Overview: Are short‑term rentals allowed in Sterling, IL?

Sterling’s newly adopted Residential Rental Housing Code (Ordinance No. 2025‑03‑10) explicitly exempts from registration, fees, and inspection the following “lodging” uses: hotels, motels, lodging units, guest suites, guest apartments, bed and breakfast establishments, and other facilities that rent for 30 days or less or rent to permanent residents. It also states this exemption is not intended to allow owners to engage in short‑term rentals by “renewing” rentals at intervals of less than 30 days to claim exemption. All rental housing, including short‑term rentals when they occur, must comply with building and property maintenance codes.

Interpretation for short‑term rentals (STRs):

• STRs renting for 30 days or fewer are permitted under Sterling’s code and are exempt from the city’s rental registration and periodic inspection program.
• Short‑term stays beyond that 30‑day threshold are treated as “permanent residence” and are not exempt; properties would then be subject to registration and inspections.
• The city’s code is a minimum habitability and maintenance standard. STR operators must still comply with the 2021 International Property Maintenance Code (IPMC) as adopted by the ordinance.

There is no separate STR licensing ordinance identified in the source documents for Sterling. Zoning or land‑use limitations on STRs were not identified in the provided sources.

How to start a short‑term rental business in this market

• Choose a compliant property: confirm it meets IPMC standards (adequate sanitation, safe egress, functional utilities, structural soundness, and absence of infestation).
• Consider owner‑occupancy vs. whole‑home rentals: owner‑occupied portions of multi‑family structures are exempt from registration/inspection; whole‑home STRs that do not exceed 30 days are also exempt, but must still meet maintenance codes.
• Designate a local agent: if you live more than 50 miles from Sterling or do not maintain an office within 50 miles, you must designate a local agent (≥18 years old) to receive code violation notices and court process on your behalf. The local agent requirement applies to residential rental units under the ordinance.
• Prepare for habitability and safety: ensure smoke and CO detectors, safe egress, functioning heating/plumbing/electrical, proper weather protection, and pest‑free conditions.
• Manage registrations, taxes, and insurance: state and local tax obligations apply to short‑term rentals. See the state‑level section for Illinois registration and tax requirements.
• Operate responsibly: avoid nuisance behavior (noise, trash, disturbances). Sterling’s ordinance assigns maintenance and nuisance responsibilities to owners and permanent residents.

Required documents, permits, licenses, and guidelines

City of Sterling (rental code):

• Registration and inspection: required for long‑term residential rental (units rented to a “permanent resident,” defined as ≥30 consecutive days).
• Not required for STRs renting ≤30 days or for exempt lodging (hotel/motel/B&B). The code states these exempt properties are not subject to registration, fees, or inspections. They still must meet the 2021 IPMC.
• Required information (for long‑term rentals):
  • Property owner name, address, phone, email.
  • Designated local agent name, address, phone, email (if owner >50 miles from Sterling or no office within 50 miles).
  • Property street address; number and types of units; maximum occupancy per unit.
  • Authorized person to order repairs/services if not the owner/agent.
  • Update any changes within 30 days.
• Timeframes and fees (for long‑term rentals):
  • Register on or before the first lease date; existing units have 180 days from adoption to register.
  • Annual fee (May 1–Apr 30): $50 (1–4 units); $75 (5–10); $100 (11–15); $150 (16–40); $200 (≥41) plus $5 per additional unit.
  • Late penalties: 1.5× fee if registered within 30 days after first lease; 2× fee after 60 days.
  • Registration covers one inspection and one re‑inspection per unit. A $25 fee applies for each additional re‑inspection if access is not provided.
• Inspections and certificates (for long‑term rentals):
  • Initial inspection; subsequent inspections scheduled per classification.
  • Properties are graded A–D with corresponding certificate issuance:
    • Class A: excellent condition; inspected every four years.
    • Class B: minor violations; conditional certificate; re‑inspection every two years.
    • Class C: multiple/significant violations; re‑inspection every year.
    • Class D: serious health/safety threats; no occupancy allowed; re‑inspection in 60 days; potential condemnation.
  • Certificate of Occupancy (or conditional certificate) indicates compliance and sets the inspection cycle.

Illinois state requirements for STRs (not city):

• State sales tax and Hotel Operators’ Tax (Illinois Department of Revenue, IDOR): Short‑term rentals are taxable. Hosts and platforms often must collect and remit state and local sales tax and the 6% Hotel Operators’ Tax. Register with IDOR and obtain the required tax permits.
• Local Home Rule or municipal taxes: Some Home Rule municipalities impose additional taxes on lodging; you must determine if any apply in Sterling and collect/remit accordingly.
• Income reporting: Rental income is generally taxable; track gross receipts and allowable expenses for Illinois and federal filings.

Specific regulations for short‑term rentals in Sterling, county, and state

Sterling (city):

• Allowed: Short‑term rentals of 30 days or fewer are allowed and exempt from registration and inspections under the ordinance.
• Exempt lodging: Hotels, motels, lodging units, guest suites, guest apartments, bed and breakfasts, and similar facilities that rent for 30 days or less or rent to permanent residents.
• Anti‑circumvention language: The exemption is “not intended” to allow owners to evade the ordinance by repeatedly “renewing” rentals at intervals of less than 30 days.
• Compliance baseline: All rental properties, including STRs, must meet the 2021 IPMC as adopted by the city. Substandard conditions are defined, and owners are responsible for repairs and abatement.
• Inspection rights: For long‑term rentals, inspections require notice and can be objected to; the city may seek an administrative warrant based on specified factors (complaints, plain‑view violations, property deterioration, etc.).
• Enforcement and penalties: Violations are punishable by fines of $100–$750 per day; false registration information carries $50–$750 fines. Penalties apply to owners and permanent residents for violations of maintenance or nuisance provisions.

Whiteside County:

• The provided sources do not identify county‑specific ordinances governing short‑term rentals.

State of Illinois:

• Taxes and reporting: IDOR requires collection and remittance of state and local sales taxes and the Hotel Operators’ Tax on lodging. Hosts may need separate registrations if operating in multiple jurisdictions.
• No statewide licensing/registration for STRs beyond state tax registration.
• Fair housing and consumer protection laws apply, but no state‑level occupancy or zoning restrictions for STRs were identified in the provided sources.

Enforcement and penalties (Sterling)

• Failure to register long‑term rentals on time triggers higher fees and possible citations.
• Substandard conditions or violations of maintenance responsibilities can result in written notices, correction deadlines, and re‑inspections.
• If violations are not corrected, the city can revoke occupancy certificates, require vacation of units, pursue legal proceedings, or initiate administrative adjudication.
• Each day a violation exists is treated as a separate offense with daily fines ($100–$750).

Contact information

City of Sterling – Building & Zoning Department

• Address: 212 3rd Ave, Sterling, IL 61081
• Phone: (815) 632‑6621
• Website: www.sterling-il.gov/departments/building‑zoning
• Purpose: Building permits, zoning, rental registration and inspection administration under the Residential Rental Housing Code.

Illinois Department of Revenue (IDOR)

• Website: www2.illinois.gov/revenue
• Purpose: Business tax registration, collection/remittance of sales tax and Hotel Operators’ Tax, filings for short‑term rentals.

Note: Sterling’s ordinance references designating a local agent (≥18 years old) if the owner lives more than 50 miles from the city or lacks an office within that radius. This agent receives notices and legal process on behalf of the owner for city enforcement actions.

Links to source pages

• Sterling Residential Rental Housing Code (adopted ordinance; PDF): go.boarddocs.com/il/cosil/Board.nsf/files/DERN6T5E7232/$file/Ord%202025-03-10%20Residential%20Rental%20Inspection%202025.pdf
• Shaw Local report on ordinance adoption (Mar 19, 2025): www.shawlocal.com/sauk-valley/2025/03/19/sterling-approves-new-residential-rental-housing-code-inspection-program/
• Shaw Local report on inspection start timing (Jul 12, 2025): www.shawlocal.com/sauk-valley/2025/07/12/sterling-rental-property-inspections-expected-to-begin-this-fall/
• Draft Residential Rental Ordinance (pre‑adoption; for reference only): go.boarddocs.com/il/cosil/Board.nsf/files/DEBRAP6CE661/$file/DRAFT%20Ordinance%20Amending%20The%20Municipal%20Code%20Residential%20Rental.pdf

Action checklist for STR operators in Sterling

• Verify the unit meets IPMC (2021) habitability standards.
• Determine whether your STR is 30 days or fewer (exempt from registration/inspection) or longer (subject to registration/inspection).
• If >30 days or classified as a long‑term rental, register with the City, pay the applicable fee, schedule inspections, and maintain a current Certificate of Occupancy.
• If you live >50 miles from Sterling or lack an office within 50 miles, appoint a local agent.
• Register with IDOR and set up tax collection for state and local lodging taxes; comply with filing/remittance.
• Maintain operations to avoid nuisance violations (noise, trash, disturbances) and promptly correct any habitability issues.