Short‑Term Rentals in Sheridan, Montana: Investor‑Ready Guide

Overview: Are Short‑Term Rentals Allowed in Sheridan, MT?

Explicitly: Yes—short‑term rentals (STRs) are allowed in Sheridan, Montana.

Within the Town Zoning Ordinance, short‑term rentals are treated under the broader category “Lodging Services.” The ordinance defines several STR‑like use types and clearly indicates where each is allowed:

• Tourist Home: A private home or condominium that is not occupied (temporarily or permanently) by an owner or manager and is rented, leased, or furnished in its entirety to transient guests on a daily or weekly basis (MCA §50‑51‑102(12)). This use is a permitted principal use in Agricultural (AG), Residential 1 (R1), Residential 2 (R2), Residential 3 (R3), and Public (P) districts. It is not listed in the Commercial (C) or Industrial (I) districts for the use types provided.

• Bed and Breakfast: An owner/manager‑occupied facility located in a detached house in which the owner offers overnight accommodations and may provide meal service to guests for compensation. This use is permitted in AG, R1, R2, R3, C, and P districts.

• Hotel/Motel: Short‑term lodging offered for compensation, with or without meal service. This use is permitted in C and P districts only (not in R1–R3, AG, OS, or I).

These permissions are confirmed by the Town’s District Use Table (Table 4.1 in the Zoning Ordinance).

Practical implication: An investor can operate a whole‑home “tourist home” STR in any residential district (R1–R3) or Agricultural district if the property has access to public water and sewer where required (R1–R3 require public water/sewer). A “hotel/motel” model is only viable in the Commercial district or Public facilities district.

How to Start an STR Business in Sheridan

1. Confirm Zoning and Allowed Use Type

• Identify the subject property’s zoning district (AG, R1, R2, R3, C, P, OS, I).
• Select the STR use type that matches your operation:
  • Tourist Home: Not owner‑occupied; entire home rented to transient guests (daily/weekly).
  • Bed and Breakfast: Owner/manager‑occupied; may serve meals; operates in a detached house.
  • Hotel/Motel: Commercial lodging facility; generally only in the Commercial (C) district.
• Confirm if the use is permitted by right or a Special Exception:
  • Tourist Home: Permitted principal use in AG, R1–R3, P (no Special Exception required).
  • Bed and Breakfast: Permitted in AG, R1–R3, C, P (no Special Exception required).
  • Hotel/Motel: Permitted in C and P (no Special Exception required).

2. Site and Structural Compliance

• Meet minimum lot sizes and dimensional standards for the zoning district.
• Verify public water and sewer connections are available where required (R1–R3 require access).
• Maintain setbacks, height limits, and any other development standards for principal and accessory structures (see district standards below).

3. Permitting路径

• Zoning Compliance Permit: Required before commencing any new use or construction/alteration (Section 1.4).
• Special Exception (if applicable): Only if an STR use is proposed in a district where it is listed as “E” in Table 4.1. Based on the current use table, STR uses are not shown as Special Exceptions for the districts where they are proposed; however, if you expand beyond permitted parameters (e.g., intensity beyond customary) or seek a deviation from standards, a Special Exception may be appropriate (Article VI).
• If altering structures, ensure compliance with building, fire, health, and safety codes (applicability stated in nonconformities section).

4. State-Level Registration and Taxes

• Montana Lodging Tax (Accommodations Tax): Register with the Montana Department of Revenue and collect/remit the state lodging tax (commonly 7%). Consult the Department of Revenue for registration details and filing obligations.
• General Business Licensing: Confirm whether a general business license/registration is required at the local level (no specific municipal business license fee is identified in the provided documents). Montana state-level safety and fire regulations may apply to lodging establishments.

5. Operational Considerations

• Occupancy and Length of Stay: No city‑level caps are stated in the provided materials. “Transient guests” is defined for tourist homes and bed and breakfasts. Comply with any state or insurance requirements that govern occupancy.
• Parking and Access: Ensure adequate access and parking for guests without negatively impacting neighbors; consider access standards and building placement rules in your district.
• Management and Owner‑Occupancy: For Bed and Breakfasts, owner/manager occupancy is required. For Tourist Homes, the property is not occupied by the owner/manager; ensure you meet all other regulations.
• Ongoing Compliance: Maintain compliance with all zoning conditions, building/fire codes, and any conditions of approval.

Required Documents, Permits, Licenses, and Guidelines

To launch and operate a compliant STR in Sheridan, you will likely need the following:

• Zoning Compliance Application and Permit

  • Purpose: Demonstrates compliance with the Zoning Ordinance and authorizes the proposed use or development.
  • Includes: Application forms, site plan, narrative addressing zoning compliance, fee payment (if applicable).

• Site Plan

  • Must show lot dimensions, building footprints, setbacks, access/egress points, parking, utilities connections (public water/sewer where required), and any accessory structures.

• Narrative Addressing Zoning Standards

  • For a Bed and Breakfast: Explain how the owner/manager occupancy is ensured and how meals (if any) are provided in compliance with the lodging use definition.
  • For a Tourist Home: Describe the transient‑guest operation (daily/weekly), confirm non‑owner‑occupancy, and outline how the use fits the permitted principal use criteria in the district.

• Proof of Lawfully Established Use (if applicable)

  • For conversions or changes of use, provide documentation showing the structure/use was lawfully established prior to current ordinance changes (Article VII standards).

• Building/Fire/Health/Safety Documentation

  • Ensure any alterations meet applicable building codes.
  • Confirm fire and life safety compliance for lodging operations (state lodging facility safety regulations may apply).

• State Registration and Tax Filings

  • Montana Department of Revenue registration for lodging tax, including ongoing filing and remittance.

• Business Registration (as applicable)

  • Local business license/registration may be required by the Town or Madison County; consult local authorities.

Note: No specific fee schedules or application forms are included in the provided materials. Contact the Town to obtain current forms and fees.

Specific Regulations for STRs in Sheridan (City/County/State)

City‑Level Zoning Standards

Tourist Home (Not Owner‑Occupied; Entire Home Rented to Transient Guests)

• Permitted Use (Principal): Agricultural (AG), Residential 1 (R1), Residential 2 (R2), Residential 3 (R3), Public (P).
• Not listed as a principal use in Commercial (C) or Industrial (I).
• Typical compliance:
  • R1–R3 districts require public water and sewer service.
  • Must meet district setbacks, height, lot size, and other development standards (see summaries below).
  • Operates as a principal use on a lot; accessory structures must meet setback and location requirements (Section 4.3).

Bed and Breakfast (Owner/Manager‑Occupied; Detached House; Meals Optional)

• Permitted Use (Principal): Agricultural (AG), Residential 1 (R1), Residential 2 (R2), Residential 3 (R3), Commercial (C), Public (P).
• Not listed as a principal use in Industrial (I).
• Owner/manager occupancy is a defining criterion for this use.
• Typically operated within a single‑household detached dwelling.

Hotel/Motel (Commercial Lodging Establishment)

• Permitted Use (Principal): Commercial (C), Public (P).
• Not listed as a principal use in Agricultural (AG) or Residential (R1–R3) districts.
• Involves commercial lodging with or without meal service.

Accessory Structures and Uses

• Accessory Dwelling Units (ADUs) are allowed as accessory uses; however, if an ADU is used for short‑term lodging as a “tourist home,” it must follow the principal use permissions and district standards. Verify whether ADU‑based lodging is treated as a separate “tourist home” principal use on the lot (Section 4.3).

Development Standards (Selected Highlights)

R1 District (Residential 1)

• Min lot area: 12,000 sq ft; min width: 100 ft.
• Public water and sewer required.
• Principal building height max: 30 ft.
• Setbacks (principal): Front 25 ft; Side interior 10 ft; Side street 10 ft; Rear 10 ft.

R2 District (Residential 2)

• Min lot area: 5,000 sq ft; min width: 50 ft.
• Public water and sewer required.
• Principal building height max: 30 ft.
• Setbacks (principal): Front 25 ft; Side interior 10 ft; Side street 10 ft; Rear 10 ft.

R3 District (Residential 3)

• Min lot area: 3,500 sq ft; min width: 50 ft.
• Public water and sewer required.
• Principal building height max: 30 ft.
• Setbacks (principal): Front 25 ft; Side interior 10 ft; Side street 10 ft; Rear 10 ft.

C District (Commercial)

• Min lot area: 5,000 sq ft; min width: 30 ft; max area: 1 acre.
• Front/side setbacks: None; Rear setback: 10 ft.
• Principal building height max: 30 ft.

P District (Public)

• Min lot area: 6,000 sq ft; min width: 40 ft.
• Principal building height max: 30 ft.
• Setbacks (principal): Front 25 ft; Side interior 5 ft; Side street 10 ft; Rear 10 ft.

AG District (Agricultural)

• Preserves agricultural systems; low‑density residential allowed.
• Front setback: 25 ft; Side interior: 10 ft; Side street: 10 ft; Rear: 25 ft.
• Principal building height max: 30 ft.

I District (Industrial)

• Not suitable for STR lodging uses as defined by the ordinance.
• Setbacks: Front 50 ft; Side interior 25 ft; Side street 25 ft; Rear 25 ft.

Special Exceptions

• If a use is not permitted by right, Special Exceptions require a public hearing before the Town Council, with written findings and possible conditions (Article VI). The ordinance includes detailed criteria, conditions, expiration, and recording requirements.

Nonconformities

• Legal nonconforming uses/structures may continue under Article VII rules, including continuation, maintenance, repair, and limited expansion (via Special Exception or variance if needed). No allowance to increase nonconformity.

State‑Level Regulations (Montana) Relevant to STRs

Montana Lodging Tax (Accommodations Tax)

• Registration and collection of state lodging tax are required through the Montana Department of Revenue. File and remit lodging tax on gross receipts from transient accommodations (commonly 7%; confirm current rate with the Department of Revenue).

Montana Lodging Facility Safety and Fire

• Lodging facilities (e.g., bed and breakfasts, hotels/motels) are subject to state safety and fire regulations. Obtain and maintain all required safety compliance documentation for lodging operations (e.g., smoke detectors, egress, fire extinguishers, posting requirements).

Business Registration and Local Compliance

• Confirm whether general business licensing or registration is required at the local or county level.
• STRs are subject to local zoning and building/fire codes, as applicable.

Contact Information

Town of Sheridan, Montana

• Address: 124 E Loch Threeileen Rd, Sheridan, MT 59749
• Phone: (406) 842‑5502
• Website: townofsheridanmt.org
• Online Document Access: townofsheridanmt.org/documents/405/Sheridan_Zoning_Ordinance_8-18-25_Draft.pdf

Montana Department of Revenue (Lodging Tax Registration)

• Refer to the Montana Department of Revenue website for lodging tax registration and guidance on accommodations tax: revenue.mt.gov

Links to Source Pages

• Sheridan Zoning Ordinance (Draft, Aug 18, 2025): townofsheridanmt.org/documents/405/Sheridan_Zoning_Ordinance_8-18-25_Draft.pdf
• Town of Sheridan Official Website: townofsheridanmt.org

Practical Notes for STR Investors

• Tourist Homes are widely permissible in residential and agricultural districts and do not require owner‑occupancy. Confirm public water and sewer requirements in R1–R3.
• Bed and Breakfasts are owner/manager‑occupied and permitted in residential, agricultural, commercial, and public districts.
• Hotel/Motel models are limited to Commercial and Public districts.
• Secure a Zoning Compliance Permit before operation. If you propose any expansion, intensification, or deviation from standards, prepare for a Special Exception review (public hearing, conditions, possible recording).
• Align with state lodging tax registration and safety requirements. Maintain documentation for building/fire safety.
• Align parking, access, and guest management with neighborhood compatibility standards to minimize friction and avoid nuisance complaints.

If the Town’s website lists more recent permit forms or specific business licensing requirements, obtain those directly from the Town’s office and the Town Clerk before applying.