Short-Term Rentals in Jo Daviess County, Illinois

Inside Galena's city limits: a capped license system, reportedly full

Vacation rentals are only permitted within the City of Galena with an approved special-use permit and a separate operating license -- a two-step approval, not a simple business registration. The City Council has capped the total number of licenses the city will issue: 20 in residential districts, 70 in the downtown commercial district, and 5 in other commercial districts.

As of this research pass, a search-indexed summary of the city's own vacation-rentals page stated that all available licenses had been issued and that the city was maintaining a substantial waitlist, run through the city's Zoning Administrator, rather than accepting direct new applications. Practically, that means a property inside Galena's corporate limits is not automatically eligible for short-term rental just because it's zoned for it or a prior owner rented it informally -- the license itself is a capped, scarce resource. If a purchase depends on operating a licensed vacation rental in Galena, confirm directly with the Zoning Administrator (a) current waitlist position and realistic timeline, and (b) whether an existing, currently-licensed vacation rental transfers with the property sale or requires the buyer to reapply -- this project could not confirm license transferability rules and it is a critical question to get answered in writing before closing.

Outside city limits: the county's own Guest Accommodations Ordinance

Unincorporated Jo Daviess County runs a separate system. The County Board adopted a Guest Accommodations Ordinance on August 10, 1999 (effective January 11, 2000) requiring that all transient rental property -- defined as property rented for less than 30 consecutive days -- be licensed by the county, covering properties with 16 or fewer units. There is no reported numeric cap on county licenses comparable to Galena's, but the process has its own sequence: a single-family home must first obtain a Zoning Certificate from the Planning & Development Department before it can apply for a Guest Accommodations License; townhouses, condos, and motels apply for the Guest Accommodations License more directly. Once an application is received, Planning & Development schedules an inspection of the rental property before issuing the license.

So the practical question for any specific parcel is jurisdictional first: is it inside Galena's city limits (subject to the capped special-use-permit system) or in unincorporated Jo Daviess County (subject to the county's Guest Accommodations Ordinance, with no reported cap but its own inspection and zoning-certificate steps)? The two systems are not interchangeable, and a property just outside Galena's boundary is not subject to the city's license cap or waitlist.

Tax on top of the license

Both inside and outside Galena, transient rentals are subject to a Hotel/Motel Tax of 5% on the gross lodging charge, for a total of roughly 11% including the State of Illinois rate, per search-indexed reporting current as of this research pass. A separate new state-level tax -- reported at 6% of 94% of gross receipts -- was reported taking effect July 1, 2025; confirm current state and local tax rates and any changes directly with the Illinois Department of Revenue and the relevant local tax office before modeling rental income, since these figures were not independently verified against a primary tax-rate schedule this pass.

What to verify before buying for short-term-rental income

• Confirm whether the specific parcel is inside Galena's city limits or in unincorporated Jo Daviess County -- the two rental-licensing systems are entirely different, and the county GIS/Assessor's Office or Planning & Development Department can confirm jurisdiction for a specific address.
• If inside Galena, contact the city's Zoning Administrator directly for current waitlist status, and get in writing whether an existing vacation-rental license at the property (if any) is currently active and how license transfer on sale actually works -- this page could not confirm that mechanism.
• If outside Galena, contact Jo Daviess County Planning & Development for the Zoning Certificate and Guest Accommodations License application sequence and current inspection scheduling.
• Verify current hotel/motel and state occupancy tax rates directly with the Illinois Department of Revenue and the relevant local tax office rather than relying on a single reported figure.
• Ask about any homeowners' association or subdivision deed restriction on short-term rental separately from the municipal/county licensing question -- a license from the city or county does not override a private deed restriction.