Short-term rental hosts in Olympia, Washington, must get permits under new law
- Sep 9, 2021 | Jennifer Sokolowsky
Olympia, Washington, has passed a new short-term rental law that will require vacation rental hosts to register with the city and limit how many properties they can operate, among other rules. The new ordinance goes into effect September 27.
Under the new regulations, property owners who rent out a whole home for short terms (defined by the city as a “vacation rental unit”) will need to apply for a city short-term rental permit, which must be renewed biannually. Operators may only hold two vacation rental permits. However, short-term rental hosts currently operating more than two properties will be legacied under the new ordinance as long as the properties comply with other rules.
Vacation rental hosts who offer “homestays,” where the host is present throughout guests’ stays, do not need a permit. Operators of both vacation rental units and homestays are required to have city and state business licenses, which are distinct from city short-term rental permits.
Short-term rental operators are also required to carry liability insurance and overnight guests are limited to 10 people, or two people per bedroom, whichever is less. Hosts must designate a local contact person who can be available 24 hours a day, seven days a week, within 15 miles of the short-term rental or within Thurston County. Short-term rental operators must also follow other rules on parking, zoning, and health and safety measures.
The City Council, after years of discussion, approved the law in order to protect the city’s affordable housing supply and maintain neighborhood integrity. Currently, vacation rentals make up 0.8% of Olympia’s housing units.
According to the law, Olympia vacation rental operators must also collect state and local lodging taxes from their guests and pass them on to tax authorities. Both Airbnb and Vrbo collect state and local lodging taxes for Washington hosts.
Even though these marketplaces collect lodging taxes on behalf of their listings, Washington state hosts are still required to register with the state Department of Revenue and file lodging tax returns reporting their rental income.
Washington short-term rental hosts who do not have marketplaces collecting taxes for them are responsible for registration, collection, and filing of all lodging taxes. MyLodgeTax can help Washington short-term rental hosts automate and simplify lodging tax compliance.
For more on short-term rental taxes in Washington state, see our state vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.