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HEAVILY REGULATEDevery claim verified 2026-07-16 against the sources below

Is a short-term rental legal in Chicago, IL?

Short-term rentals (31 days or fewer booked through a platform) are legal in Chicago but tightly controlled under the Shared Housing Ordinance (MCC Ch. 4-13, 4-14, 4-16, 4-17 and 4-6-300). Every unit needs an approved BACP shared housing registration ($250/year) before it is advertised or rented; hosts with 2+ registered units also need a $500 two-year Shared Housing Unit Operator License, and units rented outside a licensed platform need a vacation rental (regulated business) license instead. Units must be lawfully established dwellings with 6 or fewer sleeping rooms and must not be in a voter-petitioned Restricted Residential Zone (concentrated in Wards 13 and 23), on the Prohibited Buildings List (~2,400 buildings whose owners opted out), or on the Scofflaw/Problem Landlord lists. Single-family homes and units in 2-4 unit buildings must be the host's primary residence with max 1 rental per building; in 5+ unit buildings there is no primary-residence rule but no more than one-quarter of units or 6 units (whichever is less) may be STRs. Occupancy is capped at 1 person per 125 sq ft, rentals under 10 hours and overlapping bookings are banned, and guests pay a 10.5% city tax (4.5% hotel tax + 6% surcharge) plus Cook County and Illinois hotel taxes. Fines run $2,500-$10,000 per offense and the city actively enforces, including a 2026 lawsuit against Airbnb; platforms (which must hold city intermediary licenses) register units in bulk and remit city taxes for hosts.

At a glance

Unhosted whole-home rentalConditional
Hosted rental (host present)Conditional
Primary residence requiredNot verified
Guest capNone verified
Rules apply to stays under32 days

Primary residence requirement depends on building type: required for single-family homes and 2-4 unit buildings (max 1 active rental per building, primary residence defined as lived in at least 245 days/year, MCC 4-14-010); NOT required in buildings with 5+ units, capped at the lesser of one-quarter of units or 6 units per building (BACP 2026 guide; MCC 4-14-060). Exceptions via Commissioner's Adjustment ($360 application fee), active-military duty, or legacy vacation rental licenses held as of 6/22/2016. No fixed guest cap; maximum occupancy is 1 person per 125 sq ft of floor area or building-code capacity, whichever is less (MCC 4-14-050(b)). Rentals of 32+ days do not require registration (BACP 2026 guide). Rentals under 10 consecutive hours, more than one rental per 10-hour period, overlapping bookings, serving alcohol to guests, and hosting parties/events for compensation ('egregious condition') are prohibited. Units in RRZ precincts, on the Prohibited Buildings List, Scofflaw List, or Problem Landlord List, or barred by HOA bylaws/lease terms are ineligible. Hosts must be natural persons (MCC 4-13-260(a)(8)).

What you need to operate

RequirementAuthorityCostOfficial source
Shared Housing Unit Registration Chicago Dept. of Business Affairs and Consumer Protection (BACP)
Required before advertising or renting any unit for 31 days or fewer via a platform; apply via the Shared Housing Registration Portal (chicago.gov/sharedhousing). Platforms bulk-register listed units (MCC 4-13-230/4-14-020) but BACP determines eligibility; registration number must appear on every listing. Fee raised from $150 to $250 effective 2026-01-01.
 $250 per year
renewal: annual
 source
Shared Housing Unit Operator License (SHUOL) BACP
Required for any host with 2 or more shared housing registrations (MCC Ch. 4-16); issued only to individuals (sole proprietor), one per host, in addition to per-unit registrations. Fee raised from $250 to $500 effective 2026-01-01.
 $500 per 2-year license
renewal: 2 years
 source
Vacation Rental License (Regulated Business License) BACP
Units rented short-term outside the shared-housing/platform registration path need a vacation rental license under MCC 4-6-300 (same building-type/primary-residence limits, insurance, guest-record and posting duties). BACP's 2026 fee notice lists Regulated Business License at $1,000/2 years but does not name vacation rentals specifically, so cost is left null - see needs_review.
 Not verified
renewal: 2 years
 source
Insurance (vacation rental licensees) MCC 4-6-300(f)(1)
Vacation rental licensees must carry homeowner's fire/hazard/liability insurance plus commercial general liability of at least $1,000,000 per occurrence naming the City as additional insured. For platform-booked shared housing units, the licensed intermediary must provide $1,000,000-per-occurrence liability coverage for guests (MCC 4-13-220(b)).
 Not verified source
Short Term Residential Rental Intermediary License (platforms, e.g., Airbnb) BACP (MCC 4-13-200)
Platforms must hold a city license, bulk-register hosts' units, remit taxes, provide guest liability insurance, remove ineligible listings, and file registration reports twice monthly plus data reports to BACP and aldermen (MCC 4-13-220 through 4-13-240; monthly data reporting strengthened by SO2024-0013637, passed 2025-05-21). Tiered license fees per COFA/BACP: $250 (1-9 units) up to $10,000 (1,000+ units), plus $60/unit.
 $250-$10,000 per year (tiered by unit count) plus $60 per unit
renewal: annual
 source

Taxes on guests & hosts

TaxRateApplies toPlatform collectsOfficial source
Chicago Hotel Accommodations Tax 4.5% of gross rental or leasing charge All hotel accommodations including vacation rentals and shared housing units (MCC 3-24). Licensed intermediaries remit city taxes and surcharges on hosts' behalf per BACP 2026 registration guide; hosts booking off-platform must open a tax account and remit directly. Yes source
Chicago Vacation Rental and Shared Housing Surcharge 6% of gross rental or leasing charge (4% Shared Housing Surcharge funding homeless services + 2% Domestic Violence Surcharge), for a 10.5% total city rate Vacation rentals and shared housing units only (effective 12/1/2018; was 4% before) Yes source
Cook County Hotel Accommodations Tax 1% of gross rental or leasing charge Short-term lodging in Cook County, including home share rentals (per City of Chicago COFA analysis, Nov. 2025) Not verified source
Illinois Hotel Operators' Occupation Tax 6% of 94% of gross receipts Rentals of rooms/dwellings for periods under 30 days; short-term rentals are included in the definition of 'hotel', and hosting platforms meeting the 're-renter' definition are directly subject effective 7/1/2025 (IDOR Bulletin FY 2025-28); stays of 30+ consecutive days under binding contract (permanent residents) are exempt Yes source

Enforcement

PenaltiesViolations of the Shared Housing Ordinance carry fines of $2,500-$10,000 per offense (BACP Short-Term Shared Housing Registration Guide, 2026). Under the posted code text: operating a vacation rental without a license is $2,500-$3,000 per offense with each day a separate offense (MCC 4-6-300(i)); permitting criminal activity/egregious conditions is $2,500-$5,000 per offense (MCC 4-14-050(a)); renting a unit after final ineligibility notice escalates from $500-$1,000 (within 14 days) to $1,500-$3,000 (days 15-27) to $5,000 (day 28+, each day separate) (MCC 4-14-050(i)); failure to remove an ineligible listing is $1,500-$5,000 (MCC 4-14-060(g)). Registration may be suspended or revoked for a single egregious condition (drug trafficking, prostitution, gang activity, violence, pay-to-enter parties) or 2+ incidents of illegal activity/objectionable conditions in 12 months (BACP 2026 guide); revocation lasts at least 2 years (MCC 4-14-090(d)); exceeding the 5+ unit building cap exposes ALL registrations/licenses in the building to revocation (MCC 4-14-090(b)); corporation counsel may seek injunctions.
Platform liabilityPlatforms operate under city intermediary/advertising-platform licenses and are fined $1,500-$3,000 per offense per day for violating Chapter 4-13 (MCC 4-13-410); they must remove listings the commissioner rules ineligible, register units in bulk, report data (twice-monthly registration reports; bimonthly departmental and aldermanic reports; monthly reporting strengthened by SO2024-0013637, passed 2025-05-21), provide $1M guest liability insurance, and remit city taxes. Enforcement is active: the city sued Airbnb, Airbnb Living LLC and a host in Cook County Circuit Court for processing bookings for unregistered/unlicensed units and consumer-protection violations, seeking fines, disgorgement and injunctive relief (litigation active as of June 2026; CBS Chicago).
NotesBACP maintains the ineligibility list, Prohibited Buildings List (2,414 building entries on the city data portal as of 2026-07-16), and works with the City Clerk's Restricted Residential Zone list. Guest registration records must be kept 3 years. Building commissioner may mandate inspections; SHUO-operated units subject to inspection at least every 2 years (MCC 4-16-230).

Pending changes

What we could not verify (7)

  • Current consolidated Municipal Code text could not be fetched from codelibrary.amlegal.com (HTTP 403 even with browser headers); the code compilation PDF posted on chicago.gov reflects the 2016/2017 ordinance text. Current fee ($250/yr) and fine range ($2,500-$10,000 per offense) are verified via the official BACP 2026 guides and fee notice, but the exact current statutory text of the penalty sections (4-14-090 etc., amended since 2017) was not verified line-by-line; the section-level penalty figures quoted in enforcement come from the 2016/2017 code text and may have been raised by later amendments (COFA's Nov 2025 report still cited $1,500-$3,000 general fines while the BACP 2026 guide says $2,500-$10,000).
  • Vacation rental license cost set to null: BACP's 1/1/2026 fee notice lists 'Regulated Business License: $1,000 for a two-year license' and MCC 4-6-300 classifies vacation rentals as regulated business licenses, but no official source explicitly states the 2026 vacation rental license fee.
  • COFA (Nov 2025) states a 27.75% composite tax burden by including 10.25% Illinois/Chicago sales tax on rentals under 6 months; this sales-tax component could not be verified against an IDOR source (lodging is normally subject to HOOT rather than retail sales tax), so only the city 10.5% + Cook County 1% + state HOOT 6%-of-94% are listed as verified taxes. Total verified guest-facing burden is approximately 17.1%.
  • Cook County 1% hotel tax verified only via the City of Chicago COFA report, not a Cook County source; whether platforms collect the county tax was not verified against an official source.
  • Count of currently active Restricted Residential Zone precincts not precisely determined: the data portal dataset shows 192 records (79 original restrictions, 58 renewals, 55 redistricting amendments) across 75 distinct ward-precincts, overwhelmingly in Wards 13 and 23 (plus isolated precincts in Wards 11, 19, 41), and the City Clerk's paginated list shows ~4 pages; some zones may have lapsed (RRZ ordinances expire after 4 years unless renewed). Hosts must check the City Clerk RRZ list for their specific precinct.
  • No pending city-wide STR ordinance amendments (beyond routine RRZ petitions/renewals) were identified as of 2026-07-16, but City Clerk 'House Share Active Petitions' page was not enumerated.
  • Maximum-occupancy advertising requirements effective May 2025 (SO2024-0013637) verified via official COFA report and Councilmatic record; the signed ordinance text itself was not fetched.

Sources

A markdown mirror of this page lives at /chicago-il.md for AI tools and researchers.

STRWatch publishes educational information about short-term rental regulation, verified against the official sources linked above as of the date shown. It is not legal advice, and rules change — a city can move between our verification passes. For decisions with money at stake, confirm with the authority linked above or a local attorney.