Philadelphia County, Pennsylvania Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Philadelphia County

To legally operate a short-term rental (like an Airbnb or VRBO) in Philadelphia County, property owners must obtain the necessary licenses and permits from the city. The requirements differ based on whether the rental is a primary residence (Limited Lodging) or a non-primary residence (Visitor Accommodation).

For Limited Lodging, where the host lives in the property for at least half the year, a Limited Lodging Operator License is needed. This requires first obtaining a Commercial Activity License and a Zoning Permit for Limited Lodging use.

For Visitor Accommodations, where the property is not the host's primary residence, a Rental License with a hotel designation is required. This also necessitates securing a Commercial Activity License and a Zoning Permit for Visitor Accommodation use.

All short-term rental operators in Philadelphia must also register for a Business Income and Receipts Tax (BIRT) account with the city. The BIRT tax rate is currently 5.99% on taxable net income.

Hosts are required to install smoke alarms in each bedroom, hallways near bedrooms, and on each floor, as well as carbon monoxide alarms within 15 feet of bedrooms. Properties built before 1978 must submit a Lead Safety Certification.

Enforcement of these regulations began in earnest in 2023, with the city working with booking platforms like Airbnb to identify unlicensed listings. Violators can face significant fines from the Department of Licenses and Inspections.

Anecdotally, some Philadelphia hosts have expressed frustration with the licensing process and costs associated with bringing older properties up to code. However, the city maintains that the rules are necessary to ensure guest safety and manage the impact of short-term rentals on neighborhoods.

One host with 60 properties claimed ignorance of the two-year-old regulations when his unlicensed listings were removed by Airbnb at the city's request in July 2023. City Councilman Mark Squilla noted that problem rentals, including some that were rented to teenagers and used for disruptive parties, spurred the city to step up enforcement.

Short-Term Rental Licensing Requirements in Philadelphia County

To legally operate a short-term rental in Philadelphia County, property owners must obtain the necessary licenses and permits from the city. The requirements differ based on whether the rental is a primary residence (Limited Lodging) or a non-primary residence (Visitor Accommodation).

For Limited Lodging rentals, where the host lives in the property for at least half the year, a Limited Lodging Operator License is needed. The requirements include:

• Obtaining a Commercial Activity License
• Securing a Zoning Permit for Limited Lodging use
• Applying for the Limited Lodging Operator License
• Paying the $150 license fee

For Visitor Accommodations, where the property is not the host's primary residence, a Rental License with a hotel designation is required. The process involves:

1. Obtaining a Commercial Activity License
2. Securing a Zoning Permit for Visitor Accommodation use
3. Applying for the Rental License with hotel designation
4. Paying the license fee of $63 per dwelling unit

All short-term rental operators must also register for a Business Income and Receipts Tax (BIRT) account with the city.

Licenses and permits can be applied for online through the eCLIPSE system or in person at the Permit and License Center in the Municipal Services Building. Processing times are typically within 5 business days for online applications. In-person applications filed by appointment are processed while the customer waits.

Rental Licenses must be renewed annually. A late fee of 1.5% of the license fee is charged for each month the license is overdue if renewed more than 60 days after expiration.

Enforcement of short-term rental regulations began in earnest in 2023. The city works with booking platforms like Airbnb to identify and delist unlicensed properties. Violators can face significant fines from the Department of Licenses and Inspections.

It's crucial for short-term rental operators in Philadelphia to carefully follow the licensing requirements to avoid penalties and ensure the legal operation of their rentals. The city maintains that these regulations are necessary to protect guest safety and manage the impact of short-term rentals on local neighborhoods.

Required Documents for Philadelphia County Short-Term Rentals

To legally operate a short-term rental in Philadelphia County, property owners must obtain several documents from the city. The specific requirements depend on whether the rental is categorized as Limited Lodging (primary residence) or Visitor Accommodation (non-primary residence). Here are the essential documents needed:

1. Commercial Activity License: This license is a prerequisite for conducting any business in Philadelphia, including short-term rentals. It can be obtained at no cost by providing business tax account information and following the application procedure outlined by the Department of Licenses & Inspections.
2. Zoning Permit: A zoning permit is required to ensure the property is allowed to be used as a short-term rental based on its location. Limited Lodging rentals need a Zoning Permit for limited lodging use, while Visitor Accommodations require a Zoning Permit for visitor accommodation use.
3. Limited Lodging Operator License: This license is specifically for hosts who rent out their primary residence for 180 days or less per year. It can be obtained after securing a Commercial Activity License and Zoning Permit for limited lodging use.
4. Rental License with Hotel Designation: For Visitor Accommodations where the rental is not the host's primary residence, a Rental License designating the property as a hotel is needed. This also requires first obtaining a Commercial Activity License and Zoning Permit for visitor accommodation use.
5. Business Income and Receipts Tax (BIRT) Account: All short-term rental operators must register for a BIRT account with the city. This is used to file and pay business taxes on rental income, with the current tax rate at 5.99% on taxable net income.
6. Lead Certification and Inspection Report: For properties built before 1978, hosts must submit a Lead Safety Certification and inspection report to the Department of Public Health.

These documents can be applied for online through the city's eCLIPSE system or in-person at the Permit and License Center. Processing times are typically within 5 business days for online applications.

Failure to obtain the proper licenses and permits can result in significant fines and penalties from the Department of Licenses and Inspections. The city began strongly enforcing short-term rental regulations in 2023.

Philadelphia County Short-Term Rental Taxes

Short-term rental operators in Philadelphia County are subject to several taxes at the state and local level. It's crucial to understand your tax obligations to remain compliant and avoid penalties. Here are the main taxes that apply to short-term rentals in Philadelphia:

1. Pennsylvania Hotel Occupancy Tax: The state imposes a 6% hotel occupancy tax on all short-term rentals under 30 days. This tax is collected from guests and remitted to the Pennsylvania Department of Revenue.
2. Philadelphia County Hotel Tax: In addition to the state tax, Philadelphia County levies a 1% local hotel tax on short-term rentals. This brings the total hotel occupancy tax rate in Philadelphia to 7%.
3. Philadelphia City Hotel Tax: The City of Philadelphia charges an additional 8.5% hotel tax on the total amount received from short-term rentals. Hosts must collect this tax from guests and remit it to the city monthly.
4. Business Income and Receipts Tax (BIRT): Short-term rental income is subject to the city's BIRT. As of 2023, the net income tax rate is 5.81%, and the gross receipts tax rate is 0.001415. Operators must file and pay this tax regardless of profitability.
5. Net Profits Tax (NPT): Rental hosts are also liable for the NPT, which is based on the net profits earned from the business activity in Philadelphia. The 2023 NPT rate is 3.75% for residents and 3.44% for non-residents.
6. Wage Tax: If a short-term rental business employs staff, the operator must withhold the city's Wage Tax from employee paychecks and remit it to the city. The current Wage Tax rates are 3.75% for residents and 3.44% for non-residents.

It's important to note that tax rates are subject to change annually, so hosts should refer to the City of Philadelphia's website for the most current rates and filing deadlines.

Potential Tax Deductions

While short-term rental operators face several tax obligations, there are also potential deductions that can help offset the tax burden. Some common tax write-offs for Philadelphia rental properties include:

1. Maintenance and repairs costs
2. Mortgage loan interest
3. Property depreciation
4. Home office and travel expenses
5. Employee and contractor payments
6. Legal and professional services fees
7. Pass-through deduction (up to 20% of business profit for self-employed landlords)

To claim these deductions, rental hosts must maintain accurate records and receipts for all business-related expenses. It's highly recommended to work with a tax professional or property management company to ensure proper tax compliance and maximize eligible deductions.

By understanding the applicable taxes and potential deductions, short-term rental operators in Philadelphia County can better manage their finances and optimize their business for success.

Pennsylvania-Wide Short-Term Rental Rules

While most short-term rental regulations in Pennsylvania are determined at the local level, there are a few statewide rules that all hosts should be aware of, particularly related to taxes.

Pennsylvania requires short-term rental operators to collect and remit a 6% hotel occupancy tax on stays shorter than 30 days. This tax rate matches the state sales tax. In Allegheny and Philadelphia counties, an additional 1% local hotel tax is collected by the state and remitted to those counties. Some other counties may impose their own hotel taxes collected at the county level.

Before collecting any occupancy taxes, short-term rental hosts must register with the Pennsylvania Department of Revenue for a Sales, Use, and Hotel Occupancy Tax License. This can be done online through the state's myPATH system. Once registered, hosts are required to file returns and remit the collected taxes electronically using myPATH, even if no taxes were collected in a given filing period.

It's important to note that occupancy taxes are separate from income taxes. Income earned from short-term rentals (less than 30 days) should be reported on the Pennsylvania Personal Income Tax Schedule C. For rentals of 30 days or more, the income is reported on Schedule E for rent and royalty income.

Some short-term rental platforms, like Airbnb and Vrbo, may collect and remit the state occupancy tax on behalf of hosts. However, it's ultimately the host's responsibility to ensure compliance with all tax laws. Hosts should verify with their platform whether they are handling the taxes or if the host needs to collect and remit them directly.

Failure to comply with Pennsylvania's short-term rental tax laws can result in penalties, interest, and legal action. Hosts who have been operating without collecting taxes may be able to take advantage of a voluntary disclosure agreement (VDA) with the Department of Revenue, which could potentially waive some penalties and interest.

Beyond taxes, Pennsylvania does not currently have any statewide laws specifically regulating short-term rentals. However, this does not mean that hosts can operate without restriction. Most cities and counties have their own zoning laws, permitting requirements, and other rules that apply to short-term rentals. It's crucial for hosts to research and comply with the regulations in their specific municipality to avoid fines and other penalties.

Does Philadelphia County Strictly Enforce STR Rules?

Based on discussions in real estate investing forums like BiggerPockets and Reddit, it appears that Philadelphia County has not been strictly enforcing short-term rental regulations until recently. Many hosts have been operating without the required licenses and permits for years with little consequence.

However, this is set to change in 2023. As of January 1st, the city began working with platforms like Airbnb and Vrbo to identify and remove listings that don't have the proper licenses. The booking sites will require hosts to provide their license numbers, and they can be held liable for any violations. This indicates a serious effort by the city to crack down on illegal short-term rentals.

Compared to some other major cities, Philadelphia has been relatively lax about short-term rental enforcement up to this point. Cities like New York, San Francisco, and Santa Monica have had strict rules and active enforcement for several years now. Philadelphia is playing catch-up in that regard.

Despite the past lack of enforcement, operating without the required licenses is still illegal and risky. With the city now partnering with Airbnb and other sites to remove unlicensed listings, hosts who skirt the rules risk getting shut down and facing significant fines. Some may try to continue operating under the radar, but it will be much harder with the platforms now being held accountable.

In summary, while Philadelphia has been somewhat Airbnb-friendly by default due to limited enforcement, that stance appears to be changing. The city is not as welcoming to short-term rentals as it may have seemed. Hosts who want to continue operating legally will need to get the required licenses and permits or risk getting caught in the new enforcement push. The days of Philly being a regulation-free zone for short-term rentals seem to be ending.

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

Starting a short-term rental business in Philadelphia County requires careful planning and adherence to local regulations. Here's a step-by-step guide to help you navigate the process:

1. Research local regulations: Familiarize yourself with Philadelphia's short-term rental laws, zoning requirements, and licensing procedures. Understand the differences between Limited Lodging (primary residence) and Visitor Accommodation (non-primary residence) categories. Review the city's official website and consult with a local real estate attorney to ensure compliance.
2. Determine your rental strategy: Decide whether you'll rent out a portion of your primary residence or a separate investment property. Consider factors like location, property type, and target audience when making your decision. Analyze the local market to identify high-demand areas and competitive rates.
3. Obtain necessary licenses and permits: Apply for a Commercial Activity License and the appropriate Zoning Permit (Limited Lodging or Visitor Accommodation). Secure a Limited Lodging Operator License or a Rental License with hotel designation, depending on your rental type. Begin the licensing process early, as it can take several weeks to receive approvals.
4. Register for taxes: Obtain a Business Income and Receipts Tax (BIRT) account with the city. Familiarize yourself with the Hotel Occupancy Tax, Net Profits Tax, and other applicable taxes. Consult a tax professional to optimize your tax strategy and ensure proper reporting.
5. Prepare your property: Ensure your rental meets all safety requirements, including smoke and carbon monoxide alarms. If your property was built before 1978, obtain a Lead Safety Certification. Furnish and decorate the space to appeal to your target guests. Invest in high-quality amenities and professional photography to make your listing stand out.
6. Create a listing: Choose a reputable short-term rental platform like Airbnb or Vrbo. Craft a compelling listing description, highlighting your property's unique features and location. Set competitive rates based on market research. Optimize your listing with keywords, attractive photos, and a user-friendly cancellation policy.
7. Establish a management plan: Decide whether you'll manage the property yourself or hire a professional management company. Develop a system for handling bookings, guest communication, cleaning, and maintenance. Automate processes where possible to streamline operations and improve efficiency.
8. Promote your listing: Leverage social media, local tourism websites, and targeted advertising to attract guests. Encourage satisfied guests to leave positive reviews, as they greatly influence future bookings. Offer special promotions or discounts during slow periods to maintain steady occupancy.
9. Monitor and adapt: Regularly review your performance metrics, guest feedback, and local market trends. Be prepared to adjust your strategy as needed to optimize your revenue and meet changing guest preferences. Stay informed about regulatory changes and industry developments to remain competitive.

Starting a short-term rental business in Philadelphia County can be rewarding, but it requires diligence, attention to detail, and a willingness to adapt. By following these steps and staying compliant with local regulations, you'll be well-positioned to launch and grow a successful short-term rental venture.

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

If you have questions about short-term rental regulations or zoning in Philadelphia County, there are several key contacts and resources available:

Department of Licenses and Inspections (L&I)

1. For general questions, call 311 or (215) 686-8686 if outside Philadelphia.
2. For permit and code questions, schedule a virtual appointment, engage in a chat session (9am-1pm), or submit an online help form via the L&I website.
3. Mailing address:
   Department of Licenses and Inspections
   1401 John F. Kennedy Blvd., 11th Floor
   Philadelphia, PA 19102

Zoning and Planning Questions

Contact the Department of Planning and Development:

1. Email: planning.development@phila.gov
2. Phone: (215) 683-4601

Philadelphia Zoning

A local firm that assists with zoning and permit issues.

1. Phone: (267) 996-6464
2. Email: info@philadelphiazoning.com

Online Resources

• Comprehensive information on short-term rental requirements, including the application process, fees, and renewals, is available on the City of Philadelphia's website: https://www.phila.gov/services/permits-violations-licenses/rent-or-sell-property/rent-your-property-short-term/
• Frequently Asked Questions about short-term rentals in Philadelphia: https://www.phila.gov/documents/short-term-rentals-faqs/

Host Communities

Connecting with other local hosts can be a great way to get advice and stay up-to-date on regulations. Some useful communities include:

• Philadelphia Airbnb Hosts Facebook Group
  https://www.facebook.com/groups/phillyairbnbhosts/
• Airbnb Community Center - Philadelphia Hosts Forum
  https://community.withairbnb.com/t5/Philadelphia/bd-p/Philadelphia
• BiggerPockets Philadelphia Short-Term Rental Forum
  https://www.biggerpockets.com/forums/530-philadelphia

By utilizing these contacts and resources, you can get the most current and accurate information about operating a short-term rental in Philadelphia County. It's important to stay informed, as regulations can change over time. Engaging with the local host community is also invaluable for sharing experiences and strategies for success.

What Do Airbnb Hosts in Philadelphia County on Reddit and Bigger Pockets Think about Local Regulations?

Airbnb hosts in Philadelphia have expressed mixed feelings about the county's short-term rental regulations on forums like Reddit and BiggerPockets. Here are some key themes and experiences shared by local hosts:

Enforcement Concerns: In a Reddit thread, hosts discussed the city's announcement that it would start strictly enforcing short-term rental rules in January 2023. Some were skeptical that the city would follow through, with one user commenting, "Philadelphia isn't gonna enforce shit unless they can get the parking authority working on it." Others felt the city was serious this time, noting that Airbnb and other platforms would be liable for violations.

Impact on Businesses: A former Philadelphia Airbnb host on BiggerPockets shared their experience shutting down a 10-unit building due to the 2022 regulation changes. They made six figures in six months but had to close when the new rules took effect. The host now researches STR regulations to help inform other hosts.

Difficulty Finding Legal Rentals: In a Reddit post, a user looking for a short-term furnished rental in South Philly was told it would be nearly impossible to find a legal month-to-month lease. Commenters noted that Philadelphia has strict landlord-tenant laws to prevent landlords from drastically raising rents, making short-term rentals difficult.

Zoning and Permit Challenges: On BiggerPockets, a host shared their struggle to obtain a rental license for a triplex, as their zoning permit was denied due to the property being in a residential area that prohibits "visitor accommodations." The host is researching how to appeal to the Zoning Board of Adjustments.

Lack of Clarity: In an Airbnb Community thread, a new host in Philadelphia asked for guidance on local rules and regulations to ensure they were fully compliant before listing their property. This highlights the confusion some hosts face in navigating the complex regulatory landscape.

Overall, Philadelphia Airbnb hosts seem frustrated by the strict regulations and enforcement, which have forced some to shut down their businesses. Many find the rules unclear and the licensing process challenging, especially when it comes to zoning. However, some acknowledge that the city is trying to balance the economic benefits of short-term rentals with the need to preserve affordable housing and neighborhood character. As enforcement ramps up, hosts will need to carefully research and comply with local regulations to avoid penalties.

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.