How to Run an Airbnb in Chicago Without Getting Fined
Updated: Jan 23
Airbnb provides a platform for property owners with a spare room to rent to connect with guests. Owners and investors in Chicago can use the Airbnb platform to list their homes with photographs, amenities, and details for their target guests.
Travelers in Chicago browse the ads, and when they discover the perfect property to rent, they can easily (and securely) reserve and pay.
However, short-term rental restrictions are popping up all over the country, including a ban on one-night rentals, in an effort to curb the large parties that have become a regular annoyance in some neighborhoods. Here's what you need to know about these limits, which will hopefully help you better grasp Chicago's laws and regulations so you can avoid paying hefty fines.
Renting out your home for a short length of time might fall into a variety of categories, such as:
Shared housing unit
Bed & breakfast
The city of Chicago has license or registration procedures for all types of hosts. Read on to learn more about them.
Shared Housing Unit Registration
The City of Chicago's Shared Housing Ordinance, which went into effect in 2016, compels hosts to register their shared housing units with the city before listing them on home-sharing sites like Airbnb. The City Council approved a reform package in September 2020, which contains the following amendments that affect hosting:
Instead of using home-sharing platforms like Airbnb, hosts must now register and renew their shared housing units directly through the Department of Business Affairs and Consumer Protection's Shared Housing Registration Portal. Each unique address that is used as a shared housing unit requires its own registration.
For each newly approved Shared Housing Registration, as well as approved annual renewals, hosts must pay a cost of $125.
Registration applications that are awaiting approval or that are being appealed by the City of Chicago will be unable to host until they are authorized.
In their listing advertisement, hosts of all types of accommodations, not only shared housing units, must provide their license number.
Additional information about shared housing rules in Chicago is available from the city, including requirements such as occupancy limits, guest records, and minimum stay lengths. Violations of these conditions may result in the suspension or revocation of your registration number. There's also the possibility of fines. For more information, refer to the City of Chicago's website. You may also visit BACP’s FAQ page or contact BACP for more information.
Shared Housing Unit Operators
The City of Chicago considers you a Shared Housing Unit Operator if you plan to list more than one shared housing unit and requires you to obtain a specific license. The Shared Housing Unit Operator License application process and fees can be found here.
Bed & Breakfast Licensing
For a "bed and breakfast," the city of Chicago requires a license. The Municipal Code section 4-6-290 details the licensing process and responsibilities of a bed and breakfast licensee.
Bed and breakfasts may use platforms like Airbnb to market or list their rentals, but they must first register with BACP and gain approval before doing so. On their listings, hosts must include their property's license number. The City of Chicago's Business Licensing page has further information, including fees and procedural information.
Vacation Rental Licensing
A license is required by the City of Chicago for a "vacation rental." Section 4-6-300 of the Municipal Code details the licensing process and responsibilities of a vacation rental licensee.
Vacation rentals may advertise or sell their rentals on sites like Airbnb, but they must first register with BACP and gain approval before doing so. On their listings, hosts must include their property's license number. The City of Chicago's Business Licensing Page has further information, including fees and procedural information.
A hotel license is required by the City of Chicago. Section 4-6-180 of the Municipal Code details the licensing process and responsibilities of a hotel licensee.
Hotels may use platforms like Airbnb to market or sell their rentals, but they must first register with BACP and gain authorization before doing so. On their listings, hosts must include their property's license number. The City of Chicago's Business Licensing page has further information, including fees and procedural information.
The Chicago Zoning Ordinance governs the city's zoning laws and land use. To check if your listing violates any zoning rules or use definitions, consult the Zoning Ordinance — as well as 2016, 2017, and 2020 home sharing changes to the Municipal Code here.
On the listing price, including any cleaning fee, Chicago adds a 4.5% Hotel Accommodations Tax, a 4% Shared Housing Surcharge, and a 2% Domestic Violence Surcharge for reservations of 29 nights or less. These taxes and fees are collected by Airbnb in Chicago and remitted to the city. Here's a link to more information.
For reservations of 29 nights or less, Cook County charges a 1% Hotel Accommodations Tax on the listing price, including any cleaning fee. Airbnb collects and remits this tax in Cook County.
According to this Illinois Department of Revenue publication, the state of Illinois imposes certain hotel taxes that may apply to your listing. In Illinois, Airbnb collects and remits these taxes.
If your unit is subject to restrictions imposed by a homeowners association or board of directors, you must certify that the association or board has not passed bylaws barring you from renting it out as a vacation rental.
As required by law, you must acquire homeowner's fire, hazard, and liability insurance, as well as general commercial liability insurance with limits of at least $1,000,000 per occurrence.
The Department of Buildings of the City of Chicago will inspect your unit. Additional costs may occur as a result of the inspection, such as required modifications, repairs, and associated permits fees.
You'll have ongoing housekeeping expenses, such as keeping track of guest registrations, providing soap, towels, and linens, and cleaning and sanitizing the vacation rental after each guest leaves.