Temporary Housing & Vacation Rentals

Renting all or a portion of a dwelling for commercial purposes is considered doing business on the island requiring the owner(s) to obtain a City Business License. Doing business includes renting a dwelling or portion of a dwelling as temporary or short-term housing or as a vacation rental through such lodging websites as AirBNB.

Per Chapter 5.05.030 of the Municipal Code, "the term "engaging in business" means commencing, conducting, or continuing business, and also the exercise of corporate or franchise powers, as well as liquidating a business when the liquidators thereof hold themselves out to the public as conducting business." BIMC 5.05 specifically states engaging in business occurs where a person leases real property that is permanently or temporarily located with the City.  Furthermore, Ordinance No. 2018-35 sets forth "owning, renting, maintaining, or have the right to use, or using, tangible personal property, intangible personal property, or real property permanently or temporarily located in the city" by a person, or its employee, agent, representative, independent contractor, broker or another acting on its behalf constitutes engaging in business and requires a person to register and obtain a business license.

Please Note: Per Municipal Code and Ordinance No. 2018-35, the City requires licensing for all rentals regardless of duration of occupancy. Meeting the City business licensing requirement through the State of Washington Business Licensing Service, the State service directing administrative oversight of City licensing, means the property owner must apply for a Washington State Unified Business Identifier (UBI), commonly referred to as a State Business License.


Regulations

At this time, the City does not place additional requirements on temporary/short-term housing or vacation rentals beyond requiring a business license with the exception of defining a suitable dwelling for temporary/short-term or vacation occupation. According to Chapter 18.36 of the Municipal Code:

  • A "bed and breakfast" means a single-family residence that is owner-occupied and in which (a) three or more guest rooms are provided within the residence or within accessory buildings, for compensation, as overnight accommodations for transient visitors who remain no longer than two weeks in any one visit, and (b) breakfast is customarily included in the charge for the room. A bed and breakfast lodging is not a hotel, motel, inn, home occupation or other use defined or regulated elsewhere in this title, except that bed and breakfast establishments containing one or two sleeping rooms may be considered a minor home occupation as defined and regulated elsewhere in the Municipal Code.
    • Please Note: Bed and breakfasts are prohibited in some areas of Bainbridge Island. Before you apply for a business license, contact Planning and Community Development to determine if your property is zoned appropriately for a bed and breakfast.
  • "Dwelling" or "dwelling unit" means a building or portion of a building that provides independent living facilities with provisions for sleeping, eating and sanitation; provided a recreational vehicle or bus is not a dwelling or dwelling unit.
    • Please Note: RVs and travel trailers are not dwellings and cannot be used as temporary/short-term housing or vacation rentals.

Taxes and Oversight

Long-term/short-term and vacation housing income is considered "gross income on the island" and is subject to City Business & Occupation Tax (B&O).  The City B&O is a separate tax from the housing and vacation rental taxes instituted by the State of Washington (e.g., state and local retail sales tax, special hotel/motel taxes, convention and trade center taxes). If you use an entity to manage your long-term/short-term or vacation rental, it is the property owner's responsibility to ensure the City B&O Tax Report is filed annually. It is best to discuss with your property management entity if they will complete City B&O tax reporting as part of their services.

In addition to the above, be aware Kitsap County has been debating regulations pertaining to temporary/short-term housing and vacation rentals. Any owner of temporary/short-term or vacation housing on Bainbridge Island, or any owner considering renting out a dwelling as temporary/short-term housing or vacation rental on Bainbridge Island, is to fulfill and meet any and all requirements set by Kitsap County as well as the State of Washington in relation to temporary/short-term housing and/or vacation rentals.

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To apply for a City business license go to:

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