Investment Property Loans in Lexington, KY

Lexington defines a short-term rental as a home rented for less than 30 consecutive days, and splits them into hosted rentals, where a permanent resident stays on the property, and un-hosted rentals.

For investors: A duplex owner living in one side can run the other as a hosted rental, while a house bought purely as an investment is un-hosted. In Lexington's residential zones that label decides between an accessory use and a Board of Adjustment hearing, and switching types ends the license.

Source: Lexington-Fayette Urban County Government, Short-Term Rentals (STRs), Oct 2026

Lexington short-term rentals need a zoning compliance permit, a business license and a special fees license at $200 for the first unit and $100 for each additional, expiring each December 31 or on a sale.

For investors: A buyer of an operating Lexington rental cannot ride on the seller's license, because a change of ownership ends it. Apply in your own name before the first booking after closing; the Division of Revenue then issues a local registration number that every listing must display.

Source: Lexington-Fayette Code of Ordinances, Ch. 13, Art. V, Sec. 13-77, and Sec. 13-13 fee schedule (Municode); Division of Revenue licensure page, Oct 2026

Lexington short-term rental applicants must show at least $1,000,000 of liability insurance per occurrence and a site and floor plan showing how many vehicles can park on the property.

For investors: Confirm before closing that the policy names short-term use and meets the $1 million per-occurrence floor, since a standard landlord form may not. The plan must count spaces without using streets, sidewalks, alleys or other public property.

Source: Lexington-Fayette Urban County Government, STR Licensure Requirements and Permitting, Oct 2026

Lexington's hosted category needs a primary resident living on site 275 days a year, proven by a driver's license or voter registration plus a recent tax record, bank statement, vehicle registration or utility bill.

For investors: A live-in owner or manager moving into a newly bought Lexington duplex should update license or voter records early and keep a utility bill dated within the year. If that resident is away while guests stay, the rental counts as un-hosted under the ordinance.

Source: Lexington-Fayette Code of Ordinances Sec. 13-76, primary residence definition (Municode); Division of Revenue licensure page, Oct 2026

An unlicensed Lexington short-term rental draws a $500 civil penalty per offense, each day after notice counting separately; other violations run $125 rising to $1,000, and two in a license term can bring revocation.

For investors: The city holds a lien on the licensee's property for these civil fines, and after a revocation the same licensee cannot relicense that unit for one year. One season of party complaints can take a Lexington rental out of the short-term market well into the next year.

Source: Lexington-Fayette Code of Ordinances, Secs. 13-77 and 13-81 (Municode), Oct 2026

Lexington caps short-term rental occupancy at two guests per bedroom plus two, or 10 in total, whichever is less, counting any host present, and bans overnight private events and paid special events.

For investors: A five-bedroom Lexington house tops out at 10 guests, not 12, so size revenue projections to that cap. Larger groups need a conditional use approval in which the Board of Adjustment sets the number, and private events must end by 11 p.m.

Source: Lexington-Fayette Zoning Ordinance Sec. 3-13 (Municode); STR Community Resources, Oct 2026

Lexington short-term rentals running before July 11, 2023 in zones that now require a conditional use could continue, but a change in ownership requires a new Board of Adjustment conditional use permit.

For investors: A listing marketing a grandfathered Lexington rental is selling income the buyer may not keep. Underwrite such a house at long-term rent so the debt is still covered if the Board of Adjustment denies the new owner's permit, which it hears at a pace of ten new cases a month.

Source: Lexington-Fayette Zoning Ordinance Sec. 3-13 (Municode), Oct 2026

Lexington's transient room tax totals 8.5% of rent on stays shorter than 30 continuous days, applies to every short-term rental, and is due by the 20th of the following month.

For investors: Hosting platforms must collect it on bookings they process, but direct bookings leave the host liable, with a 4.5% monthly penalty plus 1% monthly interest on late payment. Furnished stays of 30 days or more fall outside the tax.

Source: Lexington-Fayette Code of Ordinances Sec. 2-172 (Municode), Oct 2026

In Lexington's R-1 through R-5 and EAR zones, an un-hosted short-term rental needs a Board of Adjustment conditional use permit, and a multifamily lot may use 10% of its units or one, whichever is greater.

For investors: Hosted rentals of up to 10 guests are an accessory use in those zones, so living on site skips the hearing. The board weighs the applicant's record, nearby nuisance citations and whether the neighborhood is vulnerable to displacement, which makes approval uncertain.

Source: Lexington-Fayette Zoning Ordinance Sec. 3-13 (Municode), Oct 2026

Lexington bars conditional-use short-term rentals within 600 feet of an approved or grandfathered one, holds un-hosted rentals in residential zones to 2% of dwellings within 1,000 feet, and hears 10 new applications monthly at most.

For investors: Map approved rentals around a target before paying for its location, since one nearby permit can block yours. The Board of Adjustment can grant relief next to nonresidential zones or across a minor arterial road, and the monthly hearing cap can stretch the wait.

Source: Lexington-Fayette Zoning Ordinance Sec. 3-13 (Municode), Oct 2026

Lexington's occupational license fee is 2.25% of compensation and business net profits, and its short-term rental ordinance makes licensees responsible for it on rental profits, subject to exemptions that include one for rental property.

For investors: Ask the Division of Revenue before the first tax season how the rental property exemption applies to your Lexington short-term rental. If the fee applies, profit goes on a Form 228 net profit return, with Form 228 ENP for quarterly estimated payments.

Source: Lexington-Fayette Urban County Government, Occupational License Fee Rates; Code Secs. 13-4 and 13-78 (Municode), Oct 2026

Lexington property tax rates depend on which of seven urban services districts a parcel sits in; full-service District 1 covers trash, recycling and yard waste pickup, street lights and street cleaning.

For investors: Two similar Lexington rentals can carry different tax bills, because older neighborhoods kept the services offered when they were built and new homes on private streets land in District 3. Check the PVA's tax district calculator; streets can petition for more services, never fewer.

Source: Lexington-Fayette Urban County Government, Urban Services (Tax districts), Oct 2026