Lake Chelan Short-Term Rental Regulations

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Permit & Licensing

Short-Term Rental Operating License (Chelan Municipal Code Chapter 5.15)

This permit type does not require primary residence.

Application Process

Owners/operators apply through the City's online licensing portal. New license applications must be submitted by November 1 for the following operating year; renewals are due December 1 annually. The application requires owner and 'qualified person' contact information (24/7 availability within 30 minutes), zoning-district compliance, a parking diagram, occupancy/bedroom calculations, proof of good-neighbor-guideline distribution to neighbors within 250 feet, a life-safety inspection prior to initial approval (self-certification checklist required at each renewal thereafter), and proof of good standing on applicable local/state lodging and sales taxes. A business license and Washington State UBI number are also required.

Tax Obligations

Combined rate: 11.70% of gross rental income.

Collection: Operators register for a Washington State Uniform Business Identifier (UBI) and remit state/local retail sales tax and the special hotel/motel tax via excise tax return to the WA Department of Revenue; good standing on these tax obligations is a condition of STR license issuance/renewal.

Rental Limits

Lake Chelan does not impose an annual cap on the number of nights you can rent.

Occupancy & Density Limits

Two people per double bed or larger, excluding up to four children under age six; properties accommodating more than 10 tenants must be over 2,000 sq ft gross floor area and meet additional health/safety requirements.

Zoning & Restrictions

• STR licenses may only be issued in the Downtown Mixed Use (DMU), Tourist Mixed Use (TMU), Highway Service Commercial (C-HS), Waterfront Commercial (C-W), and Tourist Accommodation (T-A) districts; a 2025 amendment (Ord. 2025-1632) added the Special Use District (SUD), which requires a conditional use permit.
• STRs are not permitted in standard single-family/multi-family residential zones outside these 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

• A city life-safety inspection is required before the initial operating license is approved. Each annual renewal thereafter requires a completed self-certification checklist covering fire extinguishers, smoke alarms, carbon monoxide detectors, and appropriate egress.

Penalties for Non-Compliance

Progressive enforcement for non-safety/nuisance violations: first violation in a 12-month period draws a warning notice; a second offense may draw a second warning or a 90-day license suspension; a third offense within 12 months results in license revocation. Failure to renew, failure to meet approval criteria, or material misstatements in an application are grounds for immediate revocation. Operating a short-term rental without a valid license, or advertising/renting in a manner that violates chapter 5.15 standards, is a civil infraction. Operating a short-term rental in a zoning district that does not permit it is a criminal misdemeanor charge, subject to fines set by the City Council, and the owner must immediately terminate the rental agreement.

Compliance Checklist

Follow these steps to legally operate a short-term rental in Lake Chelan:

1. Meet safety requirements. A city life-safety inspection is required before the initial operating license is approved. Each annual renewal thereafter requires a completed self-certification checklist covering fire extinguishers, smoke alarms, carbon monoxide detectors, and appropriate egress.
2. Obtain liability insurance. $1,000,000 minimum.
3. Apply for Short-Term Rental Operating License. Submit application + $600 per unit fee.
4. Register for tax accounts. Set up lodging tax accounts with Washington State Department of Revenue.
5. Collect and remit taxes. 11.70% on all bookings.
6. Renew annually. $300 per unit renewal fee.

Frequently Asked Questions

Do you need a permit to run an Airbnb in Lake Chelan?

Yes. Operating a short-term rental — including an Airbnb or Vrbo — in Lake Chelan requires a Short-Term Rental Operating License.

Does Lake Chelan require a short-term rental to be your primary residence?

No. Lake Chelan 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 Lake Chelan?

Lake Chelan 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 Lake Chelan?

Short-term rental stays in Lake Chelan are subject to a combined 11.70% in lodging taxes. This combines 8.70% combined (6.50% state + 2.20% local, City of Chelan location code 0402) State & Local Retail Sales Tax + 3% Special Hotel/Motel Tax. Hosts are legally responsible; many booking platforms collect and remit them automatically on the host's behalf.