Ann Arbor Short Term Rental Regulation: A Guide For Airbnb Hosts

Do you own a place in Ann Arbor and you're weighing whether to put it on Airbnb or Vrbo? Well, the good news is that short-term rentals are legal here in Washtenaw County, Michigan, in a way they aren't in some college towns that panicked and banned them outright. The catch is real, though. Ann Arbor sorts every host into one of three categories under Chapter 97 of its city code, and which one you fall into decides whether you need a $500 license, whether your zoning district even allows a whole-house rental, and whether you can apply at all right now.

Since I last checked in July 2026, that last part changed fast. On July 20, Ann Arbor's city council voted 8-1 to direct the city attorney to draft a six-month pause on brand-new STR licenses, after city staff turned up several hundred unlicensed rentals operating alongside the roughly 300 the city has licensed. Nothing has paused yet. The attorney still has to write the ordinance and council still has to approve it separately, but if you're thinking about applying, that timeline got a lot more urgent than it was a month ago.

So this guide works through what the city requires in 2026: the three types of STR Ann Arbor recognizes, what the $500 license involves, the taxes that stack on top of it, Michigan's thin statewide framework, and who to call when you get stuck. Every figure below comes from the city's own code and pages, or from named city officials quoted in local reporting, checked in July 2026. Once you know which category you fall into, run the numbers through BNBCalc before you commit to anything.

What are short term rental (Airbnb, VRBO) regulations in Ann Arbor, Michigan?

Those three categories are worth understanding before you run any numbers at all, because they don't merely affect paperwork. They decide whether a listing is legal in the first place.

Ann Arbor defines a short-term rental as a dwelling unit where guests stay for up to 30 consecutive days, a definition broad enough to cover a spare bedroom on Airbnb, a bed and breakfast, and a commercial unit dressed up to look like a hotel room. Three separate parts of the city code govern it: Chapter 97, the STR ordinance itself (Sections 7:650 through 7:655), Chapter 55, the Unified Development Code that handles zoning, and Chapter 105, the Housing Code that sets safety standards for the unit.

STR Type	Who Has To Live There	Where It's Allowed	Certificate of Compliance Required
Non-Principal Residence (commercial)	No one. The owner or host doesn't have to reside on site	Only in office, commercial and mixed-use zones: O, C1, C1A, C1B, C1A/R, D1, D2, C2B, C3 and TC1	Yes, plus periodic Housing Code inspection
Principal Residence Homestay	The owner, or a tenant of 30+ days, who must be the permanent resident and stays onsite the whole time guests are there	Any residential zone	Not required
Principal Residence Whole House	The owner, or a tenant of 30+ days, who must be the permanent resident, though they move out while guests are staying	Any residential zone	Not required

Whether you're the "permanent resident" listed in that table isn't a matter of intent. The city checks it against five concrete factors:

• Whether you hold the Michigan property tax code's Principal Residence Exemption on the unit
• Whether you're registered to vote at that address
• Whether your Michigan driver's license or state ID lists that address
• What address is on your tax return
• Where your bank and utility statements go

Keep in mind that a mismatch on even one of those can sink an application, since the city is looking for a consistent paper trail, not a verbal claim. One more thing worth flagging before you buy: Accessory Dwelling Units are barred from STR use outright, and an application for one gets denied automatically, no exceptions.

That "Where It's Allowed" column comes from the UDC's Permitted Use Table, and it's the product of Ordinance ORD-21-12, effective May 23, 2021. Before that date, a commercial STR in a residential zone was fair game, and any that existed before March 1, 2021 still get to operate as a legal nonconforming use even now. Everyone else applying today is stuck with the table as written. A whole-house Airbnb where the owner is absent counts as a Non-Principal Residence STR, and it only clears zoning in a handful of commercial and downtown districts, unless that grandfather clause applies.

Starting a Short Term Rental Business in Ann Arbor

That grandfather clause is the only real shortcut in this whole system, and unless you already owned a commercial STR before March 2021, you don't get it. For everyone else, what you can start depends entirely on which of those three categories fits your property and your plans.

The easiest path by far is a Homestay: you live in the house, you rent a room or two while you're there, and the zoning question never comes up because every residential zone allows it. A Whole House STR is nearly as open on zoning, though it asks more of you as an owner, since you still have to be the documented permanent resident even on the nights you're not home. The Non-Principal Residence route, a dedicated Airbnb business with no residency requirement at all, is where most new investors want to land, and it's also the one boxed into the smallest slice of the map: those ten commercial and mixed-use zones, or a pre-2021 grandfathered property. Buying a single-family house in an ordinary residential neighborhood specifically to run it as a hands-off Airbnb doesn't clear zoning here, full stop.

Whichever type you're pursuing, the applicant has to be a natural person. The city's own guidance is direct about this: third-party companies cannot apply for an STR license under any circumstances, so an LLC-only structure with no individual permanent resident behind it won't get past the front door. One more thing worth checking before you buy, especially in a subdivision with a homeowners' association: a private deed restriction can bar short-term rentals even where the city's own zoning allows them, something Michigan's courts reinforced last year. More on that case in the statewide section below.

If Ann Arbor's zoning map rules out the type of listing you want to run, it's worth widening the search before you write an offer. Hosts comparing options nearby sometimes look at the Livingston County guide, one county over, where the zoning picture and the licensing load are both different.

Short Term Rental Licensing Requirement in Ann Arbor

Assuming your situation clears that zoning test, the license itself is fairly mechanical on paper: apply through the city's STREAM portal, pay $500 per unit, and wait.

Everything runs through STREAM, under the license tab. You select your property structure, Principal or Non-Principal, upload a Sworn Statement of Principal Residency if you're applying under either principal-residence type, and pay the $500 annual fee at submission. Review takes up to 21 business days, the fee doesn't come back if you're denied, and the license itself runs for one year from issuance before it needs renewing. A property with several units for rent needs a separate license for each one, since the license attaches to the unit rather than to the owner.

Do check the city's STR page directly before you submit anything, because the rules around it are mid-rewrite. On July 20, 2026, council passed Resolution DC-2 by an 8-1 vote, Council Member Lisa Disch casting the lone dissent, directing the city attorney to draft an ordinance imposing a six-month moratorium on new STR licenses. Lead sponsor Jenn Cornell (D-5th Ward) won an amendment clarifying that renewals of existing licenses would still go through even under a moratorium. City Administrator Milton Dohoney is now leading a study of the program's community impact, expected to feed a rewrite of both Chapter 97 and the zoning table above. Cornell has posed several open questions with no answers yet, among them whether owner-occupied STRs should be exempt from any freeze, whether repeat violators should be allowed to apply at all, and whether the city should cap the total number of licenses outright.

None of that is settled law yet, and that distinction matters more than it might seem. The July 20 vote is a resolution telling the city attorney what to write, not the moratorium ordinance itself. Two separate approvals still have to happen before a new application would get turned away: the drafted ordinance has to come back to council, and council has to pass it. As of my last check in July 2026, that hadn't happened. Still, if you're weighing whether to apply now or wait, the honest read is that the window for a straightforward new application may be closing, and the city itself hasn't said when.

Required Documents for Ann Arbor Short Term Rentals

Since that $500 doesn't come back if you're denied, it's worth getting the paperwork right before you pay it.

For a Principal Residence application, Homestay or Whole House, you'll need the Sworn Statement of Principal Residency Form itself, plus something behind it that proves the claim. The city weighs the same five factors mentioned earlier, so gather what applies to you: exemption status, voter registration, ID, tax return, and a bank or utility statement. Don't assume one document covers it. A single piece of ID with the right address rarely satisfies a reviewer who's checking for a consistent pattern across several sources.

A Non-Principal Residence (commercial) application carries a heavier file. That category requires a Certificate of Compliance, so you're also working through the Housing Code inspection process under Chapter 105. In practice, that adds the standard rental-registration paperwork on top of the STR application itself: proof of ownership plus whatever the Rental Housing Services office requests once your file lands with an inspector.

Whichever type you're filing under, remember that the applicant has to be an actual person, not a company. If you're using a property manager or an LLC to hold title, be aware that you'll still need a natural person, the permanent resident for the principal-residence types, listed and verifiable on the application itself.

Ann Arbor Short Term Rental Taxes

Assuming you clear all of that and are able to get licensed, there's still tax to work out, and it stacks in three separate layers.

Tax	Rate	Who Collects It
Michigan Use Tax (state)	6% of the rental price	Airbnb collects and remits it automatically; hosts self-remit for VRBO and direct bookings
Washtenaw County Accommodation Excise Tax	Historically 5%, though individual home-hosts have long been carved out	Washtenaw County Finance, if it applies to your situation
Michigan individual income tax	4.25% flat, on top of federal tax	You, on your regular annual return

The state layer is the most straightforward. Michigan's Use Tax Act puts a 6% tax on "rooms or lodging furnished by hotelkeepers, motel operators, and other persons furnishing accommodations that are available to the public on the basis of a commercial and business enterprise," and it applies to a short-term stay of any length under 30 days. No tax is due once a guest stays more than a month. Airbnb collects and remits this 6% automatically on every Michigan booking of 30 nights or fewer, which is one less thing to track. VRBO doesn't do the same, and neither does a direct booking off your own site, so on those channels the remitting responsibility falls on you, registered directly with the Department of Treasury.

The county layer is genuinely murkier, and it's worth saying so plainly rather than guessing. Washtenaw County has run an Accommodation Excise Tax since 1975, raised to 5% in December 2008. County records describe a later carve-out exempting bed and breakfasts with 14 rooms or fewer, cottages, and individuals who periodically lease rooms in their own homes, since enforcement cost the county more than those small operators generated. I wasn't able to load the county's own ordinance text to confirm that exemption is still written the same way in 2026, since the document sits behind a bot check that never fully resolved for me. What lines up with the older account: Airbnb's own Michigan tax page lists Genesee and Kent counties as the only two where it separately collects a county-level tax, and Washtenaw isn't on that list. Treat that as circumstantial rather than confirmed, and check directly with Washtenaw County's Accommodation Excise Tax page before assuming either way.

One more wrinkle showed up in council testimony rather than a tax page: a licensed non-owner-occupied host told council she pays the "non-homestead" property tax rate on her STR, Michigan's higher millage for a property that isn't the owner's primary residence. That's a separate line from the taxes above, but it's a real cost of the Non-Principal Residence path worth budgeting for before you commit to it.

Your rental income itself is ordinary taxable income, on top of everything above. Michigan's flat individual income tax rate for the 2026 tax year is holding at 4.25%, and that's on top of whatever you owe federally. If you're weighing an Ann Arbor room-share against a market where a whole unit can run at nightly rates without the zoning restrictions, BNBCalc Markets is a fast way to see that gap at the neighborhood level.

Michigan Wide Short Term Rental Rules

All three of those taxes sit on top of a state framework that, next to Ann Arbor's own rulebook, is almost bare.

Michigan has no statewide STR license, no statewide registration requirement, and no law preempting what a city like Ann Arbor can do with its own zoning. Regulation here is entirely local, which is why Ann Arbor's three-category system, its zoning table, and its $500 license exist purely as a city creation, not a state mandate. That's also why the picture changes completely once you cross into a different municipality, even one a few miles away.

One ruling did land, and it matters more for buyers than for zoning compliance itself. On July 9, 2025, the Michigan Supreme Court affirmed, by an equally divided court, a Court of Appeals decision holding that a private deed restriction limiting a lot to "single family residence purposes" is enough on its own to bar short-term rentals, regardless of what the local zoning code permits. The case, Melvin R. Berlin Revocable Trust v. Rubin, involved a private lakeshore subdivision, and an evenly split ruling doesn't set a sweeping new statewide standard. Still, it's a clear signal that a homeowners' association or a subdivision's covenants can shut a listing down even in a zone where the city itself says yes. Do check your deed and any HOA bylaws before you assume Ann Arbor's zoning table is the last word. If you'd like the fuller statewide picture beyond Ann Arbor, the Michigan short-term rental guide walks through how the rest of the state compares.

That court ruling is the exception, not the rule. Mostly, Lansing has stayed quiet, and the bills that would change that haven't passed as of July 2026. House Bill 4554, the Michigan Short-Term Rental Promotion Act, would bar any local ban that effectively wipes out STRs entirely, while still allowing limited zoning, and would require hosts to register with the state and carry $1 million in liability insurance. A related 2024 package, House Bills 5437 through 5446, proposed a 6% statewide STR tax alongside the same $1 million insurance requirement. Most recently, House Bill 6026, introduced June 2, 2026 by Rep. Joey Andrews, would create a statewide short-term rental registry and a 6% excise tax split between the host municipality and the state's Pure Michigan tourism fund. As of my last check, it was sitting in the House Government Operations Committee, still short of a floor vote. None of it affects an Ann Arbor host today, though it's worth watching if you're planning for the long run.

Does Ann Arbor Strictly Enforce STR Rules?

Since none of those state bills have cleared the legislature yet, enforcement here stays a purely city-run operation, and Ann Arbor runs it more aggressively than the paperwork alone would suggest.

Roughly 300 short-term rentals were licensed as of June 2026, counting both owner-occupied and non-owner-occupied units. Yet the city's own July resolution cites several hundred additional listings with no license at all, many of them in residential zones where a dedicated Airbnb was never supposed to be legal in the first place. That gap between licensed and actual is the entire reason the moratorium exists: council members framed unchecked STR growth as a direct drain on long-term housing supply, and Mayor Christopher Taylor put it plainly, saying he's prioritizing long-term residents over STR operators and visitors.

The city isn't finding those unlicensed listings by accident. Ann Arbor partners with a company called Deckard Technologies, whose AI-powered tool, Rentalscape, continuously scans platforms like Airbnb and generates fresh reports every two weeks. According to Lisha Turner-Tolbert, the city's building and rental service manager, an unlicensed rental gets three warning letters before a court-appearance ticket is generated. That ticket carries a $250 fee on its own, and a court-appointed fine on top of it can run anywhere from $200 to $1,000, with a separate $150-per-unit charge for failing to register at all. Tickets keep coming until the property is brought into compliance, and a Non-Principal STR license, or a general Certified Rental license, can be revoked outright for a serious violation.

Watch out if your listing predates the 2021 zoning change but sits in a residential district without a paper trail proving it, because that grandfathered status only protects you if you can actually document it, not merely assert it. And be aware that the moratorium debate itself is a leading indicator of where enforcement goes next. Council members openly floated capping total licenses and barring repeat violators from ever getting one, so a first violation carries more downside risk in Ann Arbor right now than it might have a year ago.

How to Start a Short Term Rental Business in Ann Arbor?

Assuming all of that still leaves your plan intact, the order below is the one that saves you both time and the $500 fee.

1. Confirm your zoning district and pick your STR type first. Pull up the UDC's permitted use table for your property's zone before anything else. If it's a straight residential zone, your only legal options are Homestay or Whole House, and you have to be the permanent resident either way.
2. Check the five-factor residency test against your own situation. Principal Residence Exemption, voter registration, driver's license address, tax return address, and utility bills all need to line up before you apply.
3. Rule out deed restrictions. If you're in a subdivision with an HOA, read the covenants for language barring short-term or transient rentals, since a private restriction can override a zoning approval.
4. Gather your documents. The Sworn Statement of Principal Residency, your five-factor proof, and, for a Non-Principal application, the Certificate of Compliance paperwork under Chapter 105.
5. Apply through STREAM and pay the $500. Submit before the review clock starts, since payment is due at the time of application, not after approval.
6. Track your status and respond fast to any request. Review can take up to 21 business days, and a request for more documentation has a clock of its own.
7. Post your license number and maximum occupancy in every listing, on every platform you use, the moment your license issues.
8. Sort out tax before your first guest. Confirm Airbnb is collecting Michigan's 6% use tax on your listing, register with Treasury yourself if you're on VRBO or taking direct bookings, and check Washtenaw County's accommodation tax page for your own situation.
9. Diarize your renewal date, and keep an eye on the ordinance rewrite. Licenses run one year, and the rules under you could genuinely shift before that year is up.

Who to Contact About Short Term Rental Regulations and Zoning

Whichever step trips you up, a handful of city and state offices handle nearly everything between them.

Licensing, zoning and the application itself

Rental Housing Services, City of Ann Arbor, administers the STR license, the STREAM portal, and questions about which category or zone applies to your property.

• Address: 301 E. Huron Street (1st floor), Ann Arbor, MI 48104
• STR-specific line: 734.794.6268
• STR email: [email protected]
• General Rental Housing line: (734) 794-6264, option 1
• General email: [email protected]
• Hours: Monday through Friday, 8 a.m. to 5 p.m., excluding holidays
• Apply: the STREAM portal

Neighbor complaints and code enforcement

Community Standards, part of the Ann Arbor Police Department, handles parking, trash, and vegetation complaints tied to a problem STR.

• Phone: 734.794.6942
• Address: 301 E. Huron Street, Ann Arbor, MI 48104

For a noise complaint that needs an officer sent out while it's happening, dial the police non-emergency dispatch line at 734.994.2911. The city also offers a dedicated STR complaint form for reporting a listing you believe is operating without a license.

State and county taxes

The Michigan Department of Treasury handles Use Tax registration and Sales, Use and Withholding Tax questions for anyone remitting the state's 6% tax themselves.

• Sales, Use and Withholding line: (517) 636-4730
• Email: [email protected]
• General business tax line: (517) 636-6925
• Hours: live representatives Monday through Friday, 8:00 a.m. to 4:30 p.m.

For the county-level Accommodation Excise Tax, Washtenaw County Finance maintains the Accommodation Excise Tax page, including the current ordinance and law history. I wasn't able to confirm a direct phone line for that office from an official source, so start there and follow the contact links the county itself provides.

What Airbnb Hosts Think About Ann Arbor Regulations

Not every question here has an office you can call, though. Some of the sharpest opinions on all of this came out of the same council meeting that created the moratorium, not from an anonymous forum, which makes them worth taking seriously as a read on where local sentiment sits.

Sierre Wolfkostin, a licensed non-owner-occupied host who runs a three-bedroom property near Argus Farm Stop, testified that she and her husband had done everything by the book: licensed, inspected, paying the higher non-homestead tax rate, with more than 150 stays and 750 guests hosted and no neighbor complaints on record. Her argument to council was that a blanket freeze mostly punishes hosts like her while doing nothing about the several hundred unlicensed operators the city already can't reach. Another prospective host, Matt Ridenour, told council he and his wife had spent almost a year and thousands of dollars working toward a license, only to learn of the coming moratorium days before the vote. He also made the case that STRs absorb overflow demand during roughly 35 high-impact days a year, football Saturdays and big concerts, that Ann Arbor's hotels can't cover alone.

Airbnb weighed in too. Public policy manager John LoPorto called the moratorium a de facto ban and pointed to the company's 2025 Michigan numbers: more than 2 million guest arrivals, close to $1.4 billion in state GDP, and roughly 17,600 jobs supported, with guests spending an average of over $600 per trip at local restaurants and shops. Council wasn't swayed. Lead sponsor Jenn Cornell framed the pause as time to "pump the brakes" while the city studies what's driving the unlicensed growth, and the resolution passed 8-1 regardless.

Read that split for what it is. Hosts who followed every rule feel like they're being asked to pay for a problem created by hosts who never applied at all, and the city hasn't yet said how, or whether, it plans to separate the two groups once the actual ordinance comes back to council.

Frequently Asked Questions

Can you legally run an Airbnb in Ann Arbor in 2026?

Yes, provided you fit one of three categories under Chapter 97. You can run a room-share or a whole-house rental in any residential zone if you're the documented permanent resident of the property, or you can run a dedicated commercial rental if it sits in one of ten office, commercial or mixed-use zones. Every category needs an annual $500 license, and Accessory Dwelling Units can't be used as short-term rentals under any of the three paths.

How much does an Ann Arbor short-term rental license cost?

The license itself costs $500 per unit per year, paid at the time you submit your application through the city's STREAM portal. That fee is non-refundable even if the application is denied, and review can take up to 21 business days. A property with multiple rentable units needs a separate $500 license for each one, and the license has to be renewed annually.

Is Ann Arbor pausing new short-term rental licenses in 2026?

Not yet, though a pause is on the way. On July 20, 2026, city council voted 8-1 to direct the city attorney to draft an ordinance imposing a six-month moratorium on new STR licenses, while existing licenses would still be allowed to renew. That resolution isn't the moratorium itself: the drafted ordinance still needs to come back to council for a separate vote before any application would be turned away.

What taxes do you pay on an Ann Arbor Airbnb?

Three layers can apply. Michigan's 6% state Use Tax applies to any stay under 30 days, and Airbnb collects it automatically, though VRBO and direct-booking hosts remit it themselves. Washtenaw County has historically exempted individual home-hosts from its 5% Accommodation Excise Tax, though that's worth confirming directly with the county. Rental income is also ordinary taxable income, taxed at Michigan's flat 4.25% individual rate plus federal tax.

Can an ADU be used as a short-term rental in Ann Arbor?

No. Ann Arbor's short-term rental rules bar Accessory Dwelling Units from STR use entirely, and any application involving an ADU is automatically denied regardless of who lives in the main house. This applies across all three STR categories the city recognizes, so there's no workaround based on ownership or occupancy structure.

Last verified: July 2026. Every ordinance, tax rate, state law, and contact detail in this guide links to or comes from its official source.