Panama City, FL Short-Term Rental Rules - Permits & Taxes

Short-Term Rental Rules in Panama City, Florida

If your address is inside Panama City limits, expect city‑level business requirements on top of Bay County taxes and any county programs. Your first step is always confirming whether the property is in city limits or just outside in unincorporated Bay County.

Rules summary

Are short-term rentals allowed?: Short-term rentals are commonly allowed in many areas, but zoning matters—especially in a municipality. HOA/condo restrictions can still be the limiting factor.
Where is it regulated?: Primarily Panama City (city limits) plus Bay County (tax administration and/or inspection programs) and Florida state requirements (tax + DBPR licensing where applicable).
Registration or license: Plan for Florida sales tax registration and Bay County tourist development tax registration. If you operate as a vacation rental dwelling, you may also need a DBPR license depending on your setup.
Local taxes: Florida state sales tax is 6%. Bay County’s discretionary surtax is 1%. Bay County’s local option transient rental tax is commonly 5% in most beach/destination areas, for an estimated all‑in lodging tax burden of 12.0% (before platform fees).
Fees: Budget for city business tax receipts/merchant fees (where applicable) plus any Bay County inspection/registration costs that apply to your property type and location. Panama City materials reference a 1% merchant fee for certain businesses—confirm how it applies to your rental operation.
Occupancy and parking: Cities tend to enforce parking, trash, and noise rules more actively in dense neighborhoods and condo corridors.
Minimum stay: Minimum stays vary by zoning district and HOA/condo rules; some buildings and neighborhoods set longer minimums even where the city allows STRs.
Enforcement and penalties: Operating without required city registration or failing inspections can lead to fines and loss of eligibility to operate. Keep documentation current and address complaints quickly.

What to do next

Confirm jurisdiction (Panama City limits vs unincorporated Bay County) using GIS/property appraiser records.
Set up tax accounts: Florida sales tax + Bay County local taxes (and verify what your platform remits).
Review city business requirements(business tax receipt/merchant items) if inside city limits.
Check HOA/condo docs for minimum stays, rental caps, and parking pass rules.
Create an operations plan: quiet hours, parking map, trash day schedule, and a local contact.

FAQ

Do I follow city rules or county rules?

If the property is inside Panama City limits, follow city business requirements plus county/state tax rules. If outside city limits, you’re in unincorporated Bay County.

Does Bay County have an inspection program for vacation rentals?

Bay County publishes an annual registration/inspection framework and resources. Verify whether your address/type falls under the program.

What taxes apply?

Expect Florida sales tax + Bay County surtax, plus Bay County’s local option transient rental tax in covered areas. Platforms may remit some taxes; owners still must ensure compliance.

Do condos have different rules?

Condos are often the most restrictive because building bylaws may impose minimum stays, rental caps, and parking pass limits regardless of city rules.

What’s the #1 operational risk?

Parking. If your guest plan depends on street parking, assume complaint risk goes up.

Official sources

Last verified: 2025-12-21. Rules and fees can change. Confirm directly with the relevant authority and any HOA or condo association.

Panama City STR Market Context

Panama City can outperform a pure beach market in shoulder season because it’s driven by local jobs and infrastructure.

The tradeoff is that neighborhood‑level expectations (parking, noise, trash) can be less forgiving than in resort corridors.

What makes this market different

Best fit for hybrid strategies: Corporate/medical/contractor stays can smooth seasonality compared to beach-only demand.
Neighborhood selection matters: Some areas tolerate STRs better than others—parking and street congestion are the fastest way to complaints.
Bridge access = pricing power: Homes with quick access to the beach or the historic St. Andrews area often command higher ADR.
Compliance stack: City licensing + Bay County/State tax setup is the “baseline” before you optimize furnishings and marketing.
Plan for inspections where applicable: Bay County’s program focuses on safety self‑inspection and documentation.

Investor tip: treat compliance as a first-pass filter. Verify property-specific rules before finalizing purchase assumptions.

Short-Term ROI Calculator in Panama City

Estimate monthly revenue, expenses, and cash flow for a short-term rental in Panama City.

Output · Rough estimates

Estimated gross revenue (annual) $0

Estimated total expenses (incl. debt) $0

Estimated net income (before income tax) $0

Cash-on-cash return (approx.) 0%

Cap rate on purchase (approx.) 0%

Estimated monthly debt service $0

All values are approximate and for illustration only. Real underwriting should layer in property taxes, insurance, reserves, maintenance, capex, and your specific management structure in this market.

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Use these internal links to compare rules, fees, and underwriting assumptions across neighboring markets.