City of Chicago Vacation Rental License

Effective January 1, 2011, the City of Chicago has enacted a new business license to regulate daily/weekly rentals.  The lawmakers at the City of Chicago probably had this one in mind when Chicago was in the running for the Olympics.  This law will not affect “traditional” landlords, but will affect many people who rent out their real estate for short periods of time.

The Ordinance is located at Chapter 4-207 of the Municipal Code of Chicago and applies to “Vacation Rentals”.  The Ordinance defines a Vacation Rental as a dwelling unit with up to six sleeping rooms that are available for rent or for hire, for transient occupancy by guests which are not owner-occupied.

There is a limit of six dwelling units per building which can be licensed as a vacation rental at the same time.

The ordinance excludes: (1) single room occupancy buildings; (2) bed and breakfasts; (3) hotels; (4) month to month tenancies; and (5) corporate housing.

In order to obtain the license, an applicant must pass a Department of Zoning board review, an inspection by the Department of Buildings, and file an application with the Department of Business Affairs and Consumer Protections.  The license fee is $500 per location and is renewable every two years.

Finally, the City of Chicago amended the Hotel Accommodations tax eliminating the previous seven unit minimum in effect before a property would be considered a hotel accommodation, meaning that all vacation rentals are now subject to the City of Chicago’s 3.5% Hotel Accommodations Tax.

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