Short-term rentals in Orange Beach, explained properly.

The City's Business Licenses page says all business license applications and renewals are made through the City's OpenGov portal (orangebeachal.portal.opengov.com), and an account must be created to apply; questions go to the Finance Department at 251-981-6096. For grandfathered homes in the RS and MHS districts, the vacation rental license application form is available from the Finance Department and must include the owner's or authorized agent's contact details, a floor plan to scale showing each bedroom, a site plan showing on-site parking and trash enclosures, an affidavit that the rental meets fire, building and safety codes, signed acknowledgments, and the name and phone number of the person available 24 hours a day while renters are there. The community development and finance directors review the application and may refer it to the City Council.

Section 50-54 of the City Code says the business license is renewed annually on or before January 31 (extended to the next business day if that falls on a weekend or holiday); a renewal reminder is mailed by December 31, but not receiving it does not excuse a late renewal, and late renewals are charged penalties. A business starting before July 1 pays the full annual license and one starting on or after July 1 pays half. The City's Business Licenses page says licenses are issued annually each January for ongoing businesses and the business is responsible for meeting the renewal deadline. A grandfathered home's vacation rental license can be revoked or not renewed by the City Council for false information or violations of Article XI.

Schedule X of the City's business license rate schedules (Real Estate Rental: condominium units, townhouse units, cottages, dwellings and duplexes) sets the short-term license, for rentals of less than 180 continuous days, at $1.00 per thousand dollars of the preceding year's gross receipts above $20,000, with a minimum of $120 per unit. Long-term rentals (180 continuous days or more to one tenant) have a $75 minimum per unit. Section 50-54 adds an issue fee of $10 or the current amount set by the Alabama Department of Revenue for each license.

Section 50-646 of the City Code sets the fee for the vacation rental license required for vacation rental properties in the RS-1, RS-2, RS-3 and MHS districts outside the Beach Overlay District at $500. The code does not say how often it is paid.

The Zoning Ordinance and City Code define a vacation rental as a single-family or two-family dwelling unit in which the owner (or an authorized lessee or agent) offers hosted or non-hosted accommodations for periods of 14 consecutive days or less; detached accessory structures such as garages and storage sheds are not included. The City's Vacation Rental Regulations page uses the same 14-day definition. Separately, the business license short-term rate covers rentals of less than 180 continuous days, and the City lodging tax does not apply to accommodations supplied for 180 continuous days or more.

For homes licensed under the City Code's vacation rental article, section 50-648 limits overnight occupancy by number of bedrooms: studio or 1 bedroom 2, 2 bedrooms 4, 3 bedrooms 6, 4 bedrooms 8, 5 bedrooms 10 and 6 bedrooms 12, plus two children aged 14 or under. Section 50-649 applies the same table to overnight occupants and guests. A bedroom must meet minimum size, ceiling height, egress, window, heating and smoke detector requirements. The code sets no occupancy limit for other short-term rentals.

Section 50-648 requires the owner and the authorized agent to be available by telephone 24 hours a day for the duration of the rental, and the license application must name the person available 24 hours a day, seven days a week while renters are there. Under section 50-650, the owner or authorized agent must respond within 30 minutes of being notified of a complaint and then tell the City what corrective action was taken. The licensee must also take reasonable steps so renters and guests do not create unreasonable noise or disturbances, and must allow City inspections on 24 hours' written notice.

Section 50-648 requires a copy of the license and the City's good neighbor brochure to be posted in a prominent place inside the unit; a written rental agreement with each renter that includes the renter's name, age and address, the occupancy limits, noise rules and parking requirements, and the renter's acknowledgment of responsibility and of receiving the good neighbor brochure; access to the garage if it was counted as parking; refuse or recycling service with the property kept free of debris; and no limousine or bus parking that blocks emergency vehicle access.

Section 50-252 of the City Code levies a lodging tax on renting rooms, lodgings or accommodations to transients in any place where accommodations are regularly furnished to transients, on gross proceeds including charges for personal property and services furnished in the room, at 10% for transactions on or after September 1, 2023. Taxes in the police jurisdiction are half the rate in the corporate limits. The tax does not apply to accommodations supplied for 180 continuous days or more. The City's Taxes page says the lodging tax is based on the rental rate, cleaning fee and parking passes if applicable, and that the transaction starts on the first night of the stay.

Section 50-255 makes the City lodging tax due monthly on or before the 20th of the month after it accrues, with a statement of the previous month's gross proceeds on the City's form; quarterly or annual returns are possible for small amounts when specially authorized. The City's Taxes page asks taxpayers to set up My Alabama Taxes accounts and gives the City numbers for questions (251-981-6782 or 251-980-2159).

The City of Orange Beach's Taxes page lists a 2% Baldwin County lodging tax among the lodging taxes due on stays in the city. Baldwin County's own lodging tax page could not be read, so the county's rules (who collects it and how it is filed) are not stated here; check with the Baldwin County Sales and Use Tax Department.

Section 40-26-1 of the Code of Alabama levies a privilege or license tax on every person in the business of renting or furnishing rooms, lodging or accommodations to transients in any hotel, motel, inn, tourist camp, tourist cabin or any other place in which rooms, lodgings or accommodations are regularly furnished to transients for a consideration. The rate is 5% of the charge in the 16 counties of the Alabama mountain lakes area (Blount, Cherokee, Colbert, Cullman, DeKalb, Etowah, Franklin, Jackson, Lauderdale, Lawrence, Limestone, Madison, Marion, Marshall, Morgan and Winston) and 4% in every other county, and the charge includes any charge for personal property and services furnished in the room. The tax does not apply to rooms, lodgings or accommodations supplied for 180 continuous days or more. The Alabama Department of Revenue says lodgings tax is collected through an account at My Alabama Taxes, and that counties and cities may add their own lodgings taxes of between 1% and 13%, some collected by the Department, some by third-party administrators and some by the local government itself. Local lodgings taxes are shown on each place's page.

Section 40-26-1.1 of the Code of Alabama (the Alabama Tourism Tax Protection Act of 2024, Act 2024-334) says an accommodations intermediary, meaning a business other than the owner that facilitates a lodging transaction and charges the guest a room or accommodations fee it keeps as compensation, must collect and remit the state lodgings tax and parallel local levies for transactions on or after January 1, 2025. The tax is charged on the room charge, the full retail price the guest pays including any fees. When the intermediary handles the booking for an accommodations provider (an owner with an active lodgings tax account who collects and remits the tax), the tax collected may be remitted to the provider if an executed written agreement says who remits it, and the intermediary is then not liable for tax the provider fails to remit. The intermediary must state the tax separately on the bill. Where the owner has hired a licensed professional property management company, that company is the merchant of record. The Department of Revenue's notice describes the same rules. Which local lodgings taxes a platform collects in a given place is not stated in these sources; check with the platform and the local tax office.

Section 40-26-1.1(g) requires every accommodations intermediary and accommodations provider to submit an annual report, in a form set by the Department of Revenue, listing the physical address of each accommodation rented or furnished for more than 14 days during the previous year; the report is confidential taxpayer information. Exempt are licensed professional property management companies that collect and remit the state lodgings tax (or manage homes leased for a month or more as the tenant's principal residence), hotels that collect and remit the tax, tourism marketing organizations funded by the tax, and marina, tent camping and RV providers that collect and remit it. The Department of Revenue's notice describes the same reporting rule and exemptions.