Airbnb vacation rentals are governed by laws and regulations, depending on the state, county, and city/town in which it is located. Generally considered to be a business operating in the hospitality sector, they are also subject to taxes, apart from the income tax that owners/property managers may be liable for as individuals.
The state of California defines a short term rental (STR) as a residential property or portion of such property that is rented to an individual or group for not more than 30 consecutive days.
This definition is generally applied by most Californian counties and cities, however, some localities may include language that applies further specifics, confining what can be considered to be a short term rental even further. Some even define short term rentals and vacation rentals differently, with a few localities banning short term rentals while allowing for vacation rentals. Others restrict renting out on the short term to a short period of time each year.
Being the state in which Airbnb originated, it is no surprise that the Airbnb vacation rental industry has grown exponentially in California since the platform started. While the effects of pandemic-led lockdowns combined with rising property prices continue to reverberate in the vacation rental industry in cities like San Francisco and San Diego, other areas like Lake Tahoe and Joshua Tree have seen further increases in visitor numbers.
The San Diego Short Term Residential Occupancy Ordinance permits short term rentals that are rented out for not more than 30 days at a time. Hosts are required to obtain a license depending on the type of rental. This includes:
Tier 1 (Part-Time) where the property is rented out for not more than a total of 20 days a year. There is no owner/permanent resident residency requirement.
Tier 2 (Home Sharing) where a room or rooms in a home is rented for over a total of 20 days a year as long as the owner/permanent resident resides onsite. An exception of residency is allowed for up to 90 days in each calendar year.
Tier 3 (Whole Home excluding Mission Beach) where the entire property is rented out for a minimum of 90 days each year and the owner/permanent resident does not reside onsite.
Tier 4 (Whole Home Mission Beach) is the same as Tier 3 for rentals located in Mission Beach only.
A host can only obtain one license. Licenses are valid for 2 years before they must be renewed.
Meanwhile, the city of San Diego imposes 2 types of taxes on vacation rental hosts:
A popular destination for domestic and international visitors, the city of Los Angeles is also known for its more stringent short term rental regulations. The Los Angeles Municipal Code follows the state definition of a short term rental but limits this “home-sharing” to the host’s primary residence and for a maximum of 120 days each calendar year. You will have to register for a home-sharing permit to operate an Airbnb vacation rental in Los Angeles. Hosts are required to register and renew annually.
If you want to host for longer you will have to apply for extended home-sharing. The city’s zoning laws also severely restrict vacation rentals in its residential zones.
The city of Los Angeles imposes a transient occupancy tax of 14% and a Per Night Administrative Fee of $3.10 per night for reservations 30 nights or less. These are collected and paid by Airbnb on behalf of its hosts.
According to the San Jose Municipal Code, incidental transient occupancy is defined as the use or possession of any room or rooms, or portions thereof for dwelling, sleeping, or lodging purposes in any one-family dwelling, two-family dwelling, multiple dwelling, mobile home, live/work unit, or accessory dwelling unit, of a transient user. The city permits short term rentals that have owners present and those that don’t. However, if the host is not present, the total rental period for a year is limited to 180 days.
When the host is onsite, maximum guest occupancy is limited to 3 guests per one-family dwelling or mobile home and 2 guests per dwelling unit in a two-family or multifamily dwelling. If the host is not present at the property, occupancy limits are 2 guests in a studio unit, 3 guests in a 1-bedroom unit, and 2 guests per each additional bedroom. The total number of guests however cannot exceed 10 persons at a time.
The city imposes a transient occupancy tax (10%) which is collected and paid on behalf of hosts by Airbnb.
The city of Palm Springs refers to short term rentals as vacation rentals and defines them as stays of not more than 28 days at a time. The city limits vacation rental and homesharing lodging to single-family dwelling units and prohibits such lodging in apartments.
To operate an Airbnb in Palm Springs, you need to apply for a vacation rental certificate. The city offers three types:
Vacation Rental Certificate (when the owner is not present during stays)
Homeshare Short Term Vacation Rental Certificate (when the owner is present during all stays)
Junior Vacation Rental Registration Certification
An owner can only obtain a single certificate at a time. Certificates must be renewed annually. Applicants must also supply a letter from their HOA granting them permission to operate an Airbnb.
Hosts are only allowed not more than 32 guest stays per calendar year plus four more guest stays in July, August, and September, for a maximum of 36 guest stays each year. Homeshares, however, do not have such annual limits. Occupancy is limited to 2 guests per bedroom and parking to 1 vehicle per bedroom.
Palm Springs also requires a “responsible person” over the age of 25 years to sign a contract with the operator, meet and greet guests in person to explain the local rules and regulations, and obtain a signature of receipt of the Statement of Rules and Regulations/Good Neighbor Brochure.
In contrast to a state like Wyoming where laws regulating short term vacation rentals are sparse, cities in California have passed laws to regulate, and/or limit short term rentals. The laws, regulations, and taxes applicable to Airbnb vacation rentals differ by location. Apart from city codes, rules including taxes imposed by relevant counties may also apply. Each municipality has its own set of requirements including residency, permits and licensing, zoning, health and safety regulations, insurance, occupancy limitations, and good neighbor policies. Hosts should also look out for rules by neighborhood organizations like homeowners’ associations, condo-boards, and other tenant organizations.