District of Columbia short-term rental law finally goes into effect

Short-term rental hosts in Washington, D.C., now need to obtain permits, limit the amount of time they rent properties every year, and abide by other new rules as a three-year-old ordinance finally goes into effect.

The Washington, D.C., City Council passed the law in late 2018, but the District’s Department of Consumer and Regulatory Affairs didn’t announce that it was ready to implement and enforce the measure until December of 2021. The agency began accepting applications for short-term rental licenses January 10, 2022. Operators need to be licensed by April 10, 2022, when the department will start enforcing the law.

Under the ordinance, hosts must obtain a permit (good for two years) and may only rent out their primary residence for short terms, which are defined as stays of 30 or fewer continuous nights. Short-term rental operators must own the property and may only offer unhosted short-term rentals — when hosts are not present on site — for 90 days a year. There’s no limit on the number of stays allowed during a calendar year for hosted rentals.                                                     

However, operators can apply for an exemption from the bill’s 90-day annual cap on unhosted short-term rentals, an exception that was passed with residents serving in the military or diplomatic corps in mind.

Hosts with properties belonging to condominium buildings, co-ops, or homeowner associations must attest that these associations allow short-term rentals. Operators must provide a phone number where they or a representative can be reached 24 hours a day, and rentals must have smoke detectors and liability insurance, among other requirements. The measure also imposes civil penalties for operating illegal short-term rentals.

Washington, D.C., hosts are also required to collect the District’s sales tax on accommodations from guests and pass it on to tax authorities. Short-term rental platforms such as Airbnb and Vrbo must collect lodging taxes on behalf of their hosts for any transactions booked through them.

Washington, D.C., isn’t the only community in the region to pass short-term rental regulation in recent years. Vacation-rental ordinances have been adopted in Alexandria, Arlington County, Montgomery County, Fairfax County, and Annapolis.

Baltimore also passed a law in 2018 that went into effect in 2019. Like the D.C. ordinance, the measure limits new short-term rentals to primary residences and requires vacation rental hosts to be licensed. 

Baltimore’s law requires hosts to include their city short-term license number on any advertisement or listing. Online short-term rental marketplaces must make sure vacation rentals have valid licenses before advertising them, and marketplaces must include rentals’ license numbers in listings. Short-term rental operators are also required to collect city transient occupancy tax and state lodging tax from their guests. They must register with both Baltimore and Maryland tax authorities and file tax returns with each agency.

MyLodgeTax can automate and simplify short-term rental tax compliance, including registration and filing with District tax authorities. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.

Cover photo by Canva