Traverse City Short-Term Rental Regulations
| Permit | ✓ Required — Vacation Home Rental License ($200) |
| Primary Residence | Not required |
| Annual Day Limit | No limit |
| Tax Rate | 6% |
| Max Penalty | $500 per day minimum |
| Insurance | $1,000,000 liability required |
New to short-term rentals? Jump to the compliance checklist →
Permit & Licensing
Vacation Home Rental License
| Fee | Amount |
|---|---|
| Initial cost | $200 |
| Renewal | $200 / Annual |
This permit type does not require primary residence. Zoning restriction: Permitted in commercial and development districts (C-1, C-2, C-3, C-4, D-1, D-2, D-3, GTC, HR, I, T); prohibited in residential zones (R-1, R-2, R-3).
Application Process
Apply online through the city's portal with required documents; City inspection required before initial license is issued
Tax Obligations
| Tax | Rate | Authority |
|---|---|---|
| Michigan Use Tax (Lodging) | 6% | Michigan Department of Treasury |
Combined rate: 6% of gross rental income.
Collection: Platform auto-remit (Airbnb collects and remits Michigan 6% use tax automatically)
Rental Limits
Traverse City does not impose an annual cap on the number of nights you can rent.
Zoning & Restrictions
STRs allowed in C-1, C-2, C-3, C-4, D-1, D-2, D-3, GTC, HR, I, T districts; prohibited in R-1, R-2, R-3 residential zones; capped at 25% in C-1, C-2, D-2, and I districts
Insurance & Safety
Insurance
Operators must maintain at least $1,000,000 in liability insurance covering the property's use as a short-term rental.
Safety & Operating Requirements
- Fire escape plan displayed in each guest room
- Inspection by the City prior to issuing a new license
- Fire Marshal inspection every three years for continuously operated rentals
- Post noise ordinance hours in conspicuous location
- Post consumer fireworks ordinance in conspicuous location
- Self-inspection checklist required as part of annual license application
Penalties for Non-Compliance
Maximum penalty: $500 per day minimum.
Compliance Checklist
Follow these steps to legally operate a short-term rental in Traverse City:
- Meet safety requirements. Fire escape plan displayed in each guest room. Inspection by the City prior to issuing a new license. Fire Marshal inspection every three years for continuously operated rentals. Post noise ordinance hours in conspicuous location. Post consumer fireworks ordinance in conspicuous location. Self-inspection checklist required as part of annual license application.
- Obtain liability insurance. $1,000,000 minimum.
- Apply for Vacation Home Rental License. Submit application + $200 fee.
- Register for tax accounts. Set up lodging tax accounts with Michigan Department of Treasury.
- Collect and remit taxes. 6% on all bookings.
- Renew annually. $200 renewal fee.