floyd County and sitting directly across the Ohio River from Louisville, Kentucky, which lies only a few miles to the east. With a population of roughly 37,000 residents, it is one of the larger cities in southern Indiana outside the larger Evansville area and functions almost as a quieter, smaller-scale companion to its much larger neighbor across the river. The city has a historic Midwestern character, with brick storefronts lining a revitalized downtown and a pace of life noticeably slower than that of the urban core just over the bridge. New Albany is best known for its 19th-century architecture, its long association with Ohio River commerce and steamboat building, and its convenience as an affordable base for visitors exploring the broader Louisville metropolitan region.

A central landmark is the Culbertson Mansion State Historic Site, a three-story Italianate and Second Empire home built in the 1860s by steamboat magnate William Culbertson. The mansion sits within New Albany itself and offers guided tours of its period furnishings and decorative arts, giving visitors a tangible sense of the wealth that once flowed through the city. It is one of the most intact examples of Victorian-era domestic architecture in the region.

Just across the river, about fifteen minutes east in Clarksville, the Falls of the Ohio State Park preserves a vast exposed Devonian-era fossil bed along with the remains of the navigational canal that once bypassed the falls. The park's interpretive center overlooks the river and is a popular stop for walkers, families, and paleontology enthusiasts. Together with the Ohio River Greenway, which links New Albany to Clarksville and Jeffersonville via a paved riverside trail, the area encourages easy movement between Indiana and Kentucky without a car.

For travelers willing to cross the river, downtown Louisville is roughly ten minutes away, opening up attractions such as the Muhammad Ali Center, the Louisville Slugger Museum & Factory, and the waterfront Waterfront Park. The Kentucky Derby at Churchill Downs, located in Louisville's South End, draws hundreds of thousands of visitors each spring and represents a major seasonal draw for short-term rentals in any of the surrounding river towns, including New Albany.

New Albany's appeal for short-term rental investment lies in this combination of small-city affordability, walkable historic character, and immediate proximity to a major metropolitan destination. Visitors who choose to stay here enjoy lower nightly rates and a calmer residential atmosphere than they would find in downtown Louisville, while remaining within a short drive of one of the Midwest's most dynamic event calendars. The result is a location that serves both as a year-round regional base and as a convenient overflow market during the Derby, conventions, and other large Louisville gatherings.