Can You Rent Your Key West Home Short-Term? The Transient License Explained

What is a transient rental license in Key West, and why does it matter when buying a home?

A transient rental license is a City of Key West permit that allows a property to be rented for 28 days or less — meaning Airbnb, VRBO, and any other short-term rental. Key West stopped issuing new transient licenses to most residential properties in 2018, making them a finite, non-renewable resource. Properties with a valid transient license can generate $75,000–$115,000 or more in annual rental income. Properties without one are restricted to long-term rentals of 28 days or more. Before buying any Key West property with rental income expectations, verifying the license status isn't optional — it's the most important question you can ask.

By Jimmy Lane | June 16, 2026

Most buyers shopping in Key West already know about flood insurance. Many know about property taxes and the doc stamp tax. But a surprising number of people — including some experienced real estate investors — don't know about transient rental licenses until they're already under contract.

That oversight can be expensive. Depending on the property and your plans for it, not understanding Key West's transient license rules could mean the difference between a property that generates $90,000 a year in rental income and one that doesn't — or worse, buying a property you plan to rent short-term and then discovering you legally can't.

Here's what you need to know before you make an offer.

The 28-Day Rule Is the Dividing Line

In Key West, all residential rentals fall into one of two categories.

Non-transient properties can only be rented for 28 days or longer at a time. These are standard long-term or monthly rentals — think traditional tenants or extended-stay guests. If you want to spend two weeks in your home and then rent it out while you're gone, a non-transient property won't work for that.

Transient properties can be rented for any duration, including nightly, weekly, or anything under 28 days. This is the vacation rental category — Airbnb, VRBO, and similar platforms. These properties require a valid City of Key West transient rental license, plus a Florida DBPR vacation rental license and a City Business Tax Receipt to operate legally.

The distinction isn't subtle and the enforcement isn't light. Operating a short-term rental without the proper license means daily fines. This isn't a gray area.

Why Transient Licenses Are So Hard to Find — and So Valuable

In 2018, Key West placed a moratorium on issuing new transient rental licenses to most residential properties. The city's goal was to preserve housing for local residents rather than let the entire residential inventory drift into vacation rental use. That moratorium has never been lifted.

The result: the total number of transient licenses in Key West is fixed and slowly shrinking. There are no new ones coming. If you want a transient-licensed property, you have to find one that already has it — and buy it at a price that reflects the license's value.

That value is substantial. Transient licenses on the secondary market trade for roughly $250,000 to $400,000, though they rarely become available on their own. More commonly, the license is baked into the property's asking price — which is why transient-licensed homes in Key West can command $350,000 to $500,000 more than comparable properties without a license.

The income potential justifies it. Key West short-term rentals currently average somewhere between $73,500 and $90,000+ per year in gross rental income, depending on the property size and pricing tier, with average daily rates ranging from $438 to $661 and occupancy between 45% and 57%. Top-performing properties clear $1,185 per night. That income stream turns the license into one of the most valuable assets attached to any Key West property.

The Truman Annex Situation — A Cautionary Example

In December 2025, a significant event reshaped Key West's transient license landscape. On December 22, 2025, all 280 transient rental licenses associated with Truman Annex properties were voided.

These licenses had been issued under a 2005 settlement agreement that carried a firm 20-year expiration. The city made clear it had no obligation to renew them. Property owners in the Truman Annex Residential Property Owners (TARPO) group sued the city on the same day the licenses were voided, and that litigation is ongoing.

For the moment, Truman Annex property owners may only rent their homes on a 28+ day basis. Their options were to apply for a non-transient license (which the city will issue) or pursue the lawsuit.

Why does this matter to buyers looking at properties outside of Truman Annex? Because it's a vivid example of how transient license status can change and how important it is to verify — thoroughly — before you put money down. If you're buying in or near the Truman Annex, due diligence on license status requires extra scrutiny right now, including understanding the pending litigation.

The Transferability Question — This Is Where Buyers Get Burned

Here's the due diligence trap I've watched catch buyers off guard over the years: the transient license may not automatically transfer to you when you buy the property.

It depends. Some grandfathered licenses do transfer with the deed. Others don't — and if the license doesn't transfer, you're left with a property that now qualifies only for long-term rentals, because no new transient licenses are being issued. You can't apply for a replacement. The cap means there isn't one waiting for you.

Before making an offer on any Key West property marketed as having a transient license or short-term rental history, you need written documentation of the license status and its transferability. The right way to do that is to contact the Key West Community Development Department directly at (305) 809-3700 and request the license history for the property. A local real estate attorney with experience in Monroe County transactions can also research this and represent your interests in the process.

Do not rely on what a listing says. Do not rely on what the seller represents verbally. Verify with the city before you go under contract.

Zoning Matters — Even With a License

Having a transient license isn't the only box to check. The property's zoning district must also permit transient use. Key West allows short-term rentals only in specific zones. A property in the wrong zone doesn't qualify, regardless of its license history.

Additionally, homeowners associations can independently prohibit short-term rentals through their own rules. If the property is in a condo community or an HOA-governed neighborhood, check the governing documents carefully. An HOA prohibition overrides what the city allows — even if the license is valid.

The checklist before buying a Key West property you intend to rent short-term:

• Does the property have an active, valid City of Key West transient rental license?
• Is the license in good standing with no pending violations or lapses?
• Is the license transferable to a new owner on sale?
• Does the property's zoning permit transient use?
• Does any applicable HOA or condo association allow short-term rentals?
• Is the property registered with Florida DBPR as a vacation rental?

Every item on that list needs a confirmed yes — not a probable yes, not a "the listing agent thinks so."

What If the Property Doesn't Have a Transient License?

That's fine — as long as you go in knowing it and pricing accordingly. Non-transient properties still rent well in Key West on a monthly or seasonal basis. Long-term rental demand from locals and snowbirds is real and consistent. The income is lower than short-term vacation rental income, but the management is typically simpler.

The problem isn't buying a non-transient property. The problem is buying a property at transient-licensed pricing when it isn't actually licensed — or assuming you can obtain a license after closing. You can't. The moratorium has no end date.

If you're buying strictly for personal use with occasional long-term rentals on the side, the license question matters far less. But if rental income is part of your financial model for the property, the presence and validity of a transient license should be among the first questions your agent answers for you.

How I Help Buyers Navigate This

I've been working in this market for over 25 years. The transient license landscape has changed significantly over that time — from the early cap, to the moratorium in 2018, to the Truman Annex situation in December 2025. Understanding which properties are genuinely licensed, whether those licenses transfer, and how to verify status with the city is part of what I do for every buyer I work with who has rental income on their radar.

If you're considering a Key West purchase — whether it's a second home in Old Town, a condo in Casa Marina, or a property anywhere in the Keys — reach out before you start making offers. I'll help you understand what you're actually buying, including what the property can and can't do once you own it.

Frequently Asked Questions

Does a Key West transient rental license transfer to the new owner when a property is sold?

It depends on the specific license and how it was issued. Some grandfathered transient licenses transfer with the deed; others do not. Because Key West stopped issuing new licenses in 2018, a license that doesn't transfer cannot be replaced. Always verify transferability directly with the Key West Community Development Department at (305) 809-3700 before going under contract.

What happens if I operate a short-term rental in Key West without a transient license?

The city enforces transient rental violations with daily fines. Operating a short-term rental — including listing on Airbnb or VRBO — without a valid City of Key West transient rental license, a Florida DBPR vacation rental license, and a City Business Tax Receipt is a code violation. Enforcement in Key West is active, not passive.

Can I get a new transient rental license in Key West if a property doesn't already have one?

In most residential neighborhoods, no. Key West placed a moratorium on issuing new transient licenses to residential properties in 2018. There is currently no pathway to obtaining a new transient license for a property that doesn't already have one. A few commercial and resort zones operate under different rules, but for typical residential purchases in Key West, if the property doesn't already have a license, you won't be getting one.

How much more is a transient-licensed Key West property worth compared to one without a license?

Transient-licensed properties in Key West typically command $350,000 to $500,000 more than otherwise comparable properties without a license. The license itself, when traded separately, has a secondary market value of $250,000 to $400,000 — reflecting the $75,000–$115,000+ per year in additional rental income potential it unlocks.

What is the 28-day minimum rental rule in Key West?

Properties without a transient rental license can only be rented for a minimum of 28 consecutive days at a time. Renting for any period shorter than 28 days — even one night — requires a valid transient rental license. This rule is set by the City of Key West and enforced with daily fines for violations.

The transient license question is one of the most hyperlocal, highest-stakes issues in Key West real estate. There's no national real estate guide that prepares buyers for it, and mainland buyers routinely discover it after they've already fallen in love with a property. The right time to understand it is before you start looking — not after you're under contract.

If you're thinking through a Key West purchase and rental income is part of your plan, I'm happy to walk you through the specifics. Reach out anytime.

About Jimmy Lane
Jimmy Lane is a licensed Florida Real Estate broker serving Key West and the Florida Keys. Jimmy has been a full time broker for over 25 years and sold thousands of Florida Keys properties.