Short-Term Rentals in Chicago: Everything You Need to Know in 2025

Chicago is one of the most visited cities in the country, so demand for vacation rental options stays consistently strong across a wide mix of housing units. At the same time, the city of Chicago enforces a detailed municipal code that regulates how shared housing units, vacation rentals and other dwelling units can operate on a daily basis.

For hosts, this means you can’t simply list a furnished apartment, set some cleaning fees and wait for bookings. Most legal short-term rentals in Chicago IL require an approved registration number, a completed registration process and strict compliance with rules tied to your primary residence, building type and the number of units in the property. Taxes from the city and Cook County also apply to the full listing price, including cleaning fees.

This guide breaks down exactly how those rules work so you can run a compliant short-term rental without unpleasant surprises.

What this guide covers

You’ll find a practical breakdown of:

• How Chicago defines shared housing units, short-term rentals and vacation rentals

• When a home must be your primary residence

• Whether a property qualifies under the city’s one quarter building cap

• How to register or obtain a license and display your registration number correctly

• What Airbnb collects for you and where you’re responsible for your own taxes

• What ongoing safety, documentation and guest-record requirements look like

Who this is for

This guide is written for:

• Hosts listing their primary residence as a shared housing unit

• Property managers handling multiple units throughout the city

• Owners or landlords evaluating rental arbitrage or vacation rental use

• Investors researching short-term rental income opportunities within Chicago’s regulations

If you want a clear sense of what the Chicago municipal code actually allows before opening your calendar for guests, this covers it.

Why this matters

Chicago uses a strict, data-driven system to monitor short-term rentals. The city relies on the Shared Housing Registration program, a Prohibited Buildings List, Restricted Residential Zones and detailed reporting requirements to track every registered unit. Operating without a valid registration number, advertising in a restricted building or ignoring required taxes can lead to fines, delisting and long-term restrictions on using that property for short-term rentals.

Chicago also applies several layers of taxes on short-term stays and even though Airbnb collects and remits most of them on bookings under 29 nights, hosts are still responsible for income reporting, documentation and compliance throughout the applicable calendar year.

What you’ll learn:

• Chicago’s primary residence expectations for shared housing units

• The full shared housing registration process and when a separate license is required

• All the major city, county and state taxes that apply to short-term rentals and what Airbnb collects on your behalf

• The safety standards, documentation rules and liability expectations required to keep a unit compliant year-round

Understanding Chicago’s Short-Term Rental Legal Framework

Chicago’s short-term rental laws are built around a few core definitions in the municipal code. Understanding these terms helps you figure out what you can legally operate, what type of registration you need and whether your building is even eligible in the first place.

Short-term residential rentals under the Municipal Code

Chicago defines a short-term residential rental as any dwelling unit or part of a dwelling that’s rented to guests for 31 consecutive days or fewer. This captures everything from a private bedroom in your primary residence to a fully furnished apartment listed on a platform like Airbnb.

The key phrase the city uses is "shared housing," a broad category that covers most residential rentals offered on a short-term basis. Within shared housing, the city separates properties into three buckets:

• Shared housing units — a room or entire home rented through an online platform

• Vacation rentals — whole-unit rentals that aren’t operated as hotels but still require licensing

• Bed and breakfasts — owner-occupied homes with limited guest rooms and minimal food service

If you’re renting short-term on a daily basis and it’s not a hotel, you’re almost always in one of these three categories.

Shared housing units vs. Vacation rentals

Chicago makes a sharp distinction between a shared housing unit and a vacation rental and it matters because the registration requirements aren’t the same.

Here’s the simple version:

Shared housing units

• Often tied to a primary residence, though not always

• Rented through a platform and must display a valid registration number

• Can include single-family homes, 2–4 unit buildings and certain units in larger buildings

• Must comply with Chicago’s shared housing rules, occupancy limits and building restrictions

Vacation rentals

• Entire dwelling units offered short-term

• Usually not owner-occupied

• Require a different license and stricter oversight

• Must follow additional operational rules that don’t apply to standard shared housing units

Both categories fall under the umbrella of short-term rentals — they’re just regulated differently.

Primary residence rules

Primary residence requirements affect whether you’re registering as a shared housing operator or applying for a vacation rental license. For many properties, especially single-family homes and 2–4 flats, Chicago expects the unit to be the primary residence of the host.

Primary residence typically means:

• You live in the unit regularly

• You maintain official documents at that address

• You treat it as your main home

If your listing is not your primary residence, you fall into a different set of rules and may need a license instead of just a registration number.

Building-level caps and eligibility

Chicago doesn’t just regulate the unit. It regulates the building.

For buildings with five or more housing units, the city caps short-term rentals at one-quarter of the units or six units, whichever is fewer. This limit applies no matter how many interested hosts live in the building.

On top of that, Chicago publishes two important lists:

• The Prohibited Buildings List — buildings where short-term rentals are entirely banned

• Restricted Residential Zones — areas where certain types of shared housing units can’t operate

A building’s eligibility has nothing to do with Airbnb or amenities. It’s tied to its classification and approval status under Chicago’s municipal code.

Before you do anything else — before pricing, before photos, before setting a cleaning fee — you need to confirm whether your building is even allowed to host short-term rentals.

Licensing Requirements and Eligibility

Chicago doesn’t allow short-term rentals without proper approval. Before you list anything — a spare bedroom, your primary residence or a second unit you manage — you need to know which authorization applies to your situation. The city separates operators into two main groups: those who need a Shared Housing Registration Number and those who must obtain a license on top of their registrations.

When do you need a registration number vs. a license

Every shared housing unit needs a valid registration number issued by the city of Chicago. You cannot advertise, list or accept reservations until the registration is approved — there’s no “pending” or grace period.

You need a registration number if:

• You are renting a room or entire unit in your primary residence

• You are renting a unit in a 2–4 unit building you live in

• You are renting a unit in a larger building that isn’t restricted and you’re staying within the allowed one-quarter cap

You need a license if:

• You operate a non-primary residence vacation rental

• Your unit is classified as a vacation rental under Chapter 4–6

• You manage multiple shared housing units and qualify as an operator

• You run a bed and breakfast under the city’s definitions

Think of it this way: Registration covers the unit. A license covers the operator.

Shared housing registration: Basic eligibility

Not every unit in Chicago is eligible for shared housing.

You can register a shared housing unit if:

• The property sits in a legal dwelling unit category

• The building is not on the Prohibited Buildings List

• The address is not inside a Restricted Residential Zone

• Your landlord or HOA explicitly permits short-term rental use

• Your unit respects the building’s total cap for short-term rental units

You must also provide accurate, up-to-date contact information for emergencies, inspections and compliance checks. The city expects transparency. Even small discrepancies — like mismatched addresses, missing documents or unclear lease terms — can delay approval.

Shared housing unit operator license (for multiple units)

If you manage two or more shared housing units — whether they’re in one building or across the city — Chicago requires a Shared Housing Unit Operator License.

This license applies to:

• Property managers overseeing multiple shared housing units

• Hosts running several furnished apartments as short-term rentals

• Anyone managing STRs on behalf of owners, including arbitrage operators

The operator license is separate from the registration numbers issued to each individual unit. Every unit still needs its own approved registration number. The operator license simply verifies that you are authorized to operate at scale.

Vacation rental license

If your listing is considered a vacation rental rather than a shared housing unit, you must obtain a Vacation Rental License. This typically applies to:

• Entire non-owner-occupied units

• Investment properties

• Whole-unit listings that do not meet primary residence rules

Vacation rentals follow stricter rules than shared housing units and the approval process includes additional documentation, inspections and compliance checks.

Licensing Requirements and Application Process

Chicago’s Shared Housing Registration system is structured, detailed and not something you want to rush. The good news is that once you understand the sequence, it’s straightforward. Here’s how to get your registration number (or license, if your property needs one) without delays.

Start with the shared housing registration portal

Everything begins in the city’s online system. You’ll create an account, enter your property details and choose whether you’re applying to register a shared housing unit, a vacation rental or seeking an operator license.

Expect to provide:

• The full address of your dwelling unit

• Building details, including total number of units

• Whether the unit is your primary residence

• Whether you’re the owner, tenant or operator

• Your full contact information

This becomes the foundation for all future compliance checks.

Gather the required documentation

Chicago reviews every piece of information closely. Having your documents ready before you start will save you a lot of time.

You’ll typically need:

• Government-issued ID showing your Chicago IL address

• Proof of primary residence if applicable (utility bill, voter registration, lease, property tax bill)

• Ownership documents or a lease with explicit permission to offer short-term rentals

• If you’re an operator: entity documents and proof you manage multiple shared housing units

• Local contact details for emergency and inspection purposes

• A floor plan or unit description, depending on the building type

• For vacation rentals: documents supporting entire-unit use and license eligibility

The city doesn’t accept incomplete submissions. If something is missing, your application stalls until you fix it.

Submit your application

Once you’re sure everything is eligible and you’ve gathered your paperwork, you’ll submit:

• All required documents

• A full description of the unit

• Emergency contact information

• Ownership or lease details

• Proof that your listing complies with the Chicago municipal code

The system reviews everything at once. Chicago doesn’t accept partial submissions and there’s no “fix this later” option.

Pay the applicable fees

Depending on what you're registering, you’ll pay fees tied to the:

• Unit registration

• Shared Housing Operator License (if you manage 2+ units)

• Vacation Rental License (if needed)

Fees apply to the applicable calendar year, so renewals will come around annually.

Wait for approval

Approval times vary, but the biggest delays come from:

• Incorrect addresses

• Missing primary residence proof

• Lease agreements without explicit short-term rental permission

• Buildings already maxed out under the one-quarter cap

Once approved, you’ll receive a unique registration number for your unit.

You must display this number everywhere — on your listing, your site, your ads and your rental agreements. If you operate without it, the city can shut you down immediately.

Operational Rules and Compliance Standards

Once you have your registration number or license, Chicago expects you to follow specific day-to-day rules. These aren’t suggestions — they’re built into the municipal code and the city enforces them through inspections, data reporting and platform monitoring. Staying compliant keeps your listing active and avoids unnecessary fines or headaches.

Listing and advertising requirements

Chicago requires full transparency in every place you promote your rental. That means your listing, your website and any platform you use must clearly show:

• Your official registration number

• A correct description of the unit and its layout

• The number of bedrooms, baths and sleeping areas

• Whether the guest gets the entire place or only part of the dwelling unit

• Any amenities, accessibility notes and building rules that apply

If your registration number is missing or incorrect, the city can order platforms like Airbnb to remove your listing. Chicago’s scraping tools pick up inconsistencies quickly, so accuracy matters.

Guest communication and on-site information

Hosts must make certain information easy for guests to find during their stay. Chicago requires:

• A clearly posted local contact number for emergencies

• An evacuation diagram near the unit entrance

• House rules that follow the building’s requirements

• Clear details about parking, noise expectations and shared spaces

If your building has limitations — like restricted amenities, quiet hours or elevator rules — disclose them upfront. Chicago expects full clarity about how guests can use the space.

Record-keeping requirements

The city requires hosts to maintain detailed guest records for at least three years. These records must include:

• Guest name

• Dates of stay

• Contact information

• Rental amount (including cleaning fees)

• Booking platform or method

It’s a simple step, but it matters. If the city requests verification or needs to review activity for the applicable calendar year, you must be able to produce these documents.

Occupancy and unit limits

Chicago sets occupancy rules to prevent overcrowding and ensure safety in multi-unit buildings. In short:

• Each dwelling unit has a guest limit based on square footage or legal occupancy

• Only certain unit types qualify for shared housing or vacation rental use

• Buildings with five or more housing units cannot exceed the one quarter cap

If you operate in a larger building, make sure you aren’t the seventh host in a place that only allows six.

Noise, safety and neighborhood rules

Chicago expects short-term rentals to operate without disrupting neighbors. Hosts must make sure guests follow:

• Noise and nuisance rules

• Trash and recycling schedules

• Entry and hallway guidelines

• Any HOA, condo board or landlord restrictions

The city can step in quickly if neighbors report problems. A few complaints may trigger inspections, record requests or even temporary suspension of your registration.

Platform compliance

Every short-term rental platform — Airbnb, Vrbo and others — must follow Chicago’s rules too. But the responsibility starts with you. If your listing:

• Doesn’t show your registration number

• Lists inaccurate information

• Is in a prohibited building

…the platform can be fined and they may remove your listing until the issue is fixed. In Chicago, platform compliance and host compliance work hand in hand.

Tax Obligations and Financial Requirements

Chicago applies several layers of taxes on short stays and hosts need to understand how these charges work before opening their calendars. The city of Chicago, Cook County and the state each apply their own rates. Some of these are handled automatically because Airbnb collects them, but others still fall on the host to manage. Getting this part right helps you avoid penalties, stay compliant for the applicable calendar year and keep your property running smoothly.

Taxes charged on stays in Chicago

For stays under 29 nights, visitors must pay several different charges tied to the total price — which includes cleaning fees and any extra fee the host adds.

Here’s what typically applies:

• Chicago’s accommodation charge

• Chicago’s shared-housing/related surcharge

• A surcharge that supports local safety initiatives

• Cook County’s hotel-related charge

• Illinois’ statewide lodging charge

All of these are calculated from the full stay amount that guests pay, no matter the location in the city.

Chicago taxes that Airbnb collects (and what hosts still handle themselves)

What Airbnb collects automatically

For most hosts, the good news is that Airbnb collects the Chicago-, county- and state-level lodging-related taxes automatically. This includes:

• The total stay value

• Any cleaning fees you add

• Extra amounts you pass on to guests

Because Airbnb collects these charges directly, hosts don’t need to submit separate returns for them. Still, the income from those stays must be reported during tax season and hosts should obtain their annual payout summaries to keep accurate records.

Income reporting for hosts

Even when a platform handles the lodging-related side, hosts are responsible for tracking income for federal and state reporting. This involves:

• Recording payout totals

• Tracking expenses related to the property (repairs, supplies, insurance, lease costs and so on)

• Separating personal use from hosting activity

• Knowing whether parts of the home were used to hire help or perform paid services

Operators exploring rental arbitrage, managing investment properties or paying a large mortgage will want to pay close attention to these amounts because deductions may improve long-term savings.

Document storage for the applicable calendar year

Chicago expects hosts to keep organized financial records for the full applicable calendar year. At a minimum, retain:

• Payout statements

• Guest payments (including cleaning fees)

• Any fee collected for extra services

• Receipts for expenses you pay out-of-pocket

• Communication logs with guests

• Payment summaries from each platform

If the department requests information or needs to verify something, you must be able to produce it quickly.

What to know if you’re managing multiple spaces

If you manage more than one Chicago property or if you operate as a small hosting business, you may be required to register as an operator with the city of Chicago in addition to managing your normal filing requirements. Larger portfolios often involve:

• Bigger taxes due to higher income

• More bookkeeping

• Additional oversight from the city

• Stronger recordkeeping across multiple locations

It’s worthwhile to consult an accountant who understands hosting activity in this country, especially if you’re scaling up.

Common Challenges and Solutions

Even when hosts follow Chicago’s expectations closely, certain problems show up again and again. Most issues stem from paperwork gaps, misunderstood regulations or hiccups with a platform. Here’s a look at the challenges hosts in Chicago and Chicago IL run into most — and how to avoid them.

Challenge: Missing or incorrect registration information

Chicago is strict about accurate host information. When hosts forget to register, enter the wrong address or submit incomplete documents, the department reviewing the application can pause everything.

Solution: Double-check your files before applying. Make sure any ID, lease, utility bill or permission letter lines up with the same location. If something changed recently, add a short note in your application. Clarity speeds up approvals and protects your property from delays.

Challenge: Taxes not matching guest payments

Because Airbnb collects lodging-related taxes, many hosts assume all financial obligations are handled automatically. Confusion tends to appear when payout summaries don’t match what guests actually paid, including cleaning fees or an added fee.

Solution: Track all payouts for the full applicable calendar year. Confirm that the amounts you receive from the platform match what you expect. Keep a monthly log so your income reporting stays clean and you have documentation ready if the department asks for it.

Challenge: Issues with landlords or building policies

Hosts who explore rental arbitrage or list a space they don’t own sometimes run into conflicts with a landlord. A building may be fully approved by the city of Chicago, but the owner still has the right to restrict hosting in the lease.

Solution: Get written permission before you host — even if the property is otherwise eligible. If you already listed without permission, pause operations and resolve it directly. Chicago supports owner-level restrictions and ignoring them can lead to eviction or costly disputes.

Challenge: Guest behavior causing neighbor complaints

Noise, hallway traffic and incorrect trash disposal are some of the fastest ways to draw complaints. A single person causing problems can trigger a review from the department.

Solution: Set expectations in your welcome message. Include quiet hours, entry instructions, trash rules and your contact number. It’s a small step that prevents conflict and protects your ability to host throughout the applicable calendar year.

Challenge: Confusion around platform settings

Hosts sometimes notice their site or platform listing isn’t showing updated information. This can cause inconsistencies in pricing, availability or taxes,

Solution: Review your listing regularly. If you’re using a channel manager or multiple platforms, sync them weekly. Make sure any new fee, calendar change or description appears everywhere. This keeps your property compliant and avoids misunderstandings with guests.

Challenge: Financial overwhelm when managing multiple locations

Hosts with several investment properties or multiple spaces in different locations often feel stretched. Tracking income, expenses, taxes and permissions can become a full-time job.

Solution: Set up a simple financial system. Keep a folder for each property. Store payout summaries, invoices, cleaning fees and any fee paid to cleaners or contractors you hire. If your hosting activity grows, consider using bookkeeping software or an accountant familiar with Chicago’s hosting environment. It saves time and gives you clearer insight into long-term savings and cost planning.

Penalties and Enforcement Actions

Chicago takes compliance seriously. Once a host is approved, the expectation is that they follow the laws, respect local regulations, keep financial records for the applicable calendar year and operate each property exactly as the city of Chicago requires. When something falls out of alignment — missing paperwork, issues with guests, inaccurate tax reporting or platform discrepancies — the city steps in quickly.

Here’s what enforcement looks like and how to avoid it.

Operating without proper registration

Trying to host without completing the required steps can lead to immediate enforcement. Chicago monitors every site and platform offering stays in the city and unregistered activity is easy for them to detect.

Possible outcomes:

• Temporary removal from the platform

• Fines from the department

• Restrictions on hosting for future weeks or longer

How to avoid it: Always register before accepting reservations. Even if you’re testing rental arbitrage or managing multiple locations, your paperwork must match what the city has on file.

Incorrect or outdated information

If the city finds inconsistencies — such as mismatched addresses, wrong contact information or missing approvals from a landlord — they can pause your ability to host until everything is corrected.

Possible outcomes:

• Requests for updated documentation

• Delays in renewals

• A hold on your listing until the issue is resolved

How to avoid it: Keep your information consistent across your lease, ID, application and platform listing. If something changes, update it immediately with the department.

Failure to handle taxes correctly

Even though Airbnb collects certain taxes for Chicago and Cook County, hosts still have responsibilities. If payouts don’t match what the city expects for the applicable calendar year, they will ask for clarification.

Possible outcomes:

• Back payments you must pay

• Additional fees

• Formal notices from Chicago’s finance teams

How to avoid it: Compare your platform payouts with your own records. Keep a monthly log so you can spot issues early.

Conclusion and Next Steps

Hosting in Chicago comes with structure, oversight and a stronger focus on transparency than many other parts of the country. Once you understand how the city of Chicago handles approvals, taxes, neighborhood expectations and financial tracking for the applicable calendar year, the process becomes far more manageable.

The biggest shift for most hosts is getting comfortable with documentation — making sure IDs match, keeping consistent records and staying aligned with what your property and location allow. The second shift is learning how your platform handles payments, how Airbnb collects local charges and what you still need to report yourself.

If you treat compliance as a simple part of your workflow — just like cleaning turnover, messaging guests or updating your calendar — you’ll find that Chicago’s hosting landscape offers steady demand, predictable income and room to explore different models, from traditional hosting to rental arbitrage or managing multiple investment properties.

What to do next:

• Confirm your property is eligible and allowed by your landlord or association

• Register through the correct department before accepting any reservations

• Review how your platform handles payouts, fees and automated taxes

• Keep clean records for the full applicable calendar year

• Create a simple message template that sets expectations for all guests

• Evaluate your long-term costs and potential savings if you plan to scale

A thoughtful approach keeps you compliant, protects your income and helps you build a hosting setup that works year after year.

Frequently Asked Questions

Here are practical questions Chicago hosts often ask — with answers that go beyond what’s covered in the guide.

1. Can Chicago hosts deduct cleaning supplies or contractor payments during tax season?

Yes. If you pay for cleaning products, laundry or someone you hire to help with turnover, those costs can generally be deducted as hosting expenses. Just keep receipts and track them for the applicable calendar year.

2. Does Chicago allow hosts to switch between different platforms during the year?

Yes. You can use multiple platforms or move between them, as long as each site shows accurate information and remains aligned with Chicago’s expectations. Just keep payout summaries organized so your taxes stay accurate.

3. Can a host operate one place in Chicago while living outside the city?

Sometimes. It depends on whether the property qualifies under Chicago’s expectations for non-owner arrangements and whether your landlord or building permits it. Many hosts use managers or co-hosts to handle the day-to-day.

4. What happens if a guest stays longer than expected?

If a guest extends their time, hosts should update that stay’s documentation, including the full amount they pay. For longer bookings, hosts may want to adjust policies to reflect things like parking, garbage routines or mid-stay cleaning.

5. Is it harder to host if you have more than one Chicago location?

It can be. Managing multiple locations means more recordkeeping, more oversight from the department and closer attention to how each property handles noise, guests, access and financial tracking. Many hosts eventually use software to stay organized.