Last verified: October 21, 2026
Key West allows short-term rentals only in homes that already hold a City of Key West transient rental license. Since Ordinance 02-06, all unlicensed transient rental use of residential dwellings is prohibited, and "transient" means any rental of less than 30 days or one calendar month, or simply advertising a home to transients. Under the city's rate-of-growth rules no new transient units are created, so a buyer has to acquire a property that already carries a license and medallion.
I'm Troy Nowak, broker of Mangrove Bay Realty (BK3436609). I help investors underwrite STR deals across Florida. This guide covers the City of Key West and Monroe County rules, what 1- to 5-bedroom homes are worth versus the revenue AirROI and Rabbu report for the same bedroom count, and what to check before you offer.
Review STR Deal: Send the address and asking price and I will check the legal stay path for that property before you offer.
Why the rules create an edge in Key West
Key West is a fixed-supply market. Transient licenses and units cannot be newly created; they can only be transferred under Division 6 of the city's zoning code, and a license stays with the property and can pass to a buyer for a fee of ten percent of the annual license tax. In regulated markets like this, limited supply can mean better long-term performance for compliant homes, because the competition can't simply multiply. Supply still moves: AirROI counts 1,251 active Key West listings in the 12 months to September 2026, up 22% on the year before, which includes hotel and guesthouse inventory as well as licensed homes.
Short-term rental rules in Key West
City of Key West. Key points from the city code and Licensing Division:
- All residential rentals need a City of Key West Business Tax Receipt. Non-transient rentals may not be rented for less than 29 days at a time; transient rentals are 28 days or less.
- Only properties on the city's annual list of transient licensed properties may rent short term. The city publishes a map and address list so buyers and guests can verify a listing.
- Transient rentals require an active Florida DBPR lodging license, and a copy must accompany each renewal.
- Business Tax Receipts run October 1 to September 30 and renew every year. Licensed homes display a city medallion and keep a 24-hour contact.
- Anyone with a city BTR must also hold a Monroe County Business Tax Receipt.
Monroe County (outside city limits). In unincorporated Monroe County a vacation rental is a dwelling rented for less than 28 days. Each unit needs an annual Special Vacation Rental Permit before it is rented, plus a licensed vacation rental manager. Vacation rentals are allowed only in zoning districts that list the use, and they are prohibited in Improved Subdivision (IS) districts except IS-V districts and qualifying gated communities. The initial application fee is $490, and the permit does not transfer to a new owner.
Taxes. Florida's 6% state sales tax applies to transient rentals (Florida Department of Revenue, Sales and Use Tax, accessed October 21, 2026), and Monroe County Code Section 23-197 levies a 4% tourist development tax on rentals of six months or less, county-wide. AirROI puts the total lodging tax on a Key West stay at about 12.5%.
Official sources: City of Key West transient rental properties, City of Key West Licensing FAQ, Monroe County Special Vacation Rental Program. Rules change. Verify the license status of the exact address before you offer.
Price vs revenue by bedroom (Key West)
Key West is the highest-basis market in this series. Revenue figures are trailing 12-month medians or averages from AirROI (12 months to September 2026) and Rabbu (as of April 27, 2026). Home values are the Zillow Home Value Index (ZHVI) for the City of Key West by bedroom count, September 2026. Yields are gross (revenue ÷ typical home value) and exclude operating costs, financing, insurance, HOA dues and taxes.
| Bedrooms | Typical home value (Zillow ZHVI) | AirROI median annual revenue | Rabbu avg annual revenue | Approx. gross yield |
|---|---|---|---|---|
| 1 | ~$605,900 | ~$66,100 | ~$69,200 | 10.9–11.4% |
| 2 | ~$838,600 | ~$55,700 | ~$96,300 | 6.6–11.5% |
| 3 | ~$1,238,200 | ~$62,200 | ~$164,200 | 5.0–13.3% |
| 4 | ~$1,819,000 | ~$122,000 | ~$232,300 | 6.7–12.8% |
| 5+ | ~$3,039,900 | ~$255,000 | ~$409,000 (5 bed) | 8.4–13.5% |
Sources: Zillow Research ZHVI by bedroom, City of Key West (September 2026); AirROI Key West bedroom breakdown (12 months to September 2026); Rabbu Key West averages (as of April 27, 2026). Average recent sold price by bedroom: not available from a public source we could verify, so the ZHVI typical value stands in. Note that the typical value covers all homes, licensed or not; a transient license usually carries a premium. Update both columns monthly.
None of the five bedroom counts reaches a 20% gross yield at the city-wide typical value. The gap between AirROI's median and Rabbu's average is wide for 2- and 3-bedroom homes, which tells you a few top performers pull the average up. Underwrite the specific licensed property, not the market average.
Seasonality
Key West peaks in late winter. Rabbu reports March as the best month at $15,283 in average revenue per listing and September as the slowest at $3,772, against a 12-month average of $8,236 a month. AirROI shows the same shape: March at $15,600 and September at $5,760, with the three strongest months bringing in 34% of the year. Rabbu puts occupancy at 69% and ADR at $722; AirROI puts them at 47% and $672. Guests book about 87 days ahead on average, per AirROI. Plan for a soft August through November when you model cash flow.
Top attractions
- Duval Street and Old Town
- Mallory Square and the Sunset Celebration
- Ernest Hemingway Home and Museum
- Southernmost Point Buoy
- Fort Zachary Taylor Historic State Park
- Key West Bight and the Historic Seaport
Who gets compressed and who gains the advantage
Who gets compressed: Buyers who assume any Key West home can run nightly; without a transient license it can only be rented for 30 days or longer. Buyers in unincorporated Monroe County IS districts, where vacation rental use is prohibited. Anyone who underwrites only on March screenshots, or on a 2- or 3-bedroom average that a handful of top homes inflate.
Who holds the edge: Owners of properties already on the city's transient licensed list, where the license transfers with the sale. Monroe County homes in districts that permit vacation rentals and hold a current Special Vacation Rental Permit. Compliant operators generally, because the supply of legal units can't grow freely.
Due-diligence checklist
- Confirm whether the address is inside City of Key West limits or in unincorporated Monroe County.
- For city properties, check the address on the city's transient licensed properties list and confirm the number of licenses issued for it with the Licensing Division (305-809-3959).
- Confirm the license transfers with the sale, and budget the transfer fee and the annual BTR, inspection and DBPR renewals.
- For county properties, confirm the zoning district allows vacation rentals and that a new Special Vacation Rental Permit and a licensed manager will be in place, since the permit does not transfer.
- For condos, get the association's written position on short-term rentals.
- Pull flood zone, elevation and insurance quotes that disclose short-term use, and model both peak and fall months.
Official sources
- City of Key West: Map & Addresses of Transient Rental Properties
- City of Key West: Licensing Division FAQs
- City of Key West: Regulatory Licenses
- City of Key West Code of Ordinances, Sec. 122-1371 (transient living accommodations in residential dwellings)
- Monroe County: Special Vacation Rental Program
- Monroe County Code, Chapter 23, Article VI: Tourist Development Tax
Buying or selling a short-term rental in Key West? Send the address through the contact form and I'll tell you which rules control it and whether the numbers work for your strategy.
Related: Pinellas County STR Market Guide · Florida STR rule changes · Florida STR occupancy scarcity · Troy Nowak agent profile
Hero photo: Sunset Key cottages by Diego F. Parra, Pexels License.
Educational real estate information, not legal, tax, or insurance advice. City rules, fees, and insurance costs change. Verify the exact parcel with the city, county, state, your insurer, and your association before you buy.