Delaware’s combination of scenic beaches, historic small towns, and proximity to major East Coast cities makes it an appealing choice for short-term rental investors. Travelers visit for weekend getaways, business trips, and seasonal vacations—particularly along the state’s popular coastal areas.
While Delaware does not have a single statewide ordinance restricting or regulating Airbnb and similar platforms, owners must navigate a mix of state-level tax obligations and local municipal requirements. This article details what you need to know about starting a short-term rental business in Delaware, from collecting lodging taxes to adhering to city-specific rules.
Delaware’s Definition of a Short-Term Rental
Unlike some states that impose a specific day limit (e.g., 30 days or 90 days) to define short-term rentals, Delaware does not have a single, uniform definition. Instead, you’ll find that tax regulations and local ordinances often use their own thresholds for what qualifies as a “transient” or “vacation” rental. In many Delaware jurisdictions, a short-term rental refers to any stay under 30 days, but local rules may set different timeframes. As an investor, it’s important to confirm the precise definition and restrictions in your target city or county.
Starting a Short-Term Rental Business in Delaware
Because Delaware does not regulate short-term rentals at the state level beyond tax collection, most of the steps to start an Airbnb or Vrbo revolve around:
- Ensuring You’re Compliant With State Tax Obligations: Delaware has no statewide sales tax, but it does levy a public accommodations tax on hotels, motels, and other transient lodgings, which may apply to Airbnb-style properties.
- Securing Any Local Licenses: Depending on your location, you might need a general business license, a rental permit, or both. Towns and cities along the Delaware coast often have stricter rental requirements to address seasonal tourism and local community concerns.
- Checking Zoning and HOA Rules: If your property is in a homeowners association or a specific zoning district, you may encounter restrictions on nightly or weekly rentals. Always verify with your HOA documents and local zoning office.
Since local requirements can vary considerably, especially in popular beach towns, doing thorough research before listing your property can save you from fines or forced delistings later.
Short-Term Rental Licensing Requirement in Delaware
At the state level, Delaware does not require a dedicated short-term rental license. Rather, you may need a Delaware business license if your property generates rental income beyond a minimal threshold. The Delaware Division of Revenue manages business licensing, and you can register online if you need to collect and remit state taxes on your rental.
At the city or county level, requirements range widely. Some municipalities may simply ask you to register your rental for tax purposes, while others require an annual short-term rental permit, proof of adequate parking, or an inspection to ensure the dwelling meets safety standards. Always check your city or town’s official website or reach out to local planning departments to confirm whether they have special rules that go beyond the state’s basic tax obligations.
Delaware Short-Term Rental Taxes
While Delaware does not impose a general sales tax, it does have a Public Accommodations Tax that can apply to short-term lodging. Depending on your location, you may also owe local taxes or fees:
- State Public Accommodations Tax: Typically around 8% for hotels and similar lodgings, though the exact rate and rules can vary based on legislative updates. If a booking platform like Airbnb does not collect this tax on your behalf, you must register with the Delaware Division of Revenue and file the tax yourself.
- Local Taxes or Fees: Some municipalities, especially along the coast, levy an additional lodging or occupancy tax to fund beach maintenance, tourism promotion, or local infrastructure.
- Filing Frequency: The schedule for remitting taxes may be monthly, quarterly, or annually, depending on your total rental income. Check with both state and local tax offices for specifics.
Maintaining accurate records of all bookings, nightly rates, and fees will help you file these taxes correctly and avoid penalties.
Vacation Rental Tax Deductions
If you rent your Delaware property for more than 14 days a year and otherwise satisfy IRS criteria, you may qualify for several federal tax deductions tied to short-term rental ownership. Potential deductible expenses include mortgage interest, property taxes, maintenance, utilities, depreciation, and property insurance. Thoroughly document each expense and consult up-to-date IRS guidelines or a tax professional to ensure you’re taking advantage of every applicable deduction.
Short-Term Rental Regulations by Major Locations in Delaware
Wilmington
As Delaware’s largest city, Wilmington tends to treat short-term rentals much like any other rental property. While the city does not have a dedicated Airbnb ordinance, hosts should review zoning rules if they plan to operate in residential neighborhoods. You may need a standard Wilmington business license if your annual rental income exceeds certain thresholds. Additionally, if the platform doesn’t collect Delaware’s public accommodations tax for you, you’ll need to handle that directly with the state.
Dover
In Dover, the state capital, short-term rentals typically fall under the category of transient lodging if the stay is under 30 days. While Dover does not have an ordinance specifically banning or heavily regulating Airbnb, you must comply with local building codes and any applicable business licensing rules. Because Dover has a vibrant tourism and event schedule—especially related to Dover Motor Speedway—hosts should stay current on any temporary restrictions or event-specific regulations that may arise.
Rehoboth Beach
Rehoboth Beach is a top vacation spot in Delaware, known for its boardwalk and summertime attractions. The city has stricter rules on weekly rentals, occupancy limits, and noise violations to preserve neighborhood quality. Owners are often required to obtain a Rehoboth Beach rental license, which may involve an application fee and an annual renewal process. There is also a city lodging tax that comes on top of Delaware’s public accommodations tax, so you’ll need to file accordingly or make sure your platform remits all applicable taxes.
Lewes
Situated near Cape Henlopen State Park, Lewes is a popular waterfront destination where short-term rentals play a significant role in tourism. The city issues annual rental licenses, and owners are advised to confirm local zoning that allows vacation rentals. Safety inspections or certifications may be required, particularly for older or historic homes. Like Rehoboth, Lewes typically enforces local lodging taxes alongside the state tax.
Newark
Newark, home to the University of Delaware, attracts parents, sports fans, and academic visitors year-round. While Newark has not enacted a blanket ban on short-term rentals, it does rely on standard rental and noise regulations that can affect nightly or weekly stays, especially in residential neighborhoods. Depending on your income, you may need a city business license, and you’ll likely owe state taxes if you rent under 30 days. Keep an eye on local council meetings since college towns sometimes adopt new rental restrictions to address community concerns.
Takeaway
Delaware’s short-term rental market benefits from beach tourism, historic charm, and proximity to major metropolitan centers. Although the state doesn’t impose a comprehensive short-term rental license requirement, operators must understand how Delaware’s public accommodations tax applies and whether any local taxes or fees also come into play. The largest variations in regulation arise at the municipal level, where you may be required to obtain rental licenses, follow strict occupancy limits, or submit to property inspections.
Before listing a property on Airbnb, Vrbo, or another platform, check the official websites of both the Delaware Division of Revenue and your local city or county government. Staying informed about changes to local ordinances or tax rates will help you keep your operation compliant—and your guests satisfied—across the First State.
%201.webp)
%203.webp)
%201.webp)
.webp)
