Overview: Are Short-Term Rentals Allowed in Annapolis, MD?

Yes, short-term rentals are allowed in Annapolis, MD, but with significant restrictions. The city has implemented a comprehensive regulatory framework that includes licensing requirements, occupancy taxes, geographic limitations, and strict cap restrictions. As of October 2025, new ordinances limit short-term rentals to no more than 10% of any given blockface, with a lottery system in place to manage existing properties that exceed this threshold.

How to Start a Short-Term Rental Business in Annapolis

Step-by-Step Process

1. Verify Zoning Compliance: Confirm your property is located in an area where short-term rentals are permitted
2. Obtain Required State Licenses: Apply for Maryland Sales and Use Tax License from the State Comptroller
3. Create CSS Account: Register for the City of Annapolis Citizen Self-Service (CSS) Portal
4. Submit Application: Complete the short-term rental license application through the CSS portal
5. Meet Contact Requirements: Ensure you have proper local contacts if you're not a full-time Annapolis resident
6. Upload Documentation: Attach your MD Sales & Use Tax License and other required documents
7. Monitor Geographic Limits: Be aware of the 10% blockface cap restrictions
8. Set Up Tax Systems: Prepare to collect and remit the 8% occupancy tax
9. Plan for Renewal: Remember existing licenses in over-cap areas have until November 2027 for renewal

Pre-Application Requirements

Before beginning your application, you must have:

• Maryland Sales and Use Tax License (call 1-800-638-2937 to obtain)
• Local Property Manager (if you are not a full-time Annapolis resident)
• Access to hosting platform information (Airbnb, VRBO, HomeAway, etc.)
• Property ownership documentation

Required Documents, Permits, Licenses, and Guidelines

Essential Documents

State Level:

• Maryland Sales and Use Tax License (required)
• State business registration (if operating as a business entity)

City Level:

• Short-Term Rental License (through CSS portal)
• Proof of local contact person (if not full-time Annapolis resident)

Application Components

Business Information:

• Company name and type (sole proprietorship, LLC, etc.)
• Property address and ownership verification
• Applicant contact information

Hosting Platform Details:

• All hosting platforms used to advertise the property
• Platform account information
• Listing URLs and property identifiers

Compliance Documentation:

• Maryland Sales & Use Tax License attachment
• Property management contact information (if applicable)
• Local emergency contact details

Specific Regulations for Short-Term Rentals

Geographic and Quantitative Restrictions

10% Blockface Cap:

• No new licenses will be issued if more than 10% of a blockface are already short-term rentals
• Blockface defined as one side of a city block
• Current status: 42 blockfaces exceed the cap, with 30 in Ward 1, 5 in Ward 2, and 7 in Ward 8

Property Count Limitations:

• Blockfaces with fewer than 10 residential units are limited to one short-term rental license
• Existing over-cap properties have renewal rights until November 2027

Operational Requirements

Hosting Platform Compliance:

• All properties using hosting platforms must register and pay occupancy tax
• Platforms include Airbnb, HomeAway, VRBO, and similar services
• Must report all rental activity through the CSS portal

Local Contact Requirement:

• Non-resident property owners must designate a local property manager within Annapolis city limits
• Failure to include this contact will result in application rejection

Tax Obligations

Occupancy Tax (8%):

• 8% of gross rental income must be paid to Anne Arundel County
• Increased from 7% to 8% effective July 1, 2023
• Considered the hotel tax under state law
• Remitted through the CSS portal

Tax Remittance Process:

• Monthly reporting required through CSS portal
• Due dates and filing procedures managed online
• Failure to remit can result in license suspension

Exemptions and Special Provisions

Event-Based Exemptions:

• Naval Academy Commissioning Week
• Spring and fall boat shows
• During these periods, the 10% cap does not apply

Owner-Occupied Exemptions:

• Properties where the owner lives on-site are exempt from the 10% cap
• Owner-occupied rentals receive priority in lottery systems

Licensing and Renewal Process

Initial Licensing:

• All applications processed through CSS portal
• Review and approval timeline varies
• License issuance via email notification

Renewal Process:

• Existing over-cap properties: eligible for renewal until November 2027
• Post-2027: subject to lottery system
• Annual renewal required for all active licenses

Lottery System (Effective November 2027):

• Implemented for blockfaces exceeding 10% cap
• Prioritizes existing license holders
• Local residents receive preference over non-local owners

Enforcement and Compliance

Licensing Compliance:

• Only 50.5% of advertised short-term rentals are currently licensed
• City reports over 500 STR units advertised at any given time
• Enforcement remains a concern among city officials

Stay Duration:

• Short-term residential rentals limited to 120 consecutive days per calendar year
• 99% of stays last between 1-7 nights

Contact Information

Primary Authority Contacts

City of Annapolis Planning and Zoning Department

• Phone: 410-260-2200
• Email: KMKRAUSE@ANNAPOLIS.GOV
• Contact Person: Karen Krause

Mailing Address: City of Annapolis
160 Duke of Gloucester
Annapolis, MD 21401

Mayor's Office:

• Phone: 410-263-7997
• Email: mayorbuckley@annapolis.gov

State Tax Authority

Maryland Office of the Comptroller

• Phone: 1-800-638-2937
• Purpose: Maryland Sales and Use Tax License registration

Online Services

CSS Portal Access:

• URL: css.annapolis.gov
• Portal: selfserve.annapolis.gov/energov_prod/selfservice#/home
• Functions: Applications, renewals, tax remittance, license printing

Source Links

Official City Resources

• Short-Term Rental Portal - Citizen Self-Service
• Applying for a Short-Term Rental License
• Rental Licensing Procedures
• Rental Operations and Property Maintenance
• Housing Inspection General Checklist

County Tax Information

• Anne Arundel County Code - Occupancy Tax Section 4-6-105

News Coverage and Legislative Updates

• WMAR-2 News: Annapolis City Council Passes Limit on Short-Term Rentals
• Patch: Vacation Rental Homes Face New Cap in Annapolis
• The Baltimore Banner: Annapolis Restricts Short-Term Rentals

Legislative Documents

• Annapolis City Council Legislation - Ordinance 17-25

Important Note for Investors: The regulatory environment for short-term rentals in Annapolis is actively evolving. The city has demonstrated a commitment to balancing tourism revenue with community preservation. Potential investors should carefully monitor legislative updates and enforcement practices, as ongoing discussions suggest additional regulations may be forthcoming. The current 10% cap and lottery system create a limited and competitive licensing environment, particularly in downtown areas where demand is highest.