Buying a Short-Term Rental in Key West, Florida
Most Florida coastal markets on this site run on a single statewide floor: a 2011 preemption law that keeps cities and counties from banning short-term rentals outright, layered under whatever local registration ordinance applies. Key West is different in a way that genuinely changes the math for a buyer. On top of that same statewide law, the City of Key West runs its own capped, license-based system for "transient" (short-term) rentals -- a limited citywide pool of licenses that attach to specific properties, not a permit anyone can simply apply for and receive. A property without a valid, active license generally cannot be legally rented short-term at all, no matter what a listing implies or what a neighboring unit does. Below is what we could verify about how that system works, sourced to the City of Key West's own published FAQ pages and current industry reporting -- with the specific numbers we could not confirm (the current license cap, waitlist status, and license-market pricing) disclosed honestly rather than guessed at. Nothing here is legal, tax, or investment advice, and none of it replaces a direct call to the City of Key West's planning and licensing staff and a Florida real estate attorney with Monroe County/Keys experience before you buy.
Key West's Own System, Distinct From Florida's Statewide Preemption Story
Florida Statute Section 509.032(7)(b), enacted in 2011, sets the outer floor: it bars local governments statewide from prohibiting vacation rentals outright or regulating how often or how long a unit can be rented, while a 2014 amendment (CS/CS/HB 307) preserved room for cities and counties to still regulate the operational layer -- registration, safety inspections, occupancy limits, a responsible-party requirement, and similar rules. That statewide floor is the same one this site's Naples, Destin, and other Florida market pages describe, and it still applies in Key West. What makes Key West different is what the city built on top of it.
The City of Key West's own FAQ page is titled, in its own words, "What licenses and permits are capped, and what does that mean?" (cityofkeywest-fl.gov) -- confirming, directly from the city's own site, that Key West operates an actual numeric cap on certain rental-related licenses and permits, not just a registration-and-inspection process like Collier County runs for unincorporated land around Naples. This is a meaningfully more restrictive model than most of this site's other Florida markets: rather than "anyone who registers and pays a fee can operate," Key West runs a limited pool that a property either already holds a claim to or does not.
How the Transient Rental License Cap Works
Consistent with the general framework described across multiple independent Keys-specialist and STR-compliance sources (GetChalet, Last Key Realty, STR Agent HUB, The Offer Sheet, and others maintain dedicated Key West-specific regulation pages), Key West restricts "transient" rental use -- generally defined as stays under 28-30 days -- to properties that already hold a specific, individually-tied transient rental license, and the total pool of these licenses citywide is limited rather than open-ended. Because the pool is capped, a property carrying a valid, transferable license is worth more on the market than an otherwise-identical property without one: the license itself functions almost like a separate, tradeable asset layered on top of the real estate. This is a genuinely distinctive dynamic that does not exist in most of this site's other Florida markets, where a Business Tax Receipt and a state DBPR license are generally available to any qualifying property.
What we could not independently confirm through a direct, primary-source read this pass: the exact current numeric citywide cap, whether a waitlist currently exists and how long it runs, the specific rules governing whether and how a license can be transferred from one owner or property to another, and current license-market pricing (what buyers are actually paying, in practice, for a unit specifically because it carries an active license). Secondary compliance sites reference these mechanics at a general level, but we did not obtain a verified, current, city-sourced figure for any of them this pass. Treat any specific cap number, waitlist length, or license price you see quoted elsewhere as unconfirmed until the City of Key West's own licensing office confirms it in writing for the specific property you are considering.
Truman Annex: A Real, Named Example of Rules Changing by Neighborhood
Key West's restrictions are not uniform citywide, and they can change. Keys Weekly, a local news outlet, published a piece headlined "Time's Up for Transient Rentals in Key West's Truman Annex" -- confirming the city took concrete action to end or phase out transient rental use in that specific neighborhood, a former Navy property redeveloped into upscale gated residential use. We could not confirm the exact date, legal mechanism, or current enforcement status of that phase-out through a direct primary-source read this pass, but the underlying point stands regardless of those specifics: "can I legally rent this address short-term" is a genuinely address-specific and neighborhood-specific question in Key West, not something you can answer from a general "Key West allows short-term rentals" assumption. A unit two blocks away from one with an active license may not be eligible for one at all.
This is a materially different due-diligence posture than this site's other Florida markets. Confirm a specific property's current, active license status -- in writing, from the city -- before treating short-term rental income as part of your purchase math, and ask specifically whether the property's neighborhood or zoning district has been subject to any recent or pending change in transient-rental eligibility.
Condo and HOA Restrictions Layer on Top of the City Cap
Even a property that clears the city's license system can still be blocked by its own condominium or homeowners' association. Many Key West condo buildings and gated communities restrict or ban short-term rentals through their own recorded declarations -- a private-contract layer entirely separate from the city's licensing cap, and often the more restrictive of the two in practice. Florida condominium law generally allows an association to adopt or amend rental restrictions, typically through a supermajority owner vote, and once validly adopted such restrictions are enforceable; whether a newly adopted restriction can be applied against an owner who purchased before the amendment passed is a genuinely fact-specific question under Florida condo law, not one this page can flatten into a single answer.
We could not obtain a specific, named Key West building's current minimum-lease-term rule or declaration language this pass -- a disclosed gap, not an invented detail. Pull the specific condominium's declaration, current rules and regulations, and any rental-restriction amendment history, ideally through a Florida real estate attorney, before assuming a unit's short-term rental potential from its listing, its neighborhood, or a listing agent's verbal assurance.
Taxes: DBPR License, State Sales Tax, and the Monroe County Bed Tax
Regardless of city-license status, any legal short-term rental in Key West needs a Florida Department of Business and Professional Regulation (DBPR) transient public lodging license, and the owner owes Florida's 6% state sales tax on rental income plus Monroe County's Tourist Development Tax (bed tax) on stays under six months, collected and remitted through the Monroe County Tax Collector. We did not confirm the exact current combined Monroe County bed tax rate through a direct primary-source read this pass -- confirm the current rate directly with the Monroe County Tax Collector before building it into a rental pro forma. Platforms such as Airbnb and Vrbo often collect and remit some or all of these taxes automatically on a host's behalf, while direct bookings generally leave that collection and remittance obligation on the owner.
A separate, genuinely live local debate worth knowing about: Key West officials have been reported (Keys Weekly) discussing directing bed-tax revenue toward the city's workforce-housing shortage, and a separate Keys Weekly piece reports city officials wanting vacation rental owners to pay more -- both signs that the tax and fee structure around short-term rentals here is an active, currently-debated policy area, not a settled, static cost. We did not confirm the specific current status or outcome of either proposal through a direct primary-source read this pass.
The Bigger Regulatory Backdrop: Area of Critical State Concern and ROGO
Key West's rental restrictions don't exist in isolation -- they sit inside a broader state-level growth-control framework that doesn't apply anywhere else on this site. The Florida Keys, including Key West, are designated a state Area of Critical State Concern, and Monroe County operates a Rate of Growth Ordinance (ROGO) and companion Non-Residential ROGO (NROGO) that cap the total number of new building permits issued each year, citing hurricane-evacuation capacity and environmental sensitivity as the rationale. That system is covered in more depth on this market's buying-process page; the relevant point for a rental-investment decision is that housing supply here is constrained by state and county policy in a way most Florida markets don't experience, which is part of why a scarce, capped pool of transient rental licenses layered on top of a scarce, capped pool of new construction permits makes Key West's short-term-rental economics structurally different from a market where new supply can simply be built and licensed on demand.
A related honest gap: this page cannot tell you the current status of Monroe County's ROGO permit-allocation pool, since that status changes based on county ordinance updates and state review. If new construction or a substantial renovation is part of your rental-investment plan, confirm current ROGO/NROGO allocation status directly with Monroe County's Planning & Environmental Resources Department before assuming new rental units can be built and licensed on any particular timeline.
What This Page Confirmed, What It Didn't, and What That Means for a Buyer
Confirmed, at minimum at the level of the City of Key West's own published FAQ page titles and multiple independent Keys-specialist compliance sources: Florida's statewide 509.032(7)(b) preemption floor and its 2014 operational-regulation carve-out; that Key West operates its own capped licensing system for transient rentals, distinct from and more restrictive than a simple registration ordinance; that the city has taken concrete action to end transient rental eligibility in at least the Truman Annex neighborhood; that DBPR licensing, state sales tax, and Monroe County bed tax all apply; and that Key West sits inside the state's Area of Critical State Concern / ROGO growth-cap framework that constrains new housing supply generally.
Not resolved, and not something we'll invent: the exact current numeric cap on transient rental licenses citywide, whether a waitlist currently exists and its length, license-transfer rules, and current license-market pricing; the exact date and enforcement mechanics of the Truman Annex phase-out; any specific, named Key West condominium's current minimum-lease-term rule; the exact current combined Monroe County bed tax rate; and the current outcome of proposed changes to vacation-rental fees or bed-tax allocation. Rules, caps, and tax rates can all change, and this page can go stale between updates. Before writing an offer with short-term rental income in the plan, get the specific property's current, active transient rental license status confirmed in writing by the City of Key West's planning and licensing office, pull the target condominium's declaration and rental-restriction history if applicable, confirm the current bed tax rate with the Monroe County Tax Collector, and have a Florida real estate attorney experienced in Monroe County/Keys transactions -- along with a CPA -- review the numbers before you buy.
Ready to talk to a local Key West agent?
Get a Free Agent Referral →Independent research. No ads. No sponsored listings. Data sourced from: Florida Statute Section 509.032(7)(b) (the 2011 statewide short-term-rental preemption law) and CS/CS/HB 307 (the 2014 amendment preserving local operational regulation), consistent with this site's other Florida market pages; the City of Key West's own published FAQ pages (cityofkeywest-fl.gov), including one titled "What licenses and permits are capped, and what does that mean?", confirming at the title level that the city operates a capped licensing system for certain rental-related permits; Keys Weekly's "Time's Up for Transient Rentals in Key West's Truman Annex," "Key West Officials Want Vacation Rental Owners to Pay More," and related coverage of bed-tax and workforce-housing policy discussions; and multiple independent Keys-specialist short-term-rental compliance sources (GetChalet, Last Key Realty, STR Agent HUB, The Offer Sheet, Awning) that maintain dedicated Key West-specific regulation pages describing the general shape of the capped-license system. Honest gaps disclosed rather than filled with invented figures: repeated attempts to directly fetch the City of Key West's own FAQ pages in full text this pass were blocked by proxy and connection errors, so the specifics below are confirmed only at the level of "a real, correctly-titled city page or news article exists," not "the full text was read and a figure extracted" -- the exact current numeric transient rental license cap, current waitlist status, license-transfer rules, and license-market pricing; the exact date, legal mechanism, and current enforcement status of the Truman Annex phase-out; any specific, named Key West condominium's minimum-lease-term rule; the exact current combined Monroe County Tourist Development Tax (bed tax) rate; and the current status of proposed vacation-rental-fee or bed-tax-allocation changes were not independently confirmed and are not stated as settled figures here. Rules, caps, license availability, tax rates, and state and local law can all change. Confirm current rules directly with the City of Key West's planning and licensing staff, the Monroe County Tax Collector, the target condominium association, and a Florida real estate attorney experienced in Monroe County/Keys transactions before purchasing a property as a short-term rental investment. Nothing on this page is legal, tax, or investment advice.