Properties within the City of Panama City Beach limits (Tax District 13) face significantly stricter regulations than those in the unincorporated county. The most critical hurdle is zoning: Short-term rentals are strictly PROHIBITED in Single-Family Residential zones (R-1a, R-1b, R-1c) unless the property was grandfathered before the ordinance changes. Arbitrage is generally only viable here if the property is zoned for Commercial (CH, CM, CL) or Multi-Family use (R-2, R-3). Additionally, the City imposes a unique 1% "Merchant Fee" on gross revenue that must be filed monthly.

Key Requirements

• Zoning Check (Pass/Fail): You must verify the property is NOT in an R-1 zone. If it is, you cannot legally operate.
• City Certificate: You must obtain a City Vacation Rental Certificate ($50/year).
• Owner Affidavit: The application requires a notarized affidavit signed by the property owner authorizing the rental use. You cannot sign this as a tenant.
• Business Tax Receipt (BTR): You must register for a BTR, which functions as the city's business license.

Operational and Safety Standards

• Fire Inspection: A physical fire safety inspection is mandatory before you can list. The inspector will check for 2A:10B:C fire extinguishers, hardwired (or 10-year sealed) smoke detectors in every bedroom, and an evacuation map on the back of the main door.
• Occupancy Limit: Strict limit of 1 person per 150 sq. ft. of habitable space. This number will be assigned by the Fire Marshall during inspection and must be posted on the interior signage.
• Signage:
  • Exterior: A sign (max 18"x12") visible from the street with your 24/7 contact number.
  • Interior: "Renter Information" sheet posted on the fridge or main door with trash days, noise rules, and the evacuation map.

Tax Obligations (The "Triple Tax")

• 1. State Tax (6%): Collected by Airbnb/Vrbo.
• 2. Bay County Tourist Tax (5%): NOT collected by Airbnb/Vrbo. You must register with the Bay County Clerk and remit this 5% manually every month.
• 3. City Merchant Fee (1%): You must pay an additional 1% of gross revenue to the City of Panama City Beach monthly. This is filed separately from the County tax.

Enforcement

• Fines: $500 for the 1st violation; $1,000 for the 2nd. A 3rd violation results in the revocation of your certificate for 12 months.
• Lock-Out Fee: If you schedule an inspection and are not present (or the unit is occupied), you are charged a $100 "Lock-Out" fee.