California Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in California?

Short-term rentals through platforms like Airbnb and Vrbo have become increasingly popular in California. However, the state and many local jurisdictions have implemented regulations to address concerns about the impact of STRs on housing availability and neighborhood character. Here's what you need to know about short-term rental regulations in California.

Starting a Short-Term Rental Business in California

To legally operate a short-term rental in California, you'll need to comply with state and local regulations. This typically involves:

• Registering your business with the city and paying the necessary fees
• Occupancy limits: You may need to reside in the STR property for part of the year (e.g. at least 275 nights per year in San Francisco). There may also be restrictions on the type of structure, location, number of occupants, and length of stay.
• Safety requirements like posting emergency exit signs, having an on-call person for emergencies, and maintaining the property to code.
• Adhering to noise ordinances, parking restrictions, and trash regulations.

Failure to follow these rules could result in landlord-tenant disputes or conflicts with city officials.

Short-Term Rental Licensing Requirement in California

While there is no statewide licensing requirement for short-term rentals in California, many cities and counties have implemented their own permitting processes. The specific requirements, fees, and penalties vary by jurisdiction.

To legally operate a short-term rental, you typically need to:

1. Register your business with the city or county. This may involve:

1. Obtaining a business license
2. Getting a Transient Occupancy Tax (TOT) certificate
3. Applying for a specific short-term rental permit

2. Pay registration fees, which can range from a few hundred to over a thousand dollars annually depending on the location

3. Provide documentation such as:

1. Proof of ownership (grant deed, title)
2. Signed attestations agreeing to adhere to local STR rules
3. A diagram of your property including parking
4. Proof of insurance

4. Pass an inspection to ensure your property meets safety requirements like smoke alarms, fire extinguishers, etc.

5. Designate a local contact who can quickly respond to any issues at the property

Some jurisdictions like Malibu have online portals to submit STR permit applications. Others require mailing or dropping off physical copies of the application and attestation documents.

The timeline for approval varies, but expect it to take at least a few weeks, if not a couple months. For example, South Lake Tahoe has a 4-6 week turnaround time.

Operating without a required permit can result in significant fines:

1. In unincorporated San Bernardino County, it's $1000 per day per violation
2. Malibu charges $1000 per day or 2x the daily rental rate, whichever is higher
3. Unpermitted STRs in Placer County start with a $1500 fine, escalating to $5000 for continued non-compliance

So it's critical to research the permitting requirements in your specific area and make sure you are in full compliance before listing your property. Check with your city or county for details on their short-term rental regulations and licensing process. Failing to do so can be very costly.

Required Documents for California Short-Term Rentals

The documentation that California vacation rental property owners need to submit for obtaining and renewing a short-term rental license varies by jurisdiction. However, there are some common documents required across the state:

1. Business Registration: Most California cities require short-term rental operators to register their business, even if not forming an LLC. This is for the purpose of paying taxes.
2. Transient Occupancy Tax (TOT) Certificate: All California Airbnb hosts must pay state and local TOT on rental income, which requires obtaining a TOT certificate. Platforms like Airbnb and Vrbo often collect and remit these taxes on behalf of hosts.
3. Short-Term Rental Permit/License: While there are no state-level permits, most counties and cities require an annual permit or license to operate legally. These are obtained from the local city or county government offices. Fees are typically a few hundred dollars per year.
4. Proof of Ownership: A copy of the grant deed and property title is often required to prove ownership of the rental property. In Malibu, the operating agreement is also required if applicable.
5. Property Diagrams: Detailed site and floor plans with dimensions may be required. In Pismo Beach, photos showing interior bedrooms and parking locations are also needed.
6. Signed Attestations: Some cities, like Malibu, require a signed and initialed attestation agreeing to adhere to all local short-term rental rules and regulations.
7. Proof of Insurance: While not always legally mandated, most municipalities strongly recommend or require short-term rental insurance to protect against potential liability.
8. Local Contact Person Designation: Many cities require designating a local contact who can quickly respond to any issues at the property. In Sierra County, they must be able to arrive within 30 minutes.
9. Onsite Wastewater Treatment System (OWTS) Permit: In Malibu, as of January 1, 2023, a valid OWTS operating permit or compliance agreement with the city is required to obtain or renew a short-term rental permit.
10. Good Neighbor Policy Acknowledgement: Some cities, like Pismo Beach, require signing a good neighbor policy governing things like occupancy limits, parking, noise, and trash.

The specific documents required will depend on the city or county where the short-term rental is located. It's critical to carefully review the local regulations and ensure all necessary paperwork is completed and submitted to the appropriate authorities. Operating without the required permits and documentation can result in significant fines and penalties.

California Short-Term Rental Taxes

Short-term rental owners in California are subject to various taxes at the state and local levels. It's important to understand these taxes to ensure compliance and avoid penalties. Here are the main types of taxes that apply to short-term rentals in California:

1. Transient Occupancy Tax (TOT): Also known as hotel tax or lodging tax, TOT is a tax on short-term rentals (stays of 30 days or less). The tax rate varies by city and county, typically ranging from 10% to 15% of the rental price. For example, the combined state and local TOT rate in most locations is between 10% and 15%.

2. Business Taxes: California requires short-term rental owners to pay various business taxes, depending on the specific nature of their operations. These may include:

1. State Income Tax: Short-term rental income is subject to state income tax, with rates ranging from 1% to 12.3% depending on your income level.
2. Self-Employment Tax: If you operate your short-term rental as a sole proprietor, you may need to pay self-employment tax (15.3%) on your net rental income.

3. Tourism Business Improvement District (TBID) Assessment: Some cities and counties charge an additional 1% assessment to fund tourism promotion efforts.

4. Property Tax: As a property owner, you'll need to pay annual property taxes based on the assessed value of your rental property. The average effective property tax rate in California is 0.73%.

5. New 15% Short-Term Rental Tax (effective January 1, 2025): California recently passed Senate Bill 584, which will impose a new 15% tax on short-term rentals starting January 1, 2025. This tax will be in addition to existing taxes and assessments, potentially increasing the total tax burden for guests to 27-30% or more in some areas.

It's crucial to track all your rental income and expenses throughout the year to accurately report your taxes. Short-term rental owners can take advantage of various tax deductions to reduce their taxable income, such as:

1. Mortgage interest
2. Property taxes
3. Maintenance and repairs
4. Utilities
5. Insurance premiums
6. Depreciation
7. Cleaning and management fees
8. Advertising costs

Consult with a tax professional to ensure you're taking all eligible deductions and complying with all tax requirements for your short-term rental business in California.

Does California Strictly Enforce STR Rules?

California has a reputation for being one of the stricter states when it comes to regulating short-term rentals like Airbnb and Vrbo. Compared to many other states, California cities and counties tend to have more detailed ordinances governing STRs, with rules around permits, occupancy limits, parking, and more.

However, the actual level of enforcement varies significantly across the state. Some jurisdictions, like Santa Monica, have been very aggressive in cracking down on illegal STRs. The city has dedicated staff who monitor listings and issue citations to non-compliant operators, levying over $1.6 million in fines in 2019 alone.

Other areas, though, have struggled to keep up with the growth of STRs. Los Angeles, for example, passed a new ordinance in 2022 requiring STR operators to get a police permit. But as of August 2024, the LAPD says it still doesn't have the staffing or infrastructure to actually enforce the law.

On Reddit and BiggerPockets forums, California STR hosts report mixed experiences. Some have had no issues operating by the book and getting licensed. Others admit to flying under the radar in places with less proactive enforcement.

One Anaheim host on Reddit noted that the city "purposely limited the amount of short term rentals" likely due to lobbying from the hotel industry, but they still know of a couple STRs operating in their neighborhood.

So while California is not the most Airbnb-friendly state from a regulatory perspective, the reality is that many hosts continue to operate STRs, sometimes despite not being fully compliant with local rules. Enforcement is spotty in many parts of the state, emboldening some hosts to take the risk.

How to Start a Short-Term Rental Business in California

Starting a short-term rental business in California can be a great way to generate income from your property. However, it's crucial to follow the proper steps to ensure compliance with state and local regulations. Here's a numbered list of steps to get started, along with tips for successfully implementing each one:

1. Research local regulations: Familiarize yourself with the specific short-term rental laws in your city or county. These can vary widely across California, so it's essential to understand the requirements in your area. Check your local government's website or contact their planning department for information on permits, licenses, zoning restrictions, and other rules you need to follow.
2. Register your business: Most cities in California require short-term rental operators to register their business and obtain a business license. This typically involves filling out an application, paying a fee, and providing documentation like proof of ownership and liability insurance. Consider forming an LLC to protect your personal assets and take advantage of tax benefits.
3. Obtain necessary permits: In addition to a business license, many California jurisdictions require a specific short-term rental permit. Apply for this permit through your local city or county government, following their specific procedures. Be prepared to pay an application fee and provide supporting documents like a property diagram and signed attestations agreeing to follow all rules.
4. Prepare your property: Make any necessary repairs or upgrades to ensure your property is safe, comfortable, and attractive to guests. Consider hiring a professional photographer to take high-quality photos for your listing. Develop a comprehensive house manual with check-in instructions, house rules, and local recommendations.
5. Create your listing: Choose a platform like Airbnb or Vrbo to list your property. Craft a compelling description highlighting your property's unique features and amenities. Be transparent about any rules or restrictions, and make sure to include your permit number on your listing.
6. Set competitive rates: Research similar properties in your area to determine a competitive nightly rate. Consider factors like seasonality, events, and demand when setting your prices. Utilize dynamic pricing tools to automatically adjust rates based on market conditions.
7. Implement a cleaning and maintenance plan: Develop a thorough cleaning checklist and hire a reliable cleaning service to ensure your property is spotless between guests. Conduct regular maintenance to keep your property in top shape and prevent issues that could lead to negative reviews.
8. Comply with tax requirements: Short-term rental operators in California must collect and remit transient occupancy taxes (TOT) to their local government. Register for a TOT certificate and make sure you are charging the correct tax rate on your bookings. Keep accurate records of all income and expenses for tax purposes.
9. Provide excellent customer service: Respond promptly to guest inquiries and be available to address any issues that arise during their stay. Go above and beyond to create a memorable experience for your guests, such as providing local recommendations or leaving a welcome gift. Encourage satisfied guests to leave positive reviews to attract future bookings.
10. Stay informed and adapt: Keep up with any changes to local short-term rental regulations and make sure you remain in compliance. Monitor your performance metrics and guest feedback to identify areas for improvement. Be prepared to adapt your strategy as market conditions change to ensure the long-term success of your business.

By following these steps and implementing these tips, you can launch a successful short-term rental business in California while staying compliant with all applicable laws and regulations. Remember to always prioritize guest satisfaction and maintain open communication with your local government to ensure a smooth operation.

Who to Contact in California about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations and zoning in California, the best place to start is your local city or county government. Most municipalities have a planning department or a specific short-term rental office that can provide information on local ordinances, permits, and registration requirements.

Here are some key contacts for major cities in California:

1. Los Angeles: Contact the Los Angeles City Planning Department at (213) 978-1496 for questions about the Home-Sharing Ordinance and registration process. You can also visit their website at planning.lacity.org/plans-policies/home-sharing.
2. San Francisco: The San Francisco Office of Short-Term Rentals (OSTR) is responsible for enforcing the city's short-term rental laws. You can reach them at (415) 575-9179. Their website at sf.gov/departments/office-short-term-rentals has detailed information on the registration process and requirements.
3. San Diego: For questions about short-term rental regulations in San Diego, contact the Development Services Department at (619) 446-5000. You can find more information on their website at sandiego.gov/development-services/permits/short-term-residential-occupancy.
4. Santa Monica: The City of Santa Monica's Code Enforcement Division handles short-term rental compliance. You can reach them at (310) 458-4984. Visit their website at santamonica.gov/str for details on the city's Home-Sharing Ordinance and permit requirements.

In addition to local government resources, there are several online communities where California short-term rental hosts share information and advice:

Airbnb Community Center - California Hosting Club: This is an official Airbnb forum where hosts across California discuss various topics related to short-term rentals. You can access it at community.withairbnb.com/t5/California-Hosting-Club/bd-p/California.

BiggerPockets - California Real Estate Forum: BiggerPockets is a popular real estate investing platform with a dedicated forum for California. While not exclusively focused on short-term rentals, you can find valuable discussions and connect with other investors and hosts. Check it out at biggerpockets.com/forums/12-california-real-estate.

r/AirBnB - California: Reddit has a subreddit dedicated to Airbnb hosting where you can find California-specific threads and ask questions. Visit reddit.com/r/AirBnB and search for California-related posts.

Remember, while online communities can be helpful, always verify information with official sources like your local government offices. Regulations can change frequently, so it's important to stay up-to-date with the latest requirements in your specific area.

What Do Airbnb Hosts in California on Reddit and Bigger Pockets Think about Local Regulations?

California short-term rental hosts on forums like Reddit and BiggerPockets have a lot to say about navigating local regulations. Here are some real-life experiences and insights shared by hosts:

Tenant rights after 30 days (Reddit r/airbnb_hosts): In a thread titled "Guests become 'tenants' and triggering landlord-tenant laws (California)", hosts discuss the risk of guests gaining tenant rights after staying 30 days. One host shares, "In CA even squatters can have tenant's rights. Then they can stay while you go to court to evict them. It can take 2 months or more." The general advice is to limit stays to 28-29 days maximum to avoid this issue.

Anaheim's strict STR limits (Reddit r/Anaheim): In the "What are the rules on AirBnb/VRBO in Anaheim?" thread, locals note that the city has purposely limited permits for short-term rentals, likely due to lobbying from the hotel industry. One commenter shares, "I live pretty close to Disneyland and know of two short term rentals in my neighborhood, both are listed on Airbnb." So while STRs do exist, the city keeps a tight leash on them.

The challenges of hosting (BiggerPockets): A post titled "The Difficulties of Airbnb" on the BiggerPockets forums dives into the often-messy realities of short-term rental hosting. The author shares horror stories of parties, property damage, and 3am lockouts. They advise, "If you're willing to deal with these hassles and go far out of your way to work with some ridiculously-picky guests, you can probably find a way to make money." But they caution it's not for the faint of heart.

Opposition to new state tax bill (Airbnb Community Center): In a recent thread, "Calling on all California Hosts - No on CA SB 584", hosts express strong opposition to a proposed state bill that would add a 15% tax on short-term rentals on top of existing local taxes. One San Diego host explains, "So in San Diego that is 10.5% TOT, plus the 15% if this passes...This will make us less competitive with hotels if you compete with them in your trade area and in my view will only come out of our pockets."

These forum discussions highlight some of the key regulatory pain points for California STR hosts - tenant laws, strict local limits, operational challenges, and the looming threat of higher taxes. While the specifics vary by city, it's clear that hosts must be diligent in understanding and complying with local rules to run a successful and legal short-term rental business in the Golden State.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each area and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.