Welcome to Illinois, a state where the charm of the Midwest meets the bustling energy of urban life, making it a prime destination for those looking to delve into the world of short-term rentals. From the iconic skyline of Chicago to the serene landscapes of rural towns, Illinois offers a diverse array of short-term rental opportunities for hosts and travelers alike. This introduction will guide you through the vibrant and ever-evolving landscape of vacation rentals in Illinois, highlighting the unique blend of cultural richness, historical significance, and modern amenities that make the state an attractive market for short-term rental investments. Whether you're a seasoned host or new to the game, Illinois presents a fascinating backdrop for your short-term rental journey.

In Illinois, a short-term rental is legally defined as any rental of a residential dwelling unit for a period of 31 days or less. This encompasses various types of accommodations, including entire houses, apartments, condos, cabins, and other living spaces offered for short stays. The 31-day threshold is what separates short-term rentals from longer-term leases, which are subject to different regulations.

A period of 31 days or less.

In Illinois, short-term rentals are subject to various state and local taxes. At the state level, hosts are required to collect and remit the following taxes:

1. Hotel Operators Occupation Tax: This tax is imposed at a rate of 6.5% and applies to rentals of 30 days or less.
2. Sales Tax: Short-term rentals are also subject to Illinois' state sales tax, which is 6.25% in most areas. Some cities may impose additional local sales taxes.
3. State Income Tax: Income earned from short-term rentals is subject to Illinois' individual and corporate income tax.

Additionally, local municipalities in Illinois may levy their own lodging taxes on short-term rental transactions. These can include municipal hotel taxes, local sales taxes, and tourism taxes, which can range from 1-6%. The exact tax rates and types depend on the location of the rental property.

Hosts are responsible for registering with the Illinois Department of Revenue to receive a certificate of registration and taxpayer ID. They must also register with local tax authorities if required. Once registered, hosts must collect the appropriate taxes from guests and remit them to the state and any relevant local authorities. Tax returns are generally filed on a monthly basis, and all tax revenue collected from guests must be reported and paid.