Legality Verdict
Key West is legal only for correctly licensed transient inventory, but the market earns a D Legality Grade because the city caps transient rentals and treats 28-day-or-less residential rentals as a distinct licensed category. City of Key West Licensing FAQ
TL;DR
Key West separates residential rentals into non-transient rentals that may not be rented for less than 29 days and transient rentals of 28 days or less. City of Key West Licensing FAQ Every residential rental needs a City Business Tax Receipt, transient rentals require state licensing support, and capped transient rentals are not freely available. City of Key West Licensing FAQ The working lodging tax stack is 12.5%: 6% Florida sales tax, 1.5% Monroe County discretionary surtax, and 5% Monroe County tourist development tax. Florida DOR sales tax Florida DOR DR-15DSS Florida DOR DR-15TDT Biggest gotcha: a Key West STR deal is primarily a license-and-zoning acquisition, not a normal vacation-home acquisition. City of Key West Licensing FAQ
Quick Facts
| Item | Detail |
|---|---|
| STR Definition | Key West residential rentals are non-transient when they may not be rented for less than 29 days and transient when rented 28 days or less. City of Key West Licensing FAQ |
| Registration Required | Yes. All residential rental properties require a City of Key West Business Tax Receipt. City of Key West Licensing FAQ |
| Permit Cost | The city points applicants to Code Section 66-109; the available city FAQ states business taxes range from $23.15 for a non-transient residential unit to $1,530 for a utility company, with most averaging $118 to $300. City of Key West Licensing FAQ |
| Annual Renewal | A copy of an active state license is required with renewal payments for City BTRs, licenses, and permits that required one upon application. City of Key West Licensing FAQ |
| Late Penalty | Not specified in the city FAQ reviewed; verify with Key West Licensing at 305-809-3945 before closing. City of Key West Licensing FAQ |
| State Sales Tax | 6% Florida sales tax applies to transient rentals. Florida DOR sales tax |
| State Accommodations Tax | Florida does not publish a separate statewide “accommodations tax” in the sources reviewed; transient rentals are handled through sales tax plus applicable surtax and local option transient rental tax. Florida DOR sales tax |
| Local Accommodations Tax | Monroe County local option transient rental tax is 5.0% and collected by the county. Florida DOR DR-15TDT |
| County/District Tax | Monroe County discretionary sales surtax is 1.5% for calendar year 2026. Florida DOR DR-15DSS |
| Total Effective Lodging Tax | 12.5% before platform/service-fee treatment: 6% state sales tax, 1.5% county surtax, and 5% Monroe tourist development tax. Florida DOR sales tax Florida DOR DR-15DSS Florida DOR DR-15TDT |
| Occupancy Cap | Not specified in the official city FAQ reviewed; verify the specific medallion, fire inspection, and property records with Key West Licensing. City of Key West Licensing FAQ |
| Parking Requirement | Not specified in the official city FAQ reviewed; parcel-level parking and zoning should be verified in the Land Development Regulations before acquisition. City of Key West Licensing FAQ |
| Primary Regulator | City of Key West Licensing Division for BTRs and transient licensing; Monroe County Tax Collector for TDT; Florida DBPR for state vacation-rental licensing. City of Key West Licensing FAQ Monroe County Tax Collector Florida DBPR |
| License Cap | Yes. The city states transient rentals, including guesthouses, hotels, and residential rentals, are capped and no new licenses are issued unless an existing business owner does not renew. City of Key West Licensing FAQ |
| License Cap Number | Not specified in the city FAQ reviewed; verify the current cap and open inventory directly with Key West Licensing. City of Key West Licensing FAQ |
| Permitted Zones | Parcel-level legality depends on zoning and transient-use status under the Land Development Regulations; verify the parcel before underwriting nightly or weekly stays. City Code Sec. 122-1371 |
| Prohibited Zones | City enforcement records identify transient rentals as prohibited in the Historic Medium Density Residential district in a cited enforcement matter. Key West Legistar case record |
| HOA/Condo Override | Private restrictions can be stricter than city eligibility; verify condo declarations, HOA covenants, and Truman Annex-specific restrictions before underwriting. Keys Weekly Truman Annex report |
| Enforcement Penalties | Public enforcement records show cases alleging advertising or renting without a transient license, city/county/state licensing, medallion, and fire inspection; fine amounts in recent official records were not located and need city verification. Key West Legistar case record |
| Last Updated | April 25, 2026. |
Regulatory Impact Snapshot
Key West’s regulation is not a normal compliance-cost problem. City of Key West Licensing FAQ Monroe County Tax Collector Florida DBPR The deal killer is buying a high-ADR island property that can only legally rent monthly. Run this market in our Airbnb Calculator →
Frequently Asked Questions
Basics
What counts as an Airbnb in Key West?
A Key West Airbnb is generally a transient residential rental when it is rented for 28 days or less under the city’s residential-rental framework; Florida separately treats many rentals under 30 days as transient public lodging establishments. Sources: City FAQ, Florida DBPR.
Are short-term rentals legal in Key West?
Yes, but only for properties with the correct city, county, and state licensing and parcel-level permission. The city says transient rentals are capped and no new capped licenses are issued unless an existing operator fails to renew. Source: City FAQ.
What is the minimum stay without a transient license?
Key West’s city FAQ divides residential rentals into non-transient rentals, which may not be rented for less than 29 days, and transient rentals of 28 days or less. Source: City FAQ.
Is Key West different from unincorporated Monroe County?
Yes. This guide covers the City of Key West, while Monroe County administers tourist development tax countywide and separate local rules can apply outside city limits. Sources: City FAQ, Monroe County Tax Collector.
Licensing
Do I need a City of Key West Business Tax Receipt?
Yes. The city states that all residential rental properties are required to have a City of Key West Business Tax Receipt. Source: City FAQ.
Do I also need a Monroe County Business Tax Receipt?
Yes. The city’s licensing FAQ says anyone with a City of Key West Business Tax Receipt should also apply for a Monroe County Business Tax Receipt. Source: City FAQ.
Do I need a Florida DBPR vacation rental license?
Usually yes for whole-unit vacation rentals. DBPR says qualifying condominiums, cooperatives, and one- to four-family dwellings that are transient public lodging establishments should hold a DBPR vacation-rental license. Source: Florida DBPR.
Can I buy a property and then apply for a new transient rental license?
Do not underwrite that assumption. The city states transient rentals are capped, and no new licenses or permits are issued for capped categories unless an existing business owner does not renew. Source: City FAQ.
Does the license transfer automatically when a property sells?
Not specified in the city FAQ excerpt reviewed. Treat transferability as a closing-condition issue and verify the medallion, BTR, DBPR license, and zoning status directly with Key West Licensing before waiving diligence. Source: City FAQ.
What is the City permit cost?
The city points applicants to Code Section 66-109 for the BTR tax schedule and states business taxes range from $23.15 for a non-transient residential unit to $1,530 for a utility company, with most averaging $118 to $300. Source: City FAQ.
Taxes
What lodging tax applies to Key West STRs?
The working tax stack is 6% Florida sales tax, 1.5% Monroe discretionary surtax for 2026, and 5% Monroe local option transient rental tax, for an effective lodging tax of 12.5%. Sources: Florida DOR sales tax, Florida DOR DR-15DSS, Florida DOR DR-15TDT.
Who collects Monroe County tourist development tax?
Monroe County’s Tax Collector administers tourist development tax accounts, payment, collection contacts, audit and enforcement contacts, and a fraudulent rental hotline. Source: Monroe County Tax Collector.
Does Airbnb collect every tax automatically?
Platform collection can vary by platform, account setup, and tax type. Investors should verify state sales tax, discretionary surtax, and Monroe County tourist development tax registration before first booking. Sources: Florida DOR sales tax, Monroe County Tax Collector.
Are owner-occupied room rentals exempt from DBPR licensing?
DBPR says renting use of a bed or rooms other than the whole unit in a personal residence is not classified as public lodging for DBPR licensing, but local city and county rules may still apply. Source: Florida DBPR room-rental FAQ.
Operations
Can an HOA or condo association ban Airbnb even if the city allows it?
Yes. City and state licensing do not override private covenants, condominium declarations, or HOA rental restrictions. Investors should review recorded governing documents before underwriting transient revenue. Source for city licensing baseline: City FAQ.
What is the biggest operational risk?
Misclassification. A property marketed as a monthly rental but booked, advertised, or occupied as a shorter stay can trigger city transient-rental enforcement under the city’s licensing and transient-rental framework. Sources: City FAQ, City Code Sec. 122-1371.
Does Key West inspect transient rentals?
City enforcement records describe unlicensed properties as lacking a transient medallion and not having been inspected by the City of Key West Fire Department. Source: Key West Legistar case record.
Enforcement
What happens if I advertise without the required license?
City enforcement records show cases alleging properties were held out or advertised for short-term rental without the required city, county, and state licensing. Source: Key West Legistar case record.
Has anything changed recently?
Yes. Keys Weekly reported on December 18, 2025, that Truman Annex short-term rental rights ended on December 22, 2025, under a 20-year-old legal settlement. Source: Keys Weekly.
What should investors monitor in 2026?
Monitor Key West licensing pages, Monroe County tax guidance, and Florida statewide vacation-rental legislation. SB 280 was vetoed in 2024, leaving the local framework intact, but statewide vacation-rental bills remain recurring policy risk. Sources: Florida Realtors, Florida Phoenix.
Permit Process
The investor sequence in Key West starts before offer acceptance, not after closing, because the city treats all residential rentals as BTR-regulated activity and separates non-transient rental use from transient rental use. City of Key West Licensing FAQ The buyer should first confirm whether the parcel sits inside the City of Key West and whether the intended stay pattern is 28 days or less, because that pushes the property into the transient category under the city’s licensing FAQ. City of Key West Licensing FAQ Next, verify the City BTR, any transient rental medallion or license status, and the parcel’s zoning status under the Land Development Regulations before waiving diligence. City Code Sec. 122-1371 Then confirm the operator’s state license path with DBPR, because Florida says qualifying vacation rentals that are transient public lodging establishments should hold a DBPR vacation-rental license. Florida DBPR Finally, create or transfer the Monroe County tourist development tax account and state sales-tax workflow before the first booking. Monroe County Tax Collector The practical rule is simple: do not close on a Key West STR thesis until the city confirms the property can lawfully rent for 28 days or less. City of Key West Licensing FAQ
Zoning
Key West zoning is the underwriting hinge because a property can be valuable, furnished, and tourism-facing while still failing the legal transient-use test. City Code Sec. 122-1371 The city’s FAQ states residential rentals are either non-transient, which may not be rented for less than 29 days, or transient, which covers 28 days or less. City of Key West Licensing FAQ That distinction matters because city enforcement records describe cases where properties were allegedly advertised or held out for short-term rental without the required city, county, and state licensing, without a transient medallion, and without City Fire Department inspection. Key West Legistar case record One city enforcement record also states that transient rentals were prohibited in the Historic Medium Density Residential district for that cited property, showing why district-level zoning cannot be assumed from island-wide demand. Key West Legistar case record For underwriting, the binding constraint is the parcel’s lawful transient status, not whether comparable Airbnbs exist nearby. City Code Sec. 122-1371 Investors should verify zoning, medallion status, and any private condo or HOA restriction as separate conditions. Keys Weekly Truman Annex report
Taxes and Remittance
The Key West tax stack is layered but straightforward once the property is legal: Florida imposes state sales tax on transient rentals, Monroe County has a 1.5% discretionary surtax for 2026, and Monroe County’s local option transient rental tax is listed at 5.0% and collected by the county. Florida DOR sales tax Florida DOR DR-15DSS Florida DOR DR-15TDT Monroe County’s Tax Collector page provides tourist development tax payment, account-application, audit, enforcement, and fraudulent-rental hotline contacts, which makes county registration a separate operational workstream from the City BTR. Monroe County Tax Collector Florida DOR also warns that local option transient rental taxes may be administered locally even though state sales tax and discretionary surtax on transient rentals are always remitted to the Department. Florida DOR sales tax Underwrite 12.5% as the baseline lodging-tax burden, then verify platform collection by tax type rather than assuming Airbnb or Vrbo handles every remittance. Florida DOR sales tax Monroe County Tax Collector If a manager handles taxes, the owner still needs contractual proof of account setup, filing cadence, and platform-tax reconciliation. Monroe County Tax Collector
Enforcement and Recent Actions
Key West’s enforcement posture is document-driven and listing-driven: public enforcement records describe cases alleging that properties were advertised on platforms such as VRBO, HomeAway, and Airbnb without a transient rental business tax receipt, without required city, county, and state licensing, without a transient medallion, and without City Fire Department inspection. Key West Legistar case record Key West Legistar 2017 hearing record One 2017 record described an Airbnb rental period from October 22, 2016 to October 29, 2016 totaling $4,876.75 for a property cited as a repeat violation, while other records cite seven- and eight-night advertised stays with dollar amounts attached. Key West Legistar 2017 hearing record Those records are older than the 18-month “recent” window, but they are useful because they show the city’s enforcement fact pattern: listing evidence, reservation dates, rental totals, repeat-violation history, and missing licensing elements. Key West Legistar 2017 hearing record I did not locate a recent official city enforcement record with a named fine amount in the available search results, so fine amounts should be verified directly with Code Compliance before publication. City of Key West Licensing FAQ
Recent Changes and Pending Legislation
The most important recent Key West-specific event is December 22, 2025, when Keys Weekly reported that Truman Annex short-term rental rights ended under a 20-year-old legal settlement, removing weekly rental rights for that gated neighborhood and pushing owners below a month out of transient eligibility. Keys Weekly, December 18, 2025 At the state level, Governor Ron DeSantis vetoed SB 280 on June 27, 2024, leaving Florida’s local vacation-rental patchwork intact rather than replacing it with the bill’s statewide framework. Florida Realtors Florida Phoenix The Florida DBPR vacation-rental FAQ was updated January 14, 2026, and continues to anchor the state licensing definition for qualifying vacation rentals. Florida DBPR The City of Key West code publication available through Municode says the online code was updated January 30, 2026 and codified through Ordinance No. 25-30, enacted December 2, 2025. Municode Key West Code For the rest of 2026, monitor city licensing-cap updates, any Truman Annex follow-on litigation or enforcement, and renewed Florida statewide vacation-rental bills. City of Key West Licensing FAQ
Comparable Markets
- Islamorada, FL — Consider if you want Florida Keys demand but are willing to underwrite village-specific permitting and Monroe County tax compliance.
- Marathon, FL — Consider if you want Keys revenue dynamics with a different license and weekly-rental framework than Key West.
- Destin, FL — Consider if you want high Florida STR demand with a mainland Gulf Coast operating model.
- Panama City Beach, FL — Consider if you want a more scalable Florida beach-market acquisition funnel with less island-scarcity risk.
Sources
- City of Key West Licensing Division FAQ — https://www.cityofkeywest-fl.gov/FAQ.aspx?QID=196
- City of Key West Regulatory Licenses — https://www.cityofkeywest-fl.gov/1253/Regulatory-Licenses
- City of Key West Code of Ordinances, transient living accommodations in residential dwellings — https://library.municode.com/fl/key_west/codes/code_of_ordinances?nodeId=SPBLADERE_CH122ZO_ARTVSUDIRE_DIV7TRLIACREDW_S122-1371TRLIACREDWRE
- City of Key West Code of Ordinances, business tax schedule reference — https://library.municode.com/fl/key_west/codes/code_of_ordinances?nodeId=SPAGEOR_CH66TALI_ARTIIBUTA_S66-109SC
- Florida DBPR, vacation rental license FAQ — https://myfloridalicense.custhelp.com/app/answers/detail/a_id/2557/~/what-types-of-rental-properties-need-a-vacation-rental-license-from-dbpr%3F
- Florida Statutes Section 509.242 — https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599%2F0509%2FSections%2F0509.242.html
- Florida Department of Revenue, sales and use tax / transient rental taxes — https://floridarevenue.com/taxes/taxesfees/Pages/sales_tax.aspx
- Florida Department of Revenue, DR-15DSS 2026 discretionary sales surtax information — https://floridarevenue.com/Forms_library/current/dr15dss_26.pdf
- Florida Department of Revenue, DR-15TDT local option transient rental tax rates — https://floridarevenue.com/Forms_library/current/dr15tdt.pdf
- Monroe County Tax Collector, Tourist Development Tax — https://monroetaxcollector.com/services/tdt/
- Monroe County Code Chapter 23, Article VI Tourist Development Tax excerpt — https://www.monroecounty-fl.gov/DocumentCenter/View/37632/Section-VIII
- City of Key West Legistar, Code Enforcement Case #18-1208 — https://keywest.legistar.com/LegislationDetail.aspx?GUID=276D8786-E8F3-4ACB-B7DE-A61B2E31C45E&ID=3625960&Options=&Search=
- City of Key West Legistar, Code Enforcement Hearing January 25, 2017 — https://keywest.legistar.com/MeetingDetail.aspx?GUID=78084DF2-B77A-4F1C-9C81-CCA3276436DA&ID=525462&Options=&Search=
- Keys Weekly, “Time’s Up for Transient Rentals in Key West’s Truman Annex” — https://keysweekly.com/42/times-up-for-transient-rentals-in-key-wests-truman-annex/
- Florida Realtors, “DeSantis Vetoes Vacation Rental Bill” — https://www.floridarealtors.org/news-media/news-articles/2024/06/desantis-vetoes-vacation-rental-bill
- Florida Phoenix, “DeSantis vetoes short-term vacation rental bill” — https://floridaphoenix.com/2024/06/27/desantis-vetoes-short-term-vacation-rental-bill/
This page is research, not legal advice. Consult local counsel before acquiring or operating a short-term rental in the City of Key West, Monroe County, Florida.
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