Do you need a permit to run an Airbnb in Cape May?

Yes. Cape May requires Rental License (Mercantile License - Residential Short Term Rental Unit), and the fee is $125. Short-term rentals (any lease under 175 consecutive days) are legal throughout Cape May, but every rental unit must be inspected and licensed annually through the City Clerk's mercantile/rental license program, with square-footage-based fees of $125-$300 per unit plus a $50 tourism assessment and $25 parking surcharge (license year May 1-April 30). The biggest obligations are the annual Fire Prevention Bureau inspection, mandatory liability insurance ($500,000 for typical non-owner-occupied rentals), and a Cape May County-resident managing agent; there is no owner-occupancy rule, night cap, or minimum stay. Lodging taxes total about 14.625% (6.625% sales tax + 5% state occupancy fee + 3% municipal occupancy tax) on marketplace bookings, which platforms like Airbnb collect, while traditional realtor-brokered rentals are tax-exempt. Always confirm current requirements with the city before operating.

How much does a short-term rental permit cost in Cape May?

The Rental License (Mercantile License - Residential Short Term Rental Unit) fee in Cape May is $125, renewed annual. Tiered by square footage on the official 2025 mercantile license application: $125 (0-1,000 SF and 1,001-2,000 SF), $200 (2,001-3,000 SF), $250 (3,001-4,000 SF), $300 (4,001-5,000 SF and 5,000+ SF), per rental unit. Plus mandatory annual assessments: $50 Tourism Assessment Fee and $25 Parking Trust Fund per business license. License year runs May 1 to April 30; fees due by May 1. Late fee for STRs equals the full applicable square-footage fee multiplied by each calendar month late (the general 10%-of-fee-per-30-days late charge applies only to non-STR mercantile licenses). Some older sources cite the pre-2023 flat fees ($300 under 4,000 SF / $1,000 over), which the current official application supersedes.

How to get a short-term rental permit in Cape May, NJ (2026)

Cape May requires Rental License (Mercantile License - Residential Short Term Rental Unit) — the fee is $125, renewed annual. Here's how to get and keep it.

Permit at a glance

Permit required	Yes
Permit name	Rental License (Mercantile License - Residential Short Term Rental Unit)
Permit fee	$125
Renewal	Annual

Step by step

1
Confirm your property is eligible
Confirm the property's zoning allows short-term rentals. No STR-specific zoning districts or zone-based bans appear in the licensing ordinance; rentals are licensed citywide, and the city acknowledges most rental units sit in residential neighborhoods. The mercantile application requires the applicant to certify that all necessary zoning approvals have been secured, and the Zoning Official signs off on each license. A 2024 workforce-housing ordinance for the C-1 Business District encourages long-term apartments over retail in lieu of short-term rentals but does not prohibit STRs.
2
Apply for the Rental License (Mercantile License - Residential Short Term Rental Unit)
Submit the Rental License (Mercantile License - Residential Short Term Rental Unit) application to Cape May and pay the $125 fee. Tiered by square footage on the official 2025 mercantile license application: $125 (0-1,000 SF and 1,001-2,000 SF), $200 (2,001-3,000 SF), $250 (3,001-4,000 SF), $300 (4,001-5,000 SF and 5,000+ SF), per rental unit. Plus mandatory annual assessments: $50 Tourism Assessment Fee and $25 Parking Trust Fund per business license. License year runs May 1 to April 30; fees due by May 1. Late fee for STRs equals the full applicable square-footage fee multiplied by each calendar month late (the general 10%-of-fee-per-30-days late charge applies only to non-STR mercantile licenses). Some older sources cite the pre-2023 flat fees ($300 under 4,000 SF / $1,000 over), which the current official application supersedes.
3
Register for occupancy taxes
Register to collect and remit the applicable lodging/occupancy taxes for Cape May. Some are collected automatically by the booking platform and some you may need to remit yourself.
4
Renew on schedule
The permit renews annual — set a reminder so it never lapses, since operating on an expired permit typically triggers fines.

STR rules change without warning.

Get an email the moment Cape May changes its short-term rental rules — plus renewal reminders before your permit expires.

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Verified July 13, 2026. Informational only — not legal, tax, or financial advice. Permit requirements and fees change; confirm current requirements with Cape May before applying.

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