Lake County, Illinois Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Lake County, Illinois?

Short-term rentals, such as those listed on Airbnb and VRBO, have become increasingly popular in recent years. However, many counties and municipalities have enacted regulations on these types of rentals. Here's what you need to know about short-term rental rules in Lake County, Illinois:

Short-Term Rentals Prohibited in Unincorporated Areas

Short-term rental of single-family homes for periods less than 30 days is prohibited in unincorporated areas of Lake County per the Unified Development Ordinance. Using a property in this manner is considered a retail sales and service use, not a residential use, and is not allowed in residential zoning districts. Violations are subject to enforcement action by the county.

Some Municipalities Allow Short-Term Rentals with Restrictions

While prohibited in unincorporated areas, some Lake County municipalities do allow short-term rentals, often with certain restrictions:

The Village of Lake Bluff allows short-term rentals of less than 30 days but requires property owners to obtain a license. There is a $250 annual registration fee. Rentals are limited to no more than 10 guests per night.

The City of Lake Forest considered allowing short-term rentals in 2019 but ultimately decided against it. Short-term rentals remain prohibited in all residential districts in Lake Forest.

Investors Seeking Short-Term Rental Properties

Despite the restrictions, some real estate investors are still interested in purchasing properties in Lake County to use as short-term rentals where allowed. One investor posted on the BiggerPockets forum looking for assistance buying and managing a short-term rental in the Grayslake, Gurnee, or Libertyville areas, aiming to attract visitors to Six Flags Great America and families attending Navy graduations.

However, investors should carefully research local regulations before purchasing a property with the intent to use it as a short-term rental. Rules vary significantly between municipalities within the county.

Starting a Short-Term Rental Business in Lake County

If you're considering starting a short-term rental business in Lake County, the first step is to determine if they are allowed in your location:

• Check if the property is in an unincorporated area of the county. If so, short-term rentals are prohibited.
• If the property is within a municipality, contact the city to find out their specific short-term rental regulations. Rules vary between cities and villages.
• If short-term rentals are allowed, obtain any required licenses or permits from the municipality. For example, Lake Bluff requires an annual license and a $250 registration fee.
• Ensure your property meets all safety requirements and guest occupancy limits. Provide information to guests on local laws and regulations.

In summary, while short-term rentals are popular with travelers, they are heavily restricted in Lake County, Illinois. They are prohibited in unincorporated areas, and only allowed in some municipalities, often with permits required and limits on guest numbers. Thoroughly research the rules in your specific location before attempting to start an Airbnb rental business in Lake County.

Short-Term Rental Licensing Requirements in Lake County

While short-term rentals are prohibited in unincorporated areas of Lake County, some municipalities within the county do allow them with certain restrictions and licensing requirements. However, Lake County itself does not appear to have a short-term rental licensing program based on a review of the county's official website.

The Lake County website states that short-term rentals of less than 30 days are prohibited in residential zoning districts in unincorporated areas of the county per the Unified Development Ordinance. Using a property for short-term rentals in these areas is considered a retail sales and service use, not a residential use, and violations are subject to enforcement action by the county.

The website provides information on applying for various county permits and licenses, such as temporary use permits for special events. However, there is no mention of a short-term rental permit or license that can be obtained from Lake County.

Violations of the county's short-term rental prohibition may be subject to penalties under the Lake County Administrative Adjudication Ordinance and Illinois law. However, specific fines for operating without a license are not listed, as the county does not offer short-term rental licenses.

While Lake County, Illinois itself does not license short-term rentals, some of the municipalities within the county have their own licensing requirements. For example:

1. The Village of Lake Bluff allows short-term rentals but requires property owners to obtain an annual license and pay a $250 registration fee.
2. The City of Lake Forest considered allowing short-term rentals in 2019 but ultimately decided against it. They remain prohibited in residential districts.

Property owners interested in operating a short-term rental should check with their specific municipality to determine if they are allowed and what the licensing requirements and fees may be, as they vary between cities and villages in Lake County. But at the county level, Lake County does not appear to offer licenses, as short-term rentals are prohibited in unincorporated residential zones.

Required Documents for Lake County, Illinois Short-Term Rentals

Based on a review of the Lake County government website, there does not appear to be a short-term rental licensing or registration program at the county level in Lake County, Illinois. The county's website states that short-term rentals of less than 30 days are prohibited in unincorporated residential areas per the Unified Development Ordinance.

The Lake County website provides information on applying for various county permits, such as temporary use permits for special events. However, there is no mention of any required documents or application process specifically for short-term rentals.

This is likely because Lake County itself does not allow short-term rentals in its unincorporated areas and therefore does not have a licensing program with documentation requirements. The county defers to its municipalities to regulate short-term rentals within their boundaries.

For example, the Village of Lake Bluff, a municipality located within Lake County, does allow short-term rentals of less than 30 days with restrictions. Lake Bluff requires short-term rental operators to register annually and pay a $250 fee. The registration form asks for basic information about the applicant and property.

So in summary, while some individual cities and villages within Lake County have their own short-term rental regulations and required documents, Lake County itself does not appear to have any, as rentals under 30 days are not permitted in its unincorporated residential zones based on the information provided on the county's website. Requirements vary between municipalities, so it's important for short-term rental operators to check their specific town's rules.

Lake County Short-Term Rental Taxes

While Lake County itself does not allow short-term rentals under 30 days in its unincorporated areas, short-term rental operators in municipalities within the county that do allow them are subject to various state and local taxes:

Illinois Hotel Operators' Occupation Tax

The state of Illinois imposes a Hotel Operators' Occupation Tax of 5.98-6.17% on the rental price, including any cleaning fees, for stays of 29 nights or less. This tax applies to short-term rentals as well as traditional hotels and motels. It is administered by the Illinois Department of Revenue.

Municipal Taxes

Some cities and villages within Lake County have their own short-term rental taxes in addition to the state tax. For example:

1. Addison imposes a 5% Hotel-Motel Room Tax on the rental price and fees for stays of 29 nights or less.
2. Prospect Heights charges a 5% Hotel Operators' Occupation Tax on the rental amount and fees for rentals of 30 nights and shorter.
3. Oak Park has a 4% Hotel/Motel and Transient Occupancy Rental Unit Tax on stays of 30 nights or less.

Municipal taxes are on top of the state tax and are remitted to the local tax authority, not the Illinois Department of Revenue. Rates and rules vary between municipalities.

Sales Taxes

In addition to specialized hotel/motel taxes, short-term rentals are also subject to state and local sales taxes in Illinois. The state sales tax rate is 6.25%. Municipal and county sales taxes may also apply. Cleaning fees are subject to sales tax but damage deposits and optional charges like pet fees generally are not.

Deductions and Write-Offs

Short-term rental operators can deduct certain expenses to reduce their taxable income. Common deductions include:

1. Mortgage interest
2. Property taxes
3. Cleaning and maintenance costs
4. Utility bills
5. Insurance premiums
6. Depreciation of furniture and appliances used in the rental

Consult a tax professional to determine which deductions you qualify for and how to claim them properly. Good recordkeeping is essential.

Overall, between state hotel taxes, municipal rental taxes, and sales taxes, the total tax rate on short-term rentals in Lake County can be over 10%, depending on the exact location. It's important for hosts to understand their tax obligations, collect the appropriate taxes from guests, and remit payments to the proper state and local authorities. Failing to comply with tax laws can result in penalties and legal issues.

Illinois Wide Short-Term Rental Rules

While many of the regulations around short-term rentals in Illinois are set at the local level by cities and counties, there are a few state laws and proposals that impact Lake County hosts:

No Statewide Regulations Currently in Place

As of 2024, Illinois does not have a standardized set of laws governing short-term vacation rentals across the state. The Illinois General Assembly has yet to pass comprehensive legislation specifically addressing the legalities and requirements for listing residential properties on platforms like Airbnb and VRBO.

This lack of statewide oversight leaves much of the regulation of short-term rental activities up to local municipalities and counties. As a result, the rules can vary widely depending on where in Lake County the rental property is located.

Proposed Short-Term Rental Act (SB1735)

In 2021, the Illinois State Senate considered SB1735, known as the Short-Term Rental Act. The bill aimed to limit the authority of local governments to ban or restrict short-term rentals.

Key provisions of the proposed legislation included:

1. Prohibiting cities and counties from enacting ordinances that would ban short-term rentals or "unreasonably restrict" the use of properties as short-term rentals
2. Allowing local governments to implement certain regulations to protect health and safety or address nuisances
3. Requiring short-term rental units to be properly maintained and in compliance with applicable building and fire codes

However, the bill did not advance in the General Assembly. So for now, cities and counties retain broad authority to regulate short-term rentals as they see fit.

Mandatory State Hotel Tax Collection

While not specific to short-term rentals, Illinois requires all "hotel operators," which includes short-term rental hosts, to collect and remit the state Hotel Operators' Occupation Tax.

The tax rate is 5.98-6.17% of the rental price, depending on the exact location. It applies to all rentals of 29 nights or less, even if the host is not required to obtain a local short-term rental license or permit.

Hosts must register with the Illinois Department of Revenue to properly collect and pay the hotel tax. Failure to do so can result in fines and penalties.

So in summary, short-term rental operators in Lake County should be aware of the statewide hotel tax obligation. But beyond that, most of the applicable regulations, such as licensing, zoning, and additional local taxes, will be determined by the specific municipality where the property is located. Hosts should carefully research their city and county's short-term rental ordinances to ensure full compliance.

Does Lake County Strictly Enforce Short-Term Rental Rules?

Based on discussions in real estate investing forums like BiggerPockets, Lake County appears to take a fairly strict stance on short-term rentals compared to some other areas. The county explicitly prohibits rentals under 30 days in its unincorporated residential zones.

One investor on BiggerPockets noted, "Short term rentals are banned in unincorporated areas of Lake County at the county level." They pointed out that while some municipalities like Grayslake may not have their own restrictions yet, the county-wide ban still applies in unincorporated parts of those towns.

So Lake County itself is not particularly Airbnb-friendly, as it does not allow short-term rentals at all in its jurisdiction. The county's website makes clear that using a property for rentals under 30 days in unincorporated residential areas is considered a code violation subject to enforcement and penalties.

That said, the county's rules only apply to unincorporated areas - incorporated municipalities can set their own short-term rental policies. So the friendliness to Airbnb can vary significantly between different cities and villages within Lake County.

While some hosts may attempt to operate despite the rules in unincorporated areas, they would be doing so illegally and at risk of enforcement action from the county. The county has the authority to issue citations, fines, and even property liens for code violations related to short-term rentals.

Overall, Lake County has some of the strictest short-term rental rules in the region, as it bans the practice entirely in unincorporated residential zones. Hosts looking to operate legally will need to carefully select properties within municipalities that explicitly allow short-term rentals, as the county itself is not at all friendly to Airbnb and similar platforms. Operating illegally risks significant penalties if caught in the county's jurisdiction.

How to Start a Short-Term Rental Business in Lake County

Starting a short-term rental business in Lake County requires careful planning, as regulations vary significantly depending on the property's location within the county:

1. Check if the property is in unincorporated Lake County. If so, stop - the county prohibits short-term rentals under 30 days in its residential zones. You cannot operate legally in unincorporated areas.
2. If the property is in an incorporated municipality, thoroughly research that city or village's specific short-term rental regulations. Rules vary widely between localities within the county. Some may allow short-term rentals, while others prohibit them.
3. If short-term rentals are allowed in your municipality, determine what permits, licenses, fees, and taxes are required. For example, Lake Bluff requires an annual license and $250 registration fee to operate legally.
4. Obtain required licenses and permits from your municipality before listing your property or accepting any bookings. Operating without proper licensing can result in fines and penalties.
5. Ensure your property is up to code, has working smoke detectors, and meets all safety requirements. Some municipalities require inspections before issuing a short-term rental permit.
6. Secure proper insurance coverage. Typical homeowners insurance may not cover short-term rental activities. Look into supplemental policies or rental-specific coverage.
7. Create a detailed listing with high-quality photos and an accurate description of your property and amenities. Be upfront about any quirks or potential downsides.
8. Establish clear house rules and communicate them to guests before and during their stay. Rules protect your property and help avoid conflicts with neighbors.
9. Implement a thorough cleaning and sanitizing process between guests. Cleanliness is more important than ever for short-term rentals.
10. Keep detailed records of all income and expenses related to your short-term rental. Consult a tax professional to ensure you are properly collecting and remitting all applicable state and local taxes.

The key to successfully starting a short-term rental business in Lake County is doing your due diligence on local regulations. Never assume you can operate without checking municipal rules, as the county itself bans short-term rentals in unincorporated areas. By thoroughly researching requirements, obtaining proper permits, and implementing best practices, you can set your Lake County short-term rental up for success.

Who to Contact in Lake County about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations or want to report a potential violation in unincorporated areas of Lake County, contact:

Lake County Planning, Building, and Development Department
500 W Winchester Road, Unit 101
Libertyville, IL 60048
Phone: 847-377-2600
Fax: 847-984-5854

For general zoning inquiries or to report work without permits, improper property use, building code violations, or issues with junk, debris, and inoperable vehicles in unincorporated areas, call the Building and Engineering Division at 847-377-4444.

To report unpermitted woodland disturbance in unincorporated Lake County, contact the Planning and Development Services Division at 847-377-4444.

For short-term rental related noise complaints in unincorporated areas, contact the Lake County Sheriff's Office at 847-377-4000. Provide the address, specific location, or Property Index Number (PIN) if available, along with the nature of the violation and the time/day of week it usually occurs.

If the property is located within a city or village, contact that municipality's zoning department or code enforcement division for information on their specific short-term rental regulations and to report potential violations. Rules and enforcement vary between municipalities within Lake County.

Hosts operating legally in municipalities that allow short-term rentals may find it useful to connect with other local operators to share experiences and best practices. While there does not appear to be a Lake County-specific host group, there are active short-term rental host forums on platforms like BiggerPockets and Reddit where you can seek advice from experienced hosts in the Chicago area and beyond.

What Do Airbnb Hosts in Lake County on Reddit and BiggerPockets Think about Local Regulations?

Discussions on real estate investing forums provide insight into how short-term rental operators view the regulatory environment in Lake County:

On BiggerPockets, one investor noted that "Short term rentals are banned in unincorporated areas of Lake County at the county level." They pointed out that while some municipalities like Grayslake may not have their own restrictions yet, the county-wide ban still applies in unincorporated parts of those towns.

Another BiggerPockets user was looking for help buying and managing a short-term rental in Lake County, targeting tourist traffic from Six Flags Great America and Navy graduation families. They were particularly interested in the Grayslake, Gurnee, and Libertyville areas.

An Airbnb Superhost on BiggerPockets posted about wanting to start co-hosting for other hosts in Illinois, specifically mentioning Lake, DuPage and Will counties as target areas. This suggests there is demand for experienced short-term rental managers in the region.

On the Chicago Suburbs subreddit, a user complained about a horrific experience with their landlord and property manager in Lake County. They believed there was a statewide law requiring 24 hours notice before landlords could enter a unit. However, the property manager claimed that law did not apply in Lake County.

Commenters suggested the tenant print out the relevant law and post it on their door before showings to make potential renters aware of the landlord not following proper notice requirements. They also recommended contacting a tenant's rights lawyer or legal aid organization.

While these posts don't directly address the short-term rental environment, they highlight the importance of understanding local landlord-tenant regulations, which can impact hosts as well.

Overall, the consensus from forums seems to be that the legality of short-term rentals in Lake County depends heavily on whether the property is in an incorporated municipality or an unincorporated area subject to the county's ban.

Hosts should carefully research the rules for their specific location, as regulations can vary significantly between different cities and towns within the county. Those in unincorporated areas likely cannot operate legally at all under the current county ordinances.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.