With the sharing economy in full throttle, and the peak rental season upon us, many vacation rental homeowners are taking full advantage of this powerful income stream.
But how many are in violation of local ordinances that either limit or make vacation renting outright illegal?
We've compiled the 3 most important rules surrounding this burgeoning industry and are sharing with you below.
1. Each City Defines "Short Term Vacation Rental" Laws Differently.
Example of Two Neighboring Cities: Carlsbad (ILLEGAL) vs. Encinitas (LEGAL)
- Carlsbad: "The land use zoning requirements set forth in the Carlsbad Municipal Code .........vacation rentals are not permitted at any location within the City of Carlsbad." Source: (Municipal Code, Chapter 21).
- CONCLUSION: Any vacation rental less than thirty (30) days is illegal.
- Encinitas: "The rental of any structure of portion of any structure for occupancy for dwelling, lodging, or sleeping purposes of 30 consecutive days or less in the City... shall obtain and display a short term rental permit and register to pay the TOT." Source; (Title 9, Chapter 9.38).
- CONCLUSION: With the proper application and permit filing, posting, tax collection and remittance, short-term vacation rental operations are legal.
2. It Is Illegal To Provide Short Term Vacation Rental Housing in Coronado, Carlsbad and Huntington Beach.
- Coronado defines 'short-term' as less than 25 days
- Carlsbad defines 'short-term' as less than 30 days
- Huntington Beach defines 'short-term' as less than 30 days
CONCLUSION: Exemptions apply in each of these locales. If you have questions, let us know and we can provide esteemed counsel and guidance.
3. The Transient Occupancy Tax ("TOT") must not only be charged to the vacation rental guest, but also remitted to the city. TOT will vary from municipality to municipality. Check out these common ones:
- San Diego (City): 10.55% + 2% (depending on certain factors) + .55% (depending)
- Long Beach: 12%
- Encinitas: 10%
If you're currently listing your home for vacation rental (or likewise are considering) please consider having a legal professional review your situation so that stiff fines, penalties and potentially worse (liens) are not imposed on your most valuable asset.
The Law Offices of Ryan Danz, Esq. has been handling short term vacation rental property tax issues for clients in and around Southern California and Lake Tahoe since 2012.
Mr. Danz has been handling legal matters since 2007.