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.

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 (Chelan Municipal Code Chapter 5.15). 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 permit.

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. The host is responsible for collecting and remitting them.