Delaware Short Term Rental Laws: AirBnB & Vacation Rental Regulations

Delve into Delaware's unique approach to short-term rentals, a landscape where definitions and regulations vary from statewide norms to city-specific rules. This concise guide explores the diverse regulations across Delaware's cities, offering insights into how these areas define and manage properties like AirBnBs.

Delaware’s Definition of a Short Term Rental

​​In Delaware, the definition of a short-term rental can vary depending on the locality. State law generally defines a short-term rental as any rental fewer than 120 days​​. However, in many Delaware towns, short-term rentals are defined as those offered for periods less than 30 days, typically covering beach houses, condos, apartments, private rooms, and cabins​​. Additionally, "tourist homes" in Delaware, which are specific accommodations without cooking facilities and with at least five permanent bedrooms, must charge lodging tax, aligning with the broader category of short-term rentals​​.

An example of exceptions to this definition can be seen in Dover, Delaware. Dover's city ordinance limits hosts to renting out their properties for a total of 30 days in a calendar year. This ordinance includes several regulations, such as requiring owners to have a short-term rental license, mandating owners to be permanent residents and live in the home when not renting it out, and setting a maximum number of guests based on the 

Starting a Short Term Rental Business in Delaware

To start a short-term rental business in Delaware complete the following steps:

1. Local Zoning Check: Before launching a short-term rental in Delaware, it's crucial to verify local zoning regulations. Many towns in Delaware have specific zoning laws that may restrict or entirely prohibit short-term rentals, or limit them to certain zones​​.
2. Obtaining Permits: Most municipalities in Delaware require hosts to obtain local permits or licenses to operate short-term rentals legally. The fees for these permits can vary. For instance, Rehoboth Beach charges a $150 annual fee, while Lewes requires a $100 rental license​​.
3. Fire Safety: Rentals must comply with state fire safety laws, including having functional fire extinguishers, smoke detectors, escape routes, and adhering to fire code. Regular fire marshal inspections are required. Additional requirements apply to units with pools or hot tubs​​.
4. Building and Health Codes: Short-term rentals must adhere to state standards for electrical, plumbing, and egress. Local health officials may conduct periodic housing inspections to ensure compliance​​.
5. Permits and Licenses: As mentioned, securing the necessary permits and licenses from local municipalities is essential​​.
6. Tax Registration: Hosts need to register with the Delaware Division of Revenue for collecting and remitting state and local taxes on rentals​​.
7. Permit Fees: Fees for permits or licenses are required, varying by location.
8. Taxes: Registration for tax collection and remittance involves handling various state and local taxes.

Given the dynamic nature of short-term rental laws and regulations, it's recommended to consult local authorities or a legal professional for the most current and comprehensive information. The specific office or contact person may vary depending on the locality within Delaware.

Short Term Rental Licensing Requirement in Delaware

• Local Permits or Licenses: Most Delaware municipalities require hosts to obtain local permits or licenses to legally operate short-term rentals. The specifics may vary by location. For example, Rehoboth Beach has an annual fee of $150, while Lewes requires a $100 rental license​​.
• Tax Registration: Hosts must register with the Delaware Division of Revenue to collect and remit state and local taxes on rentals​​.

License Renewals for Short Term Rentals in Delaware

Renewing a license for a short-term rental in Delaware involves a clear but locality-specific process. Understanding the nuances of local regulations is vital for seamless operation and compliance.

For short-term rental licenses in Delaware, the renewal process largely depends on the specific rules set by local municipalities. However, a general framework can be outlined:

• Notification and Online Renewal: A few months before the expiration date of your license, you will receive a renewal notice via email. This notice guides you on how to access the online renewal application in DELPROS, the online professional licensure system of Delaware​​.
• Log-in and Application: To renew, log in to your DELPROS account, answer the necessary questions, and use a credit card to pay the renewal fee​​.
• Continuing Education Units: During renewal, you may be required to attest that you have completed the required Continuing Education Units (CE), depending on when your license was issued​​.
• Late Renewal: If the license is not renewed before the expiration date, a late renewal application can be filed up to 30 days after the expiration date. This requires paying a late fee in addition to the standard renewal fee. Note that practicing with an expired license is illegal, and the license must be renewed before resuming operations​​.

The restrictions and additional regulations for short-term rentals in Delaware are diverse and largely dependent on local ordinances:

• Zoning Restrictions: Many towns in Delaware impose zoning regulations on short-term rentals. Some areas may fully prohibit them, while others limit them to certain zones. It's important to verify that zoning laws in your area allow for short-term rentals​​.
• Local Permits and Licenses: Municipalities require hosts to obtain local permits or licenses. Fees and requirements vary by location. For instance, Rehoboth Beach charges a $150 annual fee, while Lewes requires a $100 rental license​​.
• Tax Registration and Compliance: Hosts must register with the Delaware Division of Revenue to collect and remit state and local taxes. An 8% state accommodations tax applies to rental transactions, including cleaning or service fees. Local taxes, like hotel taxes, may also apply and vary by jurisdiction​​​​​​.
• Health, Fire, and Safety Regulations: Compliance with state health, fire, and safety regulations is mandatory. This includes having functional fire extinguishers, smoke detectors, appropriate escape routes, and adherence to fire code compliance. Food and beverages offered must meet state health codes, and the rental must adhere to state electrical, plumbing, and building standards​​.

Navigating the license renewal process and understanding the various restrictions for short-term rentals in Delaware requires diligence and an awareness of local laws. Staying informed and compliant ensures a smooth operation and avoids potential legal issues.

Required Documents for Delaware Short Term Rentals

To legally operate short-term rentals in Delaware, hosts are typically required to obtain local permits or licenses. The specific documents needed can vary by municipality. For example, in Rehoboth Beach, hosts are charged a $150 annual fee, and Lewes requires a $100 rental license​​. To apply for these licenses, applicants should use the DELPROS online licensing portal, which provides detailed instructions for submitting the necessary forms. Depending on the type of form, some can be uploaded directly to the application in DELPROS, while others must be mailed to the office with an acknowledgment in DELPROS​​.

While there is no specific guideline found for the duration for which original documents need to be kept for short-term rentals in Delaware, it is generally a good practice to maintain comprehensive records related to the rental. This includes keeping receipts, invoices, bank statements, and records of electronic transactions. Additionally, maintaining a detailed log of the days the property was rented out and the days used for personal purposes is crucial for tax classification and apportioning expenses. Good record-keeping practices are vital for tax purposes and provide a clear picture of the rental property’s performance​​.

Delaware Short Term Rental Taxes

In Delaware, short-term rental operators, such as those running an Airbnb, are required to collect and remit specific taxes from their guests. These include:

• State Lodging Tax: This is imposed by the Delaware Division of Revenue on the cost of the guest's stay.
• Local Lodging Tax: Depending on the location of the rental, local taxes may also apply, which can either be remitted to the local tax authority or the Delaware Division of Revenue​​.

• State Taxes: Lodging taxes are separate from state income taxes. While income tax is paid annually on taxable income after deductions, lodging tax is a percentage of the guest's stay cost and is collected from the guest at the time of billing​​.
• Federal Taxes: Similar to state taxes, federal income taxes are distinct from lodging taxes. The latter is not directly related to federal tax obligations but must be considered when reporting income from short-term rentals​​.

Operators of short-term rentals like Airbnb can leverage various tax write-offs to reduce their taxable income. These include:

• Marketing Expenses: Costs for property promotion, such as ads, postcards, and property signs​​.
• Operating Costs: Expenses for lockboxes, keys, cleaning, laundry, and utilities​​​​​​.
• Property Maintenance: This includes repairs, guest amenities, and any redesign or maintenance work​​​​​​.
• Platform Fees: Airbnb platform fees are deductible​​.
• Travel and Meeting Expenses: Costs incurred for work-related travel, meetings with other property hosts, and business meals​​.
• Home Office Expenses: If managing the rental property from home, a portion of home office costs like furniture, insurance, power, water, and internet bills can be deducted​​.

These deductions can significantly reduce the taxable income for short-term rental operators, making it essential to maintain accurate records and receipts.

Short Term Rental Rules By Delaware City

Delaware's major cities implement short-term rental regulations to balance the interests of residents and tourists, with a focus on maintaining community integrity and ensuring safety standards. Compliance with local ordinances and regulations is key for operating successfully in these areas.

Wilmington, Delaware Short-term Rental Laws

In Wilmington, Delaware, the short-term rental regulations have been a topic of ongoing discussion and revision. The city has been working towards implementing new rules and restrictions for short-term rentals, with an emphasis on ensuring proper management and compliance with local laws. However, as of my last update, there weren't specific details available about the current state of these regulations or their enforcement. For the most accurate and up-to-date information on short-term rental rules in Wilmington, it's advisable to consult the city's official website or contact local authorities directly.

Dover, Delaware Short-term Rental Laws

In Dover, Delaware, there currently isn't a specific ordinance that directly addresses short-term rental properties. However, the city has been actively working on drafting an ordinance to regulate these properties more stringently. Some proposed highlights of the ordinance include the requirement for property owners to obtain an annual short-term rental license, pay a license fee, and pass an inspection by the Dover Code Inspection Department for compliance with city property maintenance, life safety, and building codes. The ordinance also aims to limit the proximity of short-term rentals to each other, set occupancy limits, and restrict the number of days a property can be rented out per calendar year​​.

Additionally, short-term rental regulations in Delaware vary depending on the location and may include zoning laws, occupancy and safety standards, taxation, licensing, and insurance requirements. For example, Rehoboth Beach defines short-term rentals as lodging offered for periods of less than 30 consecutive days, and similar definitions are used in other towns. Most municipalities in Delaware require hosts to obtain local permits or licenses to legally operate short-term rentals, with fees and requirements varying by location. Hosts are also required to register with the Delaware Division of Revenue to collect and remit applicable state and local taxes on rentals​​.

Takeaway

In Delaware, navigating short-term rental regulations demands an understanding of varied city-specific rules. Each city's approach reflects unique priorities, from preserving neighborhood character to balancing tourism benefits. Aspiring hosts should prioritize local ordinance research and compliance to thrive in Delaware's multifaceted short-term rental market.