By Brick & Corbett
Torch Lake is routinely cited as one of the most beautiful lakes in the world, and its Caribbean-blue water draws Midwest visitors in numbers that make the demand for rentals real. The logical assumption for any homeowner on those shores is that listing on Airbnb or VRBO will generate meaningful income during the peak weeks of July and August.
The reality is more complicated and more consequential for anyone purchasing with rental income in mind. This guide explains the regulatory landscape.
Key Takeaways
- Definition: A short-term rental (STR) is any stay of fewer than 30 consecutive days
- Township ban: Torch Lake Township prohibits short-term rentals in all residential zones (R-1, R-2, and R-3), a ban that has been on the books since July 2014
- Adjacent townships vary: Neighboring townships like Banks and Helena permit short-term rentals, but rules differ significantly by jurisdiction — the parcel's exact location determines what's allowed
- Michigan tax obligations: A 6% state use tax applies to every rental stay under 30 days; Airbnb collects and remits it automatically, but VRBO and direct bookings do not
What Torch Lake Township Actually Prohibits
The Torch Lake Township Zoning Ordinance is unambiguous: short-term rentals are not permitted uses in the R-1, R-2, or R-3 residential zoning districts. That ban has been on the books since July 2014, and the irony that a lakefront market of this caliber carries a ban predating the mainstream growth of Airbnb and VRBO is not lost on buyers who discover it after making an offer.
What the Ordinance Does and Does Not Allow
- Prohibited in residential zones: R-1, R-2, and R-3 cover the vast majority of lakefront properties in Torch Lake Township; a Torch Lake Airbnb listing in those zones is a zoning violation, not a permitted use
- Permitted in limited nonresidential settings: The current zoning ordinance states that rentals of one-unit dwellings for periods of less than 30 consecutive days are only permitted in a mixed-use planned unit development (PUD), not as a permitted residential use
- Definition threshold: The ordinance defines a short-term rental as any stay of fewer than 30 consecutive days, regardless of renter count within any 30-day period
- Enforcement posture: The Torch Lake Township ordinance is clear and has been in effect for over a decade; neighboring townships have added active scanning software to identify unlicensed listings, and the regulatory trend across the region is toward tighter enforcement, not looser
This is a prohibited use under zoning law that has been on the books for over a decade, not a permitted gray area.
The Adjacent Township Landscape
The picture is meaningfully different in other parts of Antrim County, and property owners committed to a short-term rental model have options worth understanding.
How the Adjacent Township Rules Compare
- Banks Township: Approved a Short Term Rental Ordinance at its June 2020 board meeting that makes STRs a permitted use within any single-family dwelling in all zoning districts
- Helena Township: Short-term vacation rentals are permitted by right in R-1 and R-2 residential districts, a straightforward framework for buyers whose property falls within that jurisdiction
- Forest Home Township: Rentals are permitted for owner-occupied dwellings operating as bed and breakfasts; unhosted short-term rentals do not have the same standing under the current zoning ordinance
- Village of Elk Rapids: Licensing is governed by Ordinance 502, with priority registration for village residents, a waiting-list structure once the cap is reached, and maximum occupancy generally capped at 10 guests per property; a 2025 ordinance update has been under consideration — confirm the current version directly with the village before purchasing
Properties on connected or nearby lakes in Banks or Helena townships operate under an entirely different legal framework than a Torch Lake Township residential parcel.
Michigan Tax Obligations Every Short-Term Rental Owner Must Know
For owners operating in adjacent townships or considering the 30-day-or-longer model, Michigan's tax framework requires compliance steps that differ from what many out-of-state owners expect.
The Key Tax Points Michigan Short-Term Rental Operators Must Address
- Michigan 6% state use tax: Applies to every stay under 30 days statewide; Airbnb collects and remits it automatically, VRBO does not, and direct bookings are entirely the owner's responsibility
- Registration requirement: Owners must register with the Michigan Department of Treasury before collecting any rental payments; operating unregistered can result in back taxes and penalties
- Federal 14-day rule: For any short-term rental operating in a permitted jurisdiction, rental income from properties rented 14 days or fewer is not subject to federal income tax reporting
Michigan's 6% use tax is manageable once platform remittance distinctions are understood. Owners who anticipate renting for more than 14 days should track income and expenses carefully, as rental income becomes fully reportable beyond that threshold.
FAQs
Can I list my Torch Lake Township property on Airbnb legally?
Torch Lake short-term rentals are prohibited in R-1, R-2, and R-3 residential zones under a Torch Lake Township ordinance in effect since July 2014. The Village Business District allows short-term rentals by special use, but residential lakefront properties do not fall within that district.
Are there any lakes near Torch Lake where short-term rentals are permitted?
Yes. Banks Township permits short-term rentals in all zoning districts, and Helena Township permits them by right in R-1 and R-2 residential districts.. Properties on nearby lakes in those townships operate under a materially different regulatory framework.
Does Airbnb collect Michigan's lodging tax automatically?
Airbnb collects and remits the 6% use tax for platform bookings; VRBO does not, and direct bookings require the owner to remit independently. Owners must register with the Michigan Department of Treasury before collecting any rental payments; operating unregistered can result in back taxes and penalties.
Know the Rules Before You Fall in Love With the Lake
The short-term rental landscape around Torch Lake is one of the most misunderstood aspects of buying here, and the gap between expectation and what zoning permits has caught many buyers off guard. Before any offer is written, that picture should be clear. Explore Torch Lake with Brick & Corbett.
