Can You Rent Out a Second Home at the Delaware Beaches?
Part of our Delaware Retirement and Second Home Guides.
By Bill Davis, Broker and Owner, Active Adults Realty, Lewes, Delaware. Published September 29, 2026. Every rate, fee and rule on this page was checked against state, county and town sources on September 29, 2026. Rates and fees change, usually at the start of a town's fiscal year.
Please read this before any of the numbers below. Active Adults Realty is a real estate brokerage. We are not tax or legal advisors, and nothing on this page is tax or legal advice about your situation. The figures below are published rates and rules as of the date above. Confirm your own obligations with your accountant, your attorney and the town.
Yes, in most places, but three layers of rules apply and they stack. The state taxes short-term rentals at 4.5 percent. Most beach towns add a rental license and their own rental tax on top. And if the home is in a community with an HOA, the community's own documents can limit or forbid renting it at all. Check all three before you buy a home you plan to rent, not after.
What does the state charge on a short-term rental?
Delaware charges a 4.5 percent lodging tax on short-term rentals, for rental agreements made on or after January 1, 2025. A short-term rental is a house, condo or other dwelling rented for no more than 31 consecutive nights. The tax is on the rent itself, not on cleaning fees, linen fees or security deposits.
- If you rent through Airbnb, Vrbo or a similar platform, the platform collects and sends in the state tax. You do not file it yourself for those bookings.
- If you rent directly to guests, you need a $25 Delaware business license, renewed each year, you collect the tax, and you file a return every month.
- A small exemption covers an owner who rents directly, on a casual basis, well below market rate and for no more than 10 nights a year in total. Most rental owners will not fit it.
Does Sussex County add its own rental tax?
No. Sussex County Council voted down a proposed 3 percent tax on short-term rentals on December 10, 2024, and no county short-term rental tax has been adopted since, as of September 29, 2026. The county's existing 3 percent lodging tax applies to hotels, motels and tourist homes in unincorporated areas.
What do the beach towns require?
This is where the real differences are. Inside town limits, expect a rental license, a town rental tax on gross rent, and occupancy rules.
| Town | Rental license | Town tax on rental income |
|---|---|---|
| Lewes | Required, renewed each calendar year | City gross receipts rental tax. Confirm the current rate with the City of Lewes. |
| Rehoboth Beach | Required, renewed yearly | 7% rental tax |
| Dewey Beach | Required, license year May 1 to April 30 | 3% of gross proceeds |
| Bethany Beach | Required, $100 per unit a year | 7% of gross receipts |
| South Bethany | Required, $180 application fee (2026) | 8% of gross rental income |
| Fenwick Island | Required, $185 a year | 7.5% on short-term rentals of homes since January 1, 2026 |
| Ocean View | Required, $150 a calendar year | 6% of gross receipts since January 1, 2025 |
| Milton | Required, under rental rules rewritten in June 2025 | None in the town's fiscal 2026 fee and tax schedule |
| Millsboro | Required for every rented unit, after an inspection | None in the town's licensing code |
Town taxes are paid to the town, separately from the state tax, even when a platform handles the state tax for you. So a week's rent in Bethany Beach carries the state's 4.5 percent and the town's 7 percent.
Occupancy limits are common. Lewes, Rehoboth Beach and Dewey Beach cap overnight guests at two per bedroom plus two. Milton caps them at two per bedroom. Lewes, Rehoboth Beach and Milton require a local contact who can be reached around the clock. Lewes also requires the rental's license number in every ad, including on rental websites.
Can the community stop you from renting?
Yes. An HOA can say no even where the town says yes. Many Delaware communities limit rentals in their deed restrictions: a minimum lease of several months, a cap on how many homes may be rented, or no short-term rentals at all. A town rental license does not override those documents.
Communities that operate as 55+ housing have a particular reason to watch this. Under the federal rule for housing for older persons, a community keeps that status only if at least 80 percent of its occupied homes have at least one resident 55 or older. Rentals affect that count, so boards write their leasing rules carefully.
What to do: ask for the HOA's declaration, bylaws and current rules before you write an offer, and read the leasing section. If renting is part of how you plan to pay for the home, make it a condition you check, not an assumption.
What federal tax points should you know?
The IRS treats a vacation home as a residence if you use it yourself for more than 14 days a year, or more than 10 percent of the days it is rented at a fair price, whichever is greater. That changes which expenses you can deduct. And if you use it as a home and rent it for fewer than 15 days in a year, you do not report the rent as income. Your accountant will know how this applies to you. IRS Publication 527 is the source.
What should you check before you buy a home you plan to rent?
- Read the HOA's leasing rules. This is the one that can end the plan.
- Check whether the address is inside town limits. The town decides the license and the town tax.
- Confirm the town's current license fee and rental tax rate.
- Decide platform or direct. Direct means a state license and monthly filing.
For the full cost picture, see what a second home in coastal Delaware costs to own, and for community fees, our guide to HOA fees in Delaware active adult communities. If the beach house is also your future retirement home, read buying a second home now to retire to Delaware later.
We know which communities in coastal Sussex allow rentals and on what terms, and we will pull the documents for any home you are serious about.
Active Adults Realty
1504 Savannah Road, Lewes, DE 19958
Call 302-549-5164
Contact us
Nothing on this page is tax or legal advice. Confirm your own situation with a tax professional, an attorney and the town where the home sits. Active Adults Realty is an independent brokerage serving Sussex, Kent and New Castle counties, Delaware. Equal Housing Opportunity.
Sources
- Delaware Division of Revenue, Short-Term Rental FAQs and Short-Term Rentals tax tip (2025)
- Delaware Code, Title 30, Chapter 62, short-term rental lodging tax
- Sussex County, Lodging Tax FAQ, and Sussex County ordinance to amend Chapter 103, Article VI (rejected December 10, 2024)
- Delaware Public Media, "Sussex County rejects additional tax on short-term rental properties," December 11, 2024
- City of Rehoboth Beach, Lodging and Rental Taxes, and Residential Rental License
- Town of Dewey Beach, New Property Owner Information, Accommodations Tax, and Residential Rental License Application
- Town of Bethany Beach, Licenses and Rental Tax
- Town of South Bethany, 2026 Master Application (rental and non-rental)
- Town of Fenwick Island, FY 2026-2027 Fee Schedule, and Message from the Mayor, August 2025 (rental tax change effective January 1, 2026)
- Town of Ocean View, Gross Rental Tax, and Business and Rental Licenses
- City of Lewes Code, rental licensing and short-term rentals; Town of Milton Code, Chapter 164, and Milton FY2026 Fee and Tax Schedule; Town of Millsboro Code, Chapter 140
- 24 CFR 100.305, housing for older persons
- IRS Publication 527 (2025), Residential Rental Property