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Cook County, Illinois Short-Term Rental Regulation: A Guide For Airbnb Hosts

Cook County, Illinois

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What are Short-Term Rental (Airbnb, VRBO) Regulations in Cook County, Illinois?

Cook County, Illinois, which includes the city of Chicago, has implemented a comprehensive set of regulations governing short-term rentals (STRs) like Airbnb and VRBO. These rules are designed to balance the interests of hosts, guests, and the broader community while ensuring the safety and quality of rental accommodations.

Starting a Short-Term Rental Business in Cook County

To start a short-term rental business in Cook County, hosts must navigate a complex web of regulations and licensing requirements. The first step is to determine the appropriate type of license needed, which varies depending on the location and nature of the rental property.

In Chicago, hosts are required to have a business license, pass property inspections, secure minimum insurance coverage, and meet zoning requirements. The city has a specific definition for "vacation rental" that excludes various other housing types, and hosts must register and obtain a registration number for listings. Buildings with five or more units have different rules.

Outside of Chicago, Cook County has its own set of regulations for vacation rentals. The Cook County Vacation Rental Ordinance, adopted in 2019 and amended in 2020, 2021, and 2022, establishes licensing requirements, fees, and enforcement mechanisms for short-term rentals.

To obtain a Cook County Vacation Rental License, hosts must provide basic property and contact information, self-certify liability insurance, and ensure compliance with Minnesota Department of Health (MDH) licensing requirements. The annual license fee, as of 2022, is $200 per rental unit, though this is set to increase to $400 in 2023.

Hosts must also adhere to local zoning laws, which may restrict the areas where short-term rentals are permitted. Failure to comply with zoning regulations can result in penalties or prohibition on operating legally.

In addition to licensing and zoning requirements, Cook County vacation rental hosts must collect and remit applicable taxes, including the Cook County Lodging Tax. Failure to pay the lodging tax by the required deadline may result in the revocation of the property's rental license.

The county has also established a "trigger" mechanism that could potentially limit the number of vacation rentals to approximately 393 total units countywide. As of 2022, there were 358 vacation rentals in Cook County, with around 290 properly licensed. The county is working to enforce the ordinance and bring all operators into compliance.

Short-Term Rental Licensing Requirements in Cook County

To legally operate a short-term rental (STR) in Cook County, Illinois, property owners must obtain a vacation rental license from the Cook County Land Services Department. The licensing process involves several key requirements:

  • Provide basic property and contact information for the owner and property manager
  • Self-certify liability insurance for the property
  • Ensure compliance with Minnesota Department of Health (MDH) licensing requirements
  • Pay an annual license fee of $200 per rental unit (increasing to $400 in 2023)
  • Collect and remit applicable taxes, including the Cook County Lodging Tax

To apply for a Cook County Vacation Rental License, property owners must submit their application and required documentation through the county's e-Permitting site at https://permits.co.cook.mn.us/. The application window for new and renewing licenses opens on December 1st each year.

The annual license fee, as of 2022, is $200 per rental unit. However, this fee is set to increase to $400 per unit in 2023. Failure to pay the required lodging tax by the specified deadline may result in the revocation of the property's rental license.

The processing time for vacation rental license applications is not explicitly stated on the Cook County website. However, it is recommended that property owners apply well in advance of their intended rental start date to allow sufficient time for review and approval.

Property owners who operate a vacation rental without a valid Cook County license may be subject to penalties and fines. Violations of the vacation rental ordinance are considered a misdemeanor, with each day of non-compliance constituting a separate offense. All fines for violations are paid to the county and credited to the General Revenue fund. Additionally, an after-the-fact fee can be assessed on property owners who operate a vacation rental without a license, as listed in the Cook County Fee Schedule approved by the Board of Commissioners.

To maintain compliance with the vacation rental ordinance, licensed STR operators must also submit a Lodging Tax at intervals specified by the Cook County Auditor. Failure to pay the lodging tax by the required deadline may result in the revocation of the property's rental license.

Required Documents for Cook County Short-Term Rentals

To obtain a vacation rental license in Cook County, property owners must submit the following documents:

  1. Vacation Rental License Application: This application, available through the county's e-Permitting site (https://permits.co.cook.mn.us/), collects basic property and contact information for the owner and property manager.
  2. b: Property owners must self-certify that they have sufficient liability insurance coverage for their vacation rental. The Cook County Vacation Rental Ordinance requires that vacation rentals maintain liability insurance coverage.
  3. Minnesota Department of Health (MDH) License: Vacation rental properties must comply with MDH licensing requirements. This may involve obtaining a separate license from the MDH, depending on the property type and rental frequency.
  4. Septic Treatment System Certificate of Compliance: All vacation rental operations must maintain a current "Certificate of Compliance" for their septic treatment system. Properties without a current certificate must submit a request for a septic system inspection to the Cook County Planning & Zoning Department.
  5. Lodging Tax Registration: Vacation rental operators must register with the Cook County Auditor to pay the required Lodging Tax. Failure to pay the lodging tax by the specified deadline may result in the revocation of the rental license.
  6. Fees: As of 2022, the annual license fee is $200 per rental unit, payable through the e-Permitting site. This fee is set to increase to $400 per unit in 2023.

By submitting these required documents and fees, property owners can demonstrate compliance with the Cook County Vacation Rental Ordinance and obtain a license to legally operate their short-term rental. The Cook County Land Services Department oversees the licensing process and can provide additional guidance to property owners navigating the requirements.

Cook County Short-Term Rental Taxes

Short-term rental operators in Cook County, Illinois, are subject to several tax obligations at the state, county, and local levels. It's essential to understand these taxes to ensure compliance and avoid penalties.

Illinois Hotel Operators Occupation Tax: This state-level tax ranges from 5.98% to 6.17% of the listing price, including any cleaning fees, for reservations of 29 nights or shorter.

Other Chicago Taxes administered by the State of Illinois: An additional 5.73% of the listing price, including cleaning fees, applies to reservations of 29 nights or shorter in Chicago.

Cook County Hotel Accommodations Tax: Cook County imposes a 1% tax on the listing price, including cleaning fees and guest fees, for reservations of 29 nights or shorter.

Chicago Hotel Accommodations Tax: The City of Chicago imposes a base rate of 4.5% on the gross rental or leasing charge. For vacation rentals and shared housing units, an additional 4% surcharge applies, resulting in a total city tax rate of 8.5% of the gross rental or leasing charge.

It's important to note that tax rates and rules can change frequently, so short-term rental operators should regularly review the latest tax requirements to ensure compliance.

Potential Tax Deductions and Write-Offs

Short-term rental operators in Cook County may be able to claim certain expenses as tax deductions to reduce their overall tax liability. Some potential deductions include:

  1. Mortgage interest
  2. Property taxes
  3. Utilities
  4. Cleaning and maintenance costs
  5. Repairs and renovations
  6. Supplies and amenities provided to guests
  7. Insurance premiums
  8. Advertising and marketing expenses
  9. Depreciation of furniture and equipment

To claim these deductions, short-term rental operators should maintain accurate records of their expenses and consult with a tax professional to ensure they are claiming deductions correctly and maximizing their tax benefits.

It's crucial for short-term rental operators in Cook County to understand and comply with all applicable tax obligations. By staying informed about tax requirements, collecting the appropriate taxes from guests, and taking advantage of available deductions, operators can minimize their tax liability and run a successful short-term rental business.

Illinois Wide Short-Term Rental Rules

In addition to Cook County's specific regulations, short-term rental hosts must also comply with state-wide rules and requirements in Illinois. These state-level laws and ordinances provide a broader framework for the operation of vacation rentals and home-sharing services.

One of the most significant state-wide regulations is the Illinois Hotel Operators' Occupation Tax Act, which requires hosts to collect and remit state taxes on their short-term rental income. This includes the Illinois Hotel Operators' Occupation Tax, which ranges from 5.98% to 6.17% of the listing price for reservations of 29 nights or shorter.

Furthermore, Illinois legally defines a short-term rental as any rental of a residential dwelling unit for a period of 31 days or less. This definition encompasses various types of accommodations, including entire home rentals, private or shared room rentals, accessory dwelling unit rentals, and vacation rental homes.

At the state level, hosts renting out two or more units in a building with four or more units must obtain a license from the Department of Public Health. This requirement primarily applies to condos and apartment buildings. The licensing process involves a formal application, fee, inspection, and renewal process. Non-compliance can result in fines.

Illinois has also introduced legislation to protect tenants from discrimination based on their immigration status. As a result, during tenant screening processes, Illinois landlords and rental property managers should avoid requesting immigration documents if other forms of identification are available to verify identity and conduct background/credit checks.

Another notable state-wide regulation is the Illinois Electric Vehicle Charging Act, which is designed to facilitate the installation and use of electric vehicle (EV) charging stations in residential and commercial properties. This act applies to new single-family homes and multi-unit residential buildings constructed or renovated after the Act's effective date of January 1, 2024.

Cook County hosts must stay informed about these state-wide regulations and ensure compliance alongside local county and municipal requirements. By adhering to both state and local laws, short-term rental operators can minimize their legal risks and contribute positively to the communities in which they operate.

Does Cook County Strictly Enforce STR Rules?

Cook County has taken a proactive approach to enforcing its vacation rental ordinance, aiming to bring all short-term rental operators into compliance. The county has established a 24/7 vacation rental complaint hotline (218-264-9799) to address community concerns and investigate potential violations.

While Cook County has implemented a comprehensive set of regulations for short-term rentals, it appears to be less strict compared to some other major cities like San Francisco or New York, which have more restrictive policies and aggressive enforcement. Cook County's approach seems to focus more on ensuring proper licensing, tax collection, and adherence to basic safety and quality standards.

Despite the rules in place, some hosts continue to operate short-term rentals in Cook County without proper licensing or compliance. This is evident from discussions on platforms like BiggerPockets and Reddit, where investors and hosts share their experiences navigating the local regulatory landscape.

However, it is essential to note that operating a short-term rental without a valid license in Cook County is considered a misdemeanor, with each day of non-compliance constituting a separate offense. Fines and penalties can be imposed on hosts who fail to adhere to the vacation rental ordinance.

In conclusion, while Cook County has implemented a comprehensive regulatory framework for short-term rentals, its enforcement approach appears to be more balanced compared to some other major cities. The county is working to bring all operators into compliance through licensing requirements, complaint mechanisms, and potential penalties for violations. Despite the rules, some hosts continue to operate without full compliance, but they risk facing fines and legal consequences. Overall, Cook County can be considered moderately Airbnb-friendly, with a focus on responsible and legal operation of short-term rentals.

How to Start a Short-Term Rental Business in Cook County

Starting a short-term rental business in Cook County requires careful planning and adherence to local regulations. Follow these steps to successfully launch your vacation rental venture:

Research local regulations: Familiarize yourself with Cook County's Vacation Rental Ordinance and any additional requirements specific to your municipality. Ensure your property is eligible for short-term rental use and complies with zoning laws. Consult with the Cook County Land Services Department and your local planning department to confirm your property's eligibility and understand any restrictions or requirements.

Obtain necessary licenses and permits: Apply for a Cook County Vacation Rental License through the county's e-Permitting site. Provide the required property and contact information, self-certify liability insurance, and ensure compliance with Minnesota Department of Health (MDH) licensing requirements. Begin the licensing process well in advance of your intended rental start date to allow sufficient time for review and approval.

Prepare your property: Ensure your rental property meets safety standards and is equipped with the necessary amenities to provide a comfortable stay for guests. This may include furnishing the space, installing smoke alarms and carbon monoxide detectors, and providing essential items like linens and kitchenware. Consider the needs and preferences of your target audience when preparing your rental property. Invest in high-quality furnishings and amenities to create a memorable experience for guests.

Set up a booking and management system: Choose a reliable vacation rental platform, such as Airbnb or VRBO, to list your property and manage bookings. Develop a system for handling guest communication, check-ins, and check-outs, as well as cleaning and maintenance between stays. Automate as much of the booking and management process as possible to streamline operations and provide a seamless experience for guests.

Market your rental: Create an attractive listing with high-quality photos, a detailed description, and competitive pricing. Highlight the unique features and benefits of your property and its location. Utilize social media and other marketing channels to promote your rental and attract potential guests. Encourage satisfied guests to leave positive reviews on your listing, as this can significantly boost your visibility and credibility on vacation rental platforms.

Comply with tax obligations: Register with the Cook County Auditor to pay the required Lodging Tax on your short-term rental income. Collect and remit all applicable state and local taxes, including the Illinois Hotel Operators' Occupation Tax and any additional taxes specific to your municipality. Maintain accurate records of your income and expenses to simplify tax compliance and take advantage of available deductions.

Provide excellent guest service: Prioritize guest satisfaction by maintaining open communication, addressing concerns promptly, and going above and beyond to create a memorable experience. Solicit feedback from guests and use it to continuously improve your rental offering. Develop a comprehensive guest guidebook that provides essential information about your property, local attractions, and house rules to ensure a smooth and enjoyable stay.

By following these steps and staying informed about local regulations, you can successfully launch and operate a short-term rental business in Cook County. Remember to prioritize compliance, guest satisfaction, and continuous improvement to build a thriving vacation rental venture.

Who to Contact in Cook County about Short-Term Rental Regulations and Zoning?

For questions related to short-term rental regulations and zoning in Cook County, Illinois, hosts can contact the following departments and resources:

Cook County Land Services Department

  1. Phone: 218-387-3630
  2. Email: landservices@co.cook.mn.us
  3. Address: 411 W 2nd St, Grand Marais, MN 55604
  4. Website: https://www.co.cook.mn.us/government/departments/land_services/index.php

Cook County Vacation Rental Administrator

  1. Name: Andrew Beavers
  2. Phone: 218-387-3630
  3. Email: andrew.beavers@co.cook.mn.us

Cook County Building and Zoning Department

  1. Phone: 312-603-0500
  2. Email: info.bnz@cookcountyil.gov
  3. Website: https://www.cookcountyil.gov/agency/building-and-zoning

Cook County Assessor's Office (for tax classification questions)

Phone: 218-387-3650

Cook County Auditor (for lodging tax information)

Phone: 218-387-3640

In addition to these official resources, short-term rental hosts in Cook County may find the following online communities and forums helpful for sharing experiences, advice, and support:

  1. BiggerPockets Short-Term & Vacation Rental Discussions: https://www.biggerpockets.com/forums/311/topics/229122-advice-in-cook-county-il
  2. Airbnb Community - Cook County Forum: https://community.withairbnb.com/t5/Help-with-your-business/Cook-County-Illinois-creating-new-rules/m-p/1642943
  3. Reddit - /r/ChicagoSuburbs: https://www.reddit.com/r/ChicagoSuburbs/comments/x06y1i/short_term_renting/

By reaching out to the appropriate county departments and engaging with fellow hosts in online communities, short-term rental operators in Cook County can stay informed about local regulations, zoning requirements, and best practices for running a successful and compliant vacation rental business.

What Do Airbnb Hosts in Cook County on Reddit and Bigger Pockets Think about Local Regulations?

Discussions on platforms like Reddit, Bigger Pockets, and the Airbnb Community forums provide valuable insights into the experiences and opinions of short-term rental hosts in Cook County. Here are some key takeaways:

Navigating the registration process: In a Reddit thread titled "Anyone registered an Airbnb in Chicago?", a user sought advice on navigating the registration process for a 3-unit building. Commenters highlighted the importance of obtaining a business license, checking zoning requirements, securing liability insurance, and collecting applicable taxes.

Concerns about the impact of short-term rentals: A Reddit post titled "Unpopular idea: Follow NY limiting short-term rentals." sparked a discussion about the potential impact of short-term rentals on housing availability and rent prices in Chicago. While some users expressed concerns, others argued that the scale of short-term rentals in Chicago is much smaller compared to cities like New York and that they do not significantly contribute to housing shortages.

Condo association restrictions: In a Reddit thread titled "Question for anyone that hosts an Airbnb in Chicago", a user noted that most condo associations in the city do not allow owners to rent their units via Airbnb. This sentiment was echoed in an Airbnb Community forum discussion, where a host mentioned that their HOA had rules against partial rentals, preventing them from offering individual room rentals.

Risks of long-term Airbnb rentals: A Reddit post titled "Guest rented for 50 nights- refusing to check out and Airbnb is no [help]" highlighted the potential risks of accepting long-term rentals through Airbnb. The host advised against taking rentals over 30 days on the platform, recommending a formal lease and substantial deposit for such arrangements.

Legality of non-conforming units: In a Bigger Pockets forum discussion titled "Non legal garden unit chicago", a user sought advice on the risks associated with renting out a basement unit that did not fully comply with legal requirements. Respondents emphasized the potential issues with insurance coverage and fines if the unit was reported.

Adapting to changing regulations: A Bigger Pockets thread titled "What happens if regulations change in your market?" addressed concerns about the potential impact of evolving short-term rental regulations on established businesses. Hosts discussed the importance of closely monitoring local regulations and the possibility of "grandfathering" existing rentals.

These discussions highlight the diverse experiences and concerns of short-term rental hosts in Cook County, ranging from navigating registration processes and condo association restrictions to assessing the risks of non-conforming units and adapting to regulatory changes. While opinions vary, it is evident that hosts must stay informed about local regulations and carefully consider the potential challenges and opportunities associated with operating short-term rentals in the county.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.

⚡️
Reveal your property’s rental profitability

Buy this property and list it on Airbnb.