Traverse City Short-Term Rental Regulations

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Permit & Licensing

Vacation Home Rental License

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

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:

1. 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.
2. Obtain liability insurance. $1,000,000 minimum.
3. Apply for Vacation Home Rental License. Submit application + $200 fee.
4. Register for tax accounts. Set up lodging tax accounts with Michigan Department of Treasury.
5. Collect and remit taxes. 6% on all bookings.
6. Renew annually. $200 renewal fee.

Frequently Asked Questions

Do you need a permit to run an Airbnb in Traverse City?

Yes. Operating a short-term rental — including an Airbnb or Vrbo — in Traverse City requires a Vacation Home Rental License.

How much does a short-term rental permit cost in Traverse City?

A Vacation Home Rental License in Traverse City costs $200 per year.

Does Traverse City require a short-term rental to be your primary residence?

No. Traverse City allows non-owner-occupied short-term rentals, so investment properties can qualify provided you hold the required permit.

How many days a year can you short-term rent in Traverse City?

Traverse City does not cap the number of nights per year you can short-term rent, though permitting, zoning, and occupancy rules still apply.

What taxes do you pay on a short-term rental in Traverse City?

Short-term rental stays in Traverse City are subject to a 6% Michigan Use Tax (Lodging). Hosts are legally responsible; many booking platforms collect and remit it automatically on the host's behalf.

What are the penalties for short-term rental violations in Traverse City?

Penalties run up to $500 per day minimum.