Short-term rental rules in Michiana: what a buyer has to check

A listing that promises “strong rental history” is describing the last owner’s permit, not yours. Across Michiana, short-term rental rules are written city by city and village by village, and in several of the places buyers most want a vacation rental, the permit does not survive the sale. This guide walks the rules in New Buffalo, Three Oaks, St. Joseph, Michigan City and South Bend from the municipalities’ own codes and announcements, then closes with a checklist for buying a house you plan to rent by the night. Rules change, so each section says who to call.

Why the permit matters more than the rental history

In the codes we read, a permit belongs to an owner and a property, and a sale ends it. Several Harbor Country municipalities also restrict new rentals by zoning district, so a new permit for your house depends on the zoning map, not the seller’s booking calendar. And the stakes are large: New Buffalo’s typical home value is $681K and Three Oaks’ median sale price is $442K, data through June 2026 on the market report. Check the rules first and run the rental math second; the lake-house buying guide covers the rest of the second-home homework.

Indiana and Michigan start from different places

Indiana limits what its cities and towns may do. The state’s short-term rental chapter (IC 36-1-24) covers rentals of less than 30 days, makes an owner-occupied short-term rental a permitted use wherever residential use is allowed, and lets a city require a special exception for non-owner-occupied rentals in residential districts — but not in a way that prohibits or unreasonably restricts them. A local permit may cost up to $150, expires after one year, carries no renewal fee, and “may not be transferred to the new owner.” The chapter does not apply to a town that adopted short-term rental rules before January 1, 2018.

Michigan buyers should assume the answer is local. Each lakeshore city, village and township in Berrien County writes its own rules, which is why New Buffalo city and New Buffalo Township, side by side, run separate programs. The Indiana-versus-Michigan guide covers the other state-line differences.

New Buffalo: permits end at the sale

The City of New Buffalo requires a city permit for every unit rented for less than a month. The owner certifies smoke and carbon monoxide alarms, consents to inspections and passes an annual inspection. A local agent is mandatory: a person living within 20 miles who answers complaints within 30 minutes during rentals. Before each stay, a reservation summary goes to the city clerk; only whole units may be rented, and guests may not park on the street.

Three clauses matter to a buyer. A permit “is terminated when the property to which the permit applies is conveyed to another party,” though a new application within 12 months can renew it. Permits are granted only “to the extent permits are available in the pertinent zoning district” — and when the city adopted its zoning limits, local reporting described new short-term rentals as barred from its three residential districts, with commercial and marina districts open. And the city’s posted fees total $1,525: $75 registration, $150 inspection and a $1,300 city service fee for non-homestead properties. Confirm district availability with code enforcement before you offer. New Buffalo Township runs its own license — $500 for 36 months, with an inspection. The New Buffalo page and moving-to-New Buffalo guide cover that market, including its 43-day median time to contract.

Three Oaks: a 10% ceiling in R-1

The Village of Three Oaks licenses short-term rentals under Ordinance 210. The permit runs one year and renews annually; the owner certifies alarms and fire extinguishers, supplies a scaled floor plan, obtains an occupancy permit from the building inspector, and accepts a maximum occupancy set by the village. The village code also requires a new owner of a registered unit to register within ten days of acquiring it.

The constraint is the cap. Ordinance 228, effective March 29, 2023, stops new registrations in the R-1 single-family district once permits reach 10% of its developed parcels. In R-1, the question for the village is “how many permits are left today?” With a Three Oaks median of 101 days on market, there is usually time to get that answer in writing; the Three Oaks guide covers the village itself.

St. Joseph: only certain districts

The City of St. Joseph runs short-term rentals through its rental registration and inspection program; after a passed inspection, a permit is valid for two years. Zoning is the filter: new short-term rentals are allowed only in the W Water Recreation District, in the D Downtown District above street level, and in parts of the R3 multiple-family district as a conditional or special use. Most single-family streets fall outside those districts, and the city tells prospective operators to call before assuming a property qualifies. St. Joseph Charter Township and Lincoln Township have their own rules. As a fallback, the St. Joseph page shows a typical long-term rent of $1,778 a month.

Michigan City and the LaPorte County shoreline

Michigan City’s Ordinance 4585, adopted in 2021, requires a registration certificate from Planning and Inspection before any rental of less than 30 nights, one per property. The city’s 2021 announcement listed annual renewal, no permit fee, and fines of $250, $500 and $750 for failing to register; confirm current fees with the planning office. Because Michigan City is in Indiana, the seller’s permit does not pass to you.

We could not find current short-term rental rules on official sources for Long Beach, Michiana Shores or unincorporated LaPorte County, so check with the town hall or the county planner before you buy there. The Michigan City and La Porte pages carry the market numbers.

South Bend: new permits from January 2027

South Bend’s Common Council passed two short-term rental ordinances in September 2026, reported to take effect January 1, 2027. Rentals of 30 days or less will need a city permit with a one-time $150 fee, an emergency contact and basic safety standards; new non-owner-occupied rentals will need a special zoning exception, while existing ones are grandfathered under state law. If you close after the effective date, expect to apply in your own name, and ask the city whether grandfathered status survives a sale. The university-area guide and South Bend page ($1,310 typical rent) help you price the long-term alternative.

Lodging taxes on both sides of the line

In Indiana, renting a house or condominium for less than 30 days draws state sales tax — a seven percent tax, per the Department of Revenue — plus county innkeeper’s tax, listed at 5% in LaPorte County and 8% in St. Joseph County. Platforms collect on their bookings; direct bookings leave collection to the owner. Michigan’s six percent use tax applies to lodging rented for a month or less. Ask each municipality about local fees, and read the Michigan homestead guide: a rental second home pays property tax without the principal-residence break.

Checklist before you buy a would-be rental

1. Get the parcel’s zoning district and ask the municipality, in writing, whether a new permit is available there today — and how many remain under any cap.
2. Assume the seller’s permit does not transfer; get the re-application steps in your name.
3. Collect the seller’s permit, inspection reports and set maximum occupancy. Occupancy, not bedrooms, sets revenue.
4. Line up a local agent or manager if the code requires one.
5. Count off-street parking against occupancy.
6. Read condominium or association rules, which can restrict rentals regardless of the city.
7. Get an insurance quote written for short-term rental use.
8. Make the offer contingent on permit approval — the Michigan and Indiana purchase-agreement guides and the offer toolkit show where the clause goes.
9. Run the numbers at long-term rent too, using the rental-market guide.

MichianaRealty.com™ tracks prices and market speed monthly, not permit counts, so the permit question always goes to the municipality. Buyers working without an agent can pair this list with the buy-direct playbook; shoreline parcels also need the erosion and bluff homework.

Frequently asked questions

Can I buy a house in New Buffalo and keep renting it short-term?

Not automatically. New Buffalo’s city code terminates a short-term rental permit when the property is conveyed. The buyer must apply, pass an inspection, name a local agent living within 20 miles, and receive a permit only if one is available in that zoning district. Confirm with the city before you offer.

Do short-term rental permits transfer to a new owner in Indiana?

No. Indiana’s short-term rental statute says the permit may not be transferred to the new owner when a permitted property sells; the buyer must apply for a new one. The statute also caps a local permit fee at $150 and bars renewal fees, though it does not apply to towns that regulated short-term rentals before 2018.

Does Three Oaks limit short-term rentals?

Yes, in its R-1 single-family district. Ordinance 228, effective March 29, 2023, stops new registrations there once permits reach 10% of the district’s developed parcels. Everywhere in the village, an annual permit, safety certifications and an occupancy permit are required.

Does South Bend require a short-term rental permit?

It will. Ordinances passed in September 2026, reported to take effect January 1, 2027, require a city permit with a one-time $150 fee for rentals of 30 days or less, plus a special zoning exception for new non-owner-occupied rentals. Confirm the final rules with the city before closing.

What taxes apply to short-term rentals in Indiana and Michigan?

Indiana applies state sales tax and county innkeeper’s tax to stays of less than 30 days — 5% innkeeper’s tax in LaPorte County and 8% in St. Joseph County. Michigan applies its six percent use tax to lodging. Platforms generally collect on bookings they handle; direct bookings are the owner’s job.