Overview

Short-term rentals ARE ALLOWED in Decatur, IL with proper licensing. As of April 2023, Decatur requires all short-term rental operators to obtain an annual license and comply with hotel/motel tax obligations. The city implemented this licensing framework to ensure STRs do not create neighborhood nuisances while maintaining tax equity with traditional hospitality businesses.

How to Start a Short-Term Rental Business in Decatur

Step 1: Verify Zoning Compliance

Before proceeding, confirm that your property is located in a zoning district that permits short-term rental operations. While Decatur allows STRs through licensing, local zoning restrictions may apply.

Step 2: Obtain Required Licensing

Apply for an annual Short-Term Rental License through the City of Decatur Licensing Division. Each property requires its own license regardless of ownership structure.

Step 3: Register for Tax Obligations

Register with the Illinois Department of Revenue and local authorities to collect and remit applicable hotel/motel taxes.

Step 4: Maintain Ongoing Compliance

Renew your license annually, maintain required insurance, and ensure ongoing compliance with city regulations.

Required Documents, Permits, Licenses, and Guidelines

Required Licenses

• Short-Term Rental License (Annual)
• Business Registration (if operating as a business entity)

Required Documentation

Based on Illinois state requirements and typical Decatur application processes, prepare the following:

• Property address and legal description
• Property ownership proof
• Owner's contact information
• Property manager information (if applicable)
• Proof of insurance (homeowner's fire, hazard, liability coverage)
• Maximum occupancy documentation
• Safety equipment verification (smoke detectors, carbon monoxide detectors, fire extinguisher)

Tax Registration Requirements

• Illinois Department of Revenue registration for Hotel Operators' Occupation Tax
• Local hotel/motel tax registration

Safety Requirements

• Functioning smoke detectors
• Carbon monoxide detectors
• Fire extinguisher
• Compliance with occupancy standards

Specific Regulations

City of Decatur Regulations (Chapter 51.5)

Licensing Requirements:

• Annual license required for each STR property
• $25 annual license fee (does not cover full administrative costs)
• License application through city licensing division
• Online application portal available

Operational Requirements:

• Collection of hotel/motel taxes at rates equivalent to traditional hotels
• Compliance with nuisance regulations
• Responsible guest management

Enforcement:

• City discretion to administer fines and penalties
• License revocation authority for violations
• Focus on addressing complaints regarding loud behavior, parking issues, and garbage problems

Macon County Regulations

No specific county-level STR regulations identified in provided sources. County regulations, if any, would supplement city requirements.

State of Illinois Regulations

Definition and Scope:

• Short-term rental defined as residential unit rented for less than 30 consecutive days
• Applies to single-family dwellings and residential units in multi-unit structures
• Excludes bed and breakfast establishments and non-residential properties

State-Level Taxation:

• Hotel Operators' Occupation Tax: 6% total (5% base rate + 1% additional) of 94% of gross rental receipts
• Filed monthly, quarterly, or annually depending on liability volume
• Form RHM-1 required for tax returns
• Electronic payment required for annual liabilities of $20,000 or more

Local Authority Limitations:

• State law (HB2919) prevents local governments from prohibiting STRs based on classification or occupancy
• Local governments may only enact ordinances protecting public health and safety
• Local sales taxes and fees must equal those applied to commercial transient lodgings

Contact Information

City of Decatur Licensing Division

Physical Address: Decatur Civic Center - 2nd Floor 1 Gary K. Anderson Plaza Decatur, IL 62523

Phone: 217-424-2716 Email: licensing@decaturil.gov

Online Application: City of Decatur OpenGov General Business Portal

Illinois Department of Revenue

For state tax registration and remittance: Website: www.tax.illinois.gov

Source Links

1. Decatur STR Licensing News Article: www.wandtv.com/news/decatur-to-require-license-for-short-term-rentals/article_b33270ae-dd92-11ed-b846-2b8b04a30992.html
2. Illinois State STR Laws: www.gosummer.com/post/illinois-short-term-rental-law
3. Decatur License Application Forms: www.decaturil.gov/204/License-Application-Forms
4. Short-Term Rental Application (PDF): www.decaturil.gov/204/License-Application-Forms (direct link to application form)
5. Illinois House Bill 2919: www.ilga.gov/legislation/101/HB/10100HB2919.htm
6. Illinois Senate Bill 2564 (Short Term Rental Occupation Tax Act): www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=112&GA=103&DocTypeId=SB&DocNum=2564&GAID=17&LegID=149769&SpecSess=&Session=

Compliance Reminders

• Operating without a license results in significant fines
• Annual license renewal is mandatory
• Hotel/motel tax collection and remittance are legal obligations
• Guest behavior management is essential to maintaining good standing
• Regular safety equipment maintenance and testing is required

This guide provides the foundational information needed to establish and maintain a compliant short-term rental operation in Decatur, Illinois. Always verify current requirements with local authorities before initiating operations.