Overview: Are Short-Term Rentals Allowed?

Yes—short-term rentals are allowed in the Town of Bethany Beach. Bethany Beach explicitly requires a Rental License for any property rented at any time during the year, and a 7% town rental tax applies to gross receipts. As of 2025, the State of Delaware also imposes a 4.5% tax on short‑term rentals (stays of 31 days or less). Investors should plan for a combined effective rate of approximately 11.5% in Bethany Beach (7% local + 4.5% state). Be mindful of the county context: Sussex County may impose up to an additional 3% lodging tax on short‑term rentals in unincorporated areas; that 3% proposal was defeated in December 2024 but remains within the county’s authority. Always verify any local add‑on that applies to your exact property location.

How to Start a Short-Term Rental Business in Bethany Beach

• Confirm zoning/occupancy suitability and any homeowners’ association rules.
• Obtain the required Bethany Beach Rental License for each rental unit.
• Submit the Safety Certification for rental properties and ensure ongoing compliance.
• Register for state-level short‑term rental tax collection/remittance if you operate as or engage an accommodations intermediary (e.g., platforms may collect and remit).
• Prepare to collect and remit:
  • 7% Bethany Beach rental tax (based on gross rental income).
  • 4.5% Delaware short‑term rental tax (for stays of 31 days or less).
• Set up online payments where available and plan semi‑annual rental tax remittances to the Town (see “Town-Level Requirements” below).

Required Documents, Permits, and Licenses

• Rental License Application (required for any property you will rent at any point during the year; license runs June 1–May 31; fee: $100 per year per unit).
• Safety Certification Form for rental property licenses (download via town documents and keep current as part of inspections/licensing requirements).
• Accommodations Intermediary License (Delaware state requirement for platforms/intermediaries; $25 fee; intermediaries typically collect/remit the 4.5% state tax). If you hire a platform (e.g., Airbnb, VRBO), they will likely manage state tax compliance and may handle local lodging taxes where applicable.
• Business License may apply if you operate a rental management business (not the same as the Rental License for an owner’s property). Annual fee: $250 (June 1–May 31). If you currently have a town business license in good standing, you may renew online.

Town of Bethany Beach Requirements (City-Level)

• Licensing
  • Rental License is required for each unit you rent any time during the year.
  • License period: June 1 through May 31.
  • Annual fee: $100 per unit.
• Taxes
  • Rental tax rate: 7% of gross receipts (applies to residential and commercial space).
  • Remittance: Semi‑annual; due on November 1 and June 1.
  • Payment options: Credit card payment online (per town e‑services).
• Safety Certification
  • Rental property licenses require a Safety Certification (Form available in town Document Center). Maintain compliance and keep records available for inspection.
• Noise/Parking
  • Bethany Beach enforces noise and parking regulations. Treat guests proactively via house rules and communication to avoid violations and fines.

Delaware State-Level Requirements

• State short‑term rental tax: 4.5% of rent for stays of 31 nights or less (effective for agreements signed on/after January 1, 2025).
• Accommodations Intermediary: $25 license fee; platforms/intermediaries typically collect and remit the state tax.
• Local interaction: State tax applies on top of any municipal lodging taxes. For Bethany Beach, the combination is approximately 11.5% (7% local + 4.5% state).
• Definitions and scope:
  • Short‑term rental: Any rental of 31 days or fewer.
  • Taxable base: Gross rent (certain fees may be excluded; confirm specifics in state guidance).
• Practical implication:
  • Owner-collected vs. platform-collected: If you use an intermediary platform, the platform will often handle state tax collection/remittance. If you rent directly, you are responsible for state tax compliance.
  • Reimbursability: The state tax is generally passed through to the guest; your lease/TOS should clearly state tax obligations to avoid disputes.

Sussex County Context (Unincorporated Areas and County Authority)

• Authority: Sussex County can impose a lodging tax up to 3% on short‑term rentals in unincorporated areas (outside municipal limits).
• Status update (Dec 2024): A 3% county tax for short‑term rentals was proposed and defeated at the December 10, 2024 county council hearing. The county retains the authority to revisit and adopt a rate up to 3% in the future.
• Realistic composite tax scenarios:
  • Bethany Beach (incorporated): 7% local + 4.5% state = 11.5% (confirmed by industry sources).
  • Unincorporated Sussex County: 0% local + 4.5% state = 4.5% baseline; if the county adopts a 3% tax, total could be 7.5%.
  • Municipal variations noted in Delaware: Dewey Beach (3% + 4.5% = 7.5%), Lewes/Ocean View (5% + 4.5% = 9.5%), Rehoboth Beach (7% + 4.5% = 11.5%).
• Action items:
  • Confirm whether your property lies within town limits (Bethany Beach proper) or in unincorporated Sussex County.
  • Monitor Sussex County legislative updates for any future lodging tax adoption on short‑term rentals.

Enforcement and Practical Notes

• The town requires a license for each unit and enforces both licensing and safety requirements.
• Noise and parking violations are actively enforced; embed clear rules in your guest agreements and provide town-specific guidance to guests.
• Use the town’s online portal to pay rental taxes (semi‑annual) and ensure timely remittance to avoid penalties.
• Keep the Safety Certification current and available for inspection.

Key Contacts and Where to Apply (Town-Level)

• Rental License: Town of Bethany Beach, Code Enforcement (licensing and safety compliance).
• Finance/Tax Remittance: Town of Bethany Beach, Finance (licenses & rental tax section).
• General Town Contact: See “Contact Us” and Document Center at townofbethanybeach.com.

Note: For department-specific email/phone numbers, refer to the town website’s “Contact Us” and department directory listings (numbers/contacts are not included in the provided content).

Source Links

• www.townofbethanybeach.com/346/Rental-License-Process-and-Application
• www.townofbethanybeach.com/281/Licenses-Rental-Tax
• www.bestofbethany.com/blog/sussex-county-short-term-rental-tax-information.html
• beachrentals.penfedrealty.com/article/delaware-passes-new-short-term-rental-tax

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