"We're invested in our property, accountable to our neighbors, and contributing to the local economy." That's how one Twin Cities vacation rental manager described the argument for keeping non-resident owners in Minnetonka's short-term rental market. The city council heard it, and voted 6-0 anyway to require that every short-term rental in Minnetonka be homesteaded, meaning the owner has to live there as a primary residence. If you're shopping for a Minnetonka property with Airbnb income in the pro forma, that single word, homestead, is about to do more work than any zoning map.
What the ordinance actually says
On June 8, 2026, the Minnetonka City Council adopted Ordinance No. 2026-04, amending sections 530.02 and 530.04 of the city code. It doesn't outlaw short-term rentals. It narrows who can register one. Starting January 1, 2027, a property can only be listed as a short-term rental, defined as a residential rental for fewer than 30 consecutive days, if the owner occupies it as their primary residence.
This builds on rules already in place. Minnetonka has required all rental properties, regardless of rental length, to register with the city since a registration ordinance took effect on February 3, 2024. What changed in June wasn't the registry itself. It was eligibility for it. A second home, a purely investment-owned single-family rental, or a property held by an LLC for short-term rental income no longer qualifies for registration once the new rule takes effect, based on how the council defined the requirement.
Homestead is a legal filing, not a plan
Here's the part that catches buyers off guard. Homestead status in Minnesota isn't a lifestyle description. It's a property tax classification tied to occupying the home as your primary residence, and it comes with its own paperwork and timeline through the county assessor, separate from anything you do with the city's rental registry. Telling the city you plan to live there someday doesn't satisfy the requirement. The classification has to actually be in place.
That matters for the specific case of someone buying now with a future STR plan. If you close on a Minnetonka property in the fall of 2026 intending to live there for a year and then convert part of it to a short-term rental, you're probably fine, since your homestead classification would already be established. If you're buying with the intent to keep your current residence and run the new property purely as a rental, the ordinance is built to exclude exactly that structure once it takes effect.
The math the council used to justify it
What makes this ordinance worth a second look is how small the problem actually was. A public comment submitted to the council, citing the city's own supplemental background report, put the numbers this way: roughly 25 registered short-term rentals across 27,903 housing units citywide, a share under one-tenth of one percent. That same report reportedly found zero nuisance complaints logged against any short-term rental since the registry began in February 2024, and noted that 23 of the 25 registered STR owners were already Minnesota residents.
In other words, the ordinance isn't a response to a documented pattern of complaints or absentee-owner nuisance. It's a preemptive cap on a market the council apparently decided was safer to lock down small than to let grow. If you're evaluating Minnetonka as a place to hold an investment property long-term, that's useful context: the city has shown it will act on STR policy before a problem shows up in the complaint log, not after.
What's still unsettled heading into fall
Several parts of the rollout remain genuinely open as of this writing. Public comments during the process, including from an operator who already manages a registered non-homesteaded STR in the city, specifically asked the council to grandfather existing compliant operators with a clean track record. Whether that grandfathering made it into the final ordinance, or whether every non-homesteaded STR currently on the registry will simply lose eligibility on January 1, 2027, isn't something the published summaries resolve clearly.
The city's own timeline calls for STR owners to receive detailed compliance information later this year, with full registration and compliance required by the January 1, 2027 deadline. If you're under contract on a Minnetonka property right now, or evaluating one with existing short-term rental history, that's not a detail to guess at. It's worth a direct call to the city's rental registration contact before you finalize any assumptions about what the property can legally do after the new year.
How this compares to the rest of the lake
Minnetonka's homestead-only approach sits in the middle of a wider range of responses among neighboring communities. Several cities around Lake Minnetonka and the west metro, including Deephaven, Edina, Greenwood, Minnetrista, Shorewood, Apple Valley, Bloomington, and St. Louis Park, have prohibited short-term rentals outright. Others, including Chanhassen, Hopkins, Burnsville, Roseville, Stillwater, and parts of Excelsior, allow STR operation with a permit or license.
Wayzata tried the outright-ban route in the fall of 2025, and it hasn't gone smoothly. A Hennepin County judge voided that ban in April 2026, ruling that the city had adopted it as if it were a simple licensing change when it actually functioned as a zoning ordinance, which legally requires a different public process. That decision is reportedly under appeal. Minnetonka's choice to regulate through its existing rental registration framework, rather than through zoning, may be a deliberate attempt to avoid the same procedural trap. Whether that holds up if challenged is untested, but it's a meaningfully different legal footing than the approach that got Wayzata sued.
What this means if you're buying with rental income in the plan
If a Minnetonka listing's marketing or pro forma leans on short-term rental income, three things are worth confirming before you write an offer:
- Whether the current owner's STR registration is homesteaded or not, since that status doesn't automatically transfer to you as the buyer
- Whether you intend to occupy the home as your primary residence, since that's now the deciding factor for eligibility, not simply owning the property
- What the city's compliance office says about any existing STR history on the specific address, since the transition rules for currently registered non-homesteaded rentals weren't fully published as of this writing
The city's rental registration office has handled inquiries like this before. Reaching out directly, rather than relying on a listing description or a general market guide, is the only way to get an answer specific to the address you're considering.
A short FAQ
Can I still rent out a spare bedroom in my own Minnetonka home short-term? Based on the ordinance's structure, yes, since that's exactly the homesteaded, owner-occupied scenario the rule was written to allow. The city's registration requirement still applies regardless of how much of the home you rent out.
Does this affect long-term rentals too? No. The homestead requirement in Ordinance No. 2026-04 applies specifically to short-term rentals, defined as stays under 30 consecutive days. Minnetonka's broader rental registration ordinance, in place since February 2024, continues to apply to all rental properties regardless of term.
What happens to a non-homesteaded STR that's already registered? This is the piece that isn't clearly settled yet. Public comment specifically raised the grandfathering question, and the city's compliance details were expected to reach current STR owners later in 2026. If you're looking at a property with existing STR history, confirm its status directly with the city rather than assuming either outcome.
If you're weighing a Minnetonka purchase with rental income in mind, or you just want a clear-eyed read on what a specific address can and can't do under this rule, Evan Axelson is a good place to start that conversation. Let's Connect.
