Short-Term Rentals in Federal Way, WA: A Compliance and Launch Guide for Investors

Overview: Are short-term rentals allowed in Federal Way, WA?

• Yes, short-term rentals are allowed in Federal Way in single-family residential zones when they meet specific conditions. In 2007, the City issued a formal interpretation (File #07-105266-00-UP) stating that a vacation rental residence is an allowable use in single-family zones if the operator satisfies occupancy limits, parking requirements, signage restrictions, availability of a local property representative, homeowners’ association notification, licensing compliance, and weekly solid waste collection.
• Statewide in Washington, short-term rentals (less than 30 consecutive nights) are legal and regulated by RCW 64.37. Operators must collect and remit all applicable taxes, meet consumer safety posting requirements, provide local contact information, and maintain at least $1,000,000 in primary liability insurance or book through a platform that provides equal or greater coverage.

How to start a short-term rental business in Federal Way

• Verify zoning and use permissions:
  • Confirm your property is in a permitted zone and that a short-term rental is a compatible use. The City’s 2007 interpretation allows vacation rentals in single-family residential zones subject to conditions (occupancy, parking, signage, local representative, HOA notification, licensing, weekly trash service).
  • If you are uncertain about zoning status or need an official verification (e.g., for lenders or co-hosts), request a Zoning Verification Letter through the City’s “Request an Administrative Decision” process.
• Register your business:
  • Obtain a Federal Way business license through the City’s “Get a Business License” portal.
• Set up tax compliance:
  • Register with the Washington Department of Revenue (DOR) for sales tax and lodging-related taxes. Washington requires lodging businesses (including short-term rentals) to collect and remit lodging taxes and sales tax unless your platform does so on your behalf.
  • Note: While third-party sources indicate Federal Way has a 5% transient lodging tax, investors should verify the current rate, remittance rules, and filing cadence with DOR or the City’s finance office. Federal Way is in King County; the county may also administer lodging tax rules through DOR and/or the county.
• Meet state consumer safety requirements:
  • Provide a local guest contact who can respond during the stay.
  • Post emergency information inside the unit, including street address, emergency contact numbers (police, fire, EMS), floor plan with fire exits and escape routes, maximum occupancy, and the operator/contact information.
  • Install carbon monoxide alarms per RCW 19.27.530 and State Building Code Council rules.
• Insurance:
  • Maintain primary liability insurance with at least $1,000,000 in coverage for the short-term rental dwelling unit, or conduct each transaction through a platform that provides equal or greater primary liability coverage.
• Platform compliance and disclosures:
  • Platforms must be registered with the Washington Department of Revenue and must inform operators about tax obligations, consumer safety requirements, and potential insurance gaps in personal policies.
• Establish local operations:
  • Assign a local property representative or management company capable of handling guest inquiries, safety responses, and emergencies.
  • Notify your homeowners’ association if applicable and confirm HOA rules do not prohibit short-term rental activity.
  • Confirm weekly solid waste collection (per the 2007 interpretation’s requirements) or demonstrate equivalent compliance with the City’s solid waste contractor.

Required documents, permits, licenses, and guidelines

• City-level:
  • Federal Way business license (obtained online via the City’s business license portal).
  • Zoning compliance confirmation or formal zoning verification (as needed).
  • Vacation Rentals Interpretation (File #07-105266-00-UP) considerations: occupancy limits, parking, signage, local representative availability, HOA notification, licensing compliance, weekly solid waste collection.
• State-level:
  • Washington Department of Revenue registration for sales and lodging taxes.
  • RCW 64.37 compliance: consumer safety postings, local contact availability, carbon monoxide alarm installation, liability insurance ($1M minimum or platform-provided equivalent).
  • Advertising disclosures required by state law (if applicable through platform).
• Safety and building:
  • Compliance with carbon monoxide alarm rules (RCW 19.27.530 and State Building Code Council rules).
  • Posting emergency information inside the unit as specified by RCW 64.37.030.
• Insurance:
  • Maintain primary liability insurance at or above $1,000,000 per occurrence or use a platform providing equivalent coverage for each short-term rental transaction.

Specific regulations for short-term rentals: Federal Way, King County, and Washington State

• Federal Way (City):
  • Vacation rentals are allowed in single-family residential zones when conditions are met (see the 2007 Notice of Interpretation). Operators should expect to document compliance with occupancy, parking, signage, local representative, HOA notification, licensing, and solid waste service requirements. The Permit Center or current Planning/Zoning staff can confirm whether these conditions remain in force or have been superseded.
• King County:
  • The City of Federal Way is in King County. While the County may have some administrative roles for lodging tax collection via DOR, County-specific short-term rental rules did not appear in the provided materials. Investors should verify any County-level requirements (e.g., tax rate administration) through the City or DOR.
• Washington State:
  • Definitions (RCW 64.37.010): A short-term rental is a lodging use (fewer than 30 consecutive nights) in a dwelling unit, not including hotels, motels, bed and breakfasts, or timeshare properties. Exclusions apply for owner-occupied units under certain conditions.
  • Taxes (RCW 64.37.020): Operators must remit all applicable local, state, and federal taxes unless the platform does so on the operator’s behalf.
  • Consumer safety (RCW 64.37.030): Required postings (address, emergency contacts, floor plan with exits, occupancy limits, operator contact), local contact availability during stays, and carbon monoxide alarm compliance.
  • Short-term rental platforms (RCW 64.37.040): Platforms must register with the Department of Revenue, inform operators of tax and safety requirements, and provide notice about potential insurance gaps.
  • Liability insurance (RCW 64.37.050): Operators must maintain at least $1,000,000 in primary liability insurance or use a platform offering equal or greater coverage.

Contact information (phone, email, website) for local authority in charge of STRs

• City of Federal Way – Permit Center:
  • Phone: 253-835-2607
  • Hours: 8 a.m. to 5 p.m., Monday through Friday (Note: The Permit Center is closed on Wednesdays; submit materials electronically via the City’s document upload link.)
  • Website: www.federalwaywa.gov/page/land-use-applications-informational-handouts
  • Submit electronic applications: www.cityoffederalway.com/page/electronic-document-submittal
  • Business Licensing: www.federalwaywa.gov/page/business-license
• Washington State – Department of Revenue (DOR):
  • Short-Term Rental Program (platform registration, tax reporting, and guidance): dor.wa.gov/taxes-rates/other-taxes/short-term-rental-platforms
  • Legislative Hotline (for questions about state law): 1-800-562-6000 (TTY: 1-800-833-6388)
• Emergency (City services):
  • Police, Fire, EMS: Use 911 for emergencies
  • Non-emergency police contact (City main): 253-835-7000

Links to source pages

• Washington RCW 64.37 – Short-Term Rentals: app.leg.wa.gov/RCW/default.aspx?cite=64.37&full=true
• Federal Way Vacation Rental Interpretation (2007): www.federalwaywa.gov/sites/default/files/Documents/Department/CD/Planning/Land%20Use%20Apps%20and%20Info%20Handouts/Vacation%20Rental.pdf
• Federal Way – Land Use Applications & Informational Handouts: www.federalwaywa.gov/page/land-use-applications-informational-handouts
• Federal Way – Electronic Document Submittal: www.cityoffederalway.com/page/electronic-document-submittal
• Federal Way – Get a Business License: www.federalwaywa.gov/page/business-license
• Washington Department of Revenue – Short-Term Rental Platforms: dor.wa.gov/taxes-rates/other-taxes/short-term-rental-platforms

Practical investor checklist

• Confirm zoning and the continued applicability of the City’s 2007 interpretation for your property’s use and neighborhood context.
• Apply for and maintain a Federal Way business license; keep it displayed and renewed as required.
• Register with DOR; set up tax accounts for sales and lodging taxes; determine whether your platform will collect and remit on your behalf or if you must do so directly.
• Implement all consumer safety postings and local contact procedures; install carbon monoxide alarms where required.
• Secure primary liability insurance with a minimum $1,000,000 limit or confirm equivalent platform-provided coverage for each booking.
• Verify weekly solid waste collection arrangements (or City-approved equivalent) and HOA notification requirements.
• Monitor City notices and fee schedules; use the Permit Center for questions on land use and current local requirements.

Note on updates and verification

• City and state rules can change. The City’s 2007 interpretation is a historical source; investors should confirm whether Federal Way has issued updated ordinances, administrative rules, or guidance affecting short-term rentals. For taxes and platform registration, rely on DOR’s official guidance. If you need an official zoning determination, submit a request through the City’s administrative decision process.