Chelan County, Washington, passes new vacation rental regulations

Under a new code in Chelan County, Washington, the number of short-term rentals in the unincorporated county will be capped. Short-term rentals must also abide by zoning rules and register with the county for an annual short-term rental permit, among other rules.

Passage of the new rules follows two years of community discussion and a moratorium on new short-term rentals that began in August 2020. The moratorium stands until September 27, when the new code goes into effect.

The new regulations divide short-term rentals into different tiers according to occupancy capacity, with special rules for properties that accommodate more than 12 guests. All vacation rentals must operate out of an owner’s primary dwelling or a legally established accessory dwelling unit.

The code caps short-term rentals at 6% of total housing units in unincorporated Chelan County; in the Manson area, the cap is 9%. The caps apply to properties that house more than eight people and are non-owner occupied.

However, existing vacation rentals can be exempted from these caps if they were established before the moratorium and follow current rules. According to the county, vacation rentals currently make up around 7% of the housing stock in the unincorporated areas of the county. The number of Chelan County short-term rentals rose 55% from 2015 to 2019 and is currently estimated at approximately 1,500, according to a report prepared for the county.

Existing short-term rentals that cannot meet the new standards have one year to cease operating. Properties that were established illegally during the county’s moratorium on new short-term rentals are not eligible for a new permit.

Under the new regulations, owners are responsible for following rules on parking, garbage, noise, and occupancy. The county may revoke the licenses of vacation rental properties that have two noise disturbance violations within six months.

Vacation rentals must follow occupancy limits and apply for conditional use permits for larger events such as weddings, and designate an agent who can be available to respond to issues at the property within 60 minutes.

Chelan County short-term rental hosts must also collect state and local lodging taxes from their guests and pass them on to tax authorities. Both Airbnb and Vrbo collect state and local lodging taxes for Washington hosts.

Even though these marketplaces collect lodging taxes on behalf of their listings, Washington state hosts are still required to register with the state Department of Revenue and file lodging tax returns reporting their rental income.

Washington state vacation rental hosts who do not have platforms collecting taxes for them are responsible for registration, collection, and filing of all taxes due on their short-term rentals. MyLodgeTax can help Washington short-term rental hosts automate and simplify lodging tax compliance.

For more on short-term rental taxes in Washington state, see our state vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.