California, the land of happiness and sunshine, also boasts various rental services. Airbnb is one of the most widely-rented services, with an average annual revenue of $7.1K.
However, to be an Airbnb host in California, you must keep a few rules and regulations in mind.
Many cities here have stringent Airbnb laws, with some areas outright banning them. Even the existing laws have been reviewed, so you should stay updated on short-term and long-term rental laws. So come on, let’s get started!
1. Registration Requirements
If you plan to host for 30 days or more, you don’t need to register or publish the listing. However, if you’re planning to host guests any time between 1 and 29 days at a time, you have to add a home-sharing permit before publishing your property as a listing.
You can get the official home-sharing permission from the official city of Los Angeles government. It will give you a specific number, which you will then have to add to your Airbnb listing.
You also have to check whether the listing’s address requires an official permit or not. Some neighborhoods that officially fall under the city of Los Angeles are, but are not limited to, Venice, Woodland Hills, Bel Air, Pacoima, North Hollywood, Brenshaw, and Echo Park.
2. Short-term Rental Rules
Some of the most common short-term rental rules that you must know about are:
Local Regulations
Visit the local Airbnb authorities or government offices to understand the government permits, licensing, taxes, and rental limits. Be thorough about the specific locality’s policies, even if they fall under Los Angeles County.
Transient Occupation Taxes
Transient Occupation Taxes, or TOTs, are levied mainly by Airbnb on behalf of the hosts, but you should still be aware of them. In most cases, the tax will be somewhere between 6% to 14%.
Host’s Responsibilities
As a host, you are solely responsible for complying with the local tax regulations, including collection of the TOTs. You also need to file regular tax reports to inform the Airbnb authorities that you comply with the tax regulations.
These taxes might appear a bit complicated, so it’s best to get in touch with a real estate attorney california to know more. A reputable attorney will be equipped with all the knowledge to help you understand the legal implications of the specific locality and navigate through all laws.
Safety Measures
When it comes to safety measures, you simply can’t compromise. You must post clear information about the fire extinguishers, the fire exits in and around the property, and the contact number of a designated person or body for emergencies.
You should also know the local building and safety codes for regular maintenance.
Neighborly Conduct
Being a good host means knowing your neighborly duties and obligations. You must comply with the local noise limits and monitor the amount of trash generated and its disposal methods.
3. Choosing the Right Structure
For your short-term rental business in California, you can select from a host of options for your property structure.
For example, a limited liability company (LLC) is a financially safe option because you can protect your personal assets by separating them from the business assets.
You can also opt for a corporate-style structure, general partnership, limited partnership, or a sole proprietorship. If you’re not sure, your attorney can always help.
You need to think of a good name for your property, and along with the business structure, you’ll have to submit the required paperwork for short-term licensing.
Once your paperwork is approved, you’ll receive the Employer Identification Number (EIN) from the Internal Revenue Service.
4. Tax Implications
Thoroughly knowing about the taxes being imposed on your property is a must. Some common expenses that you can deduct from your rental properties are the ones related to maintenance and repairs, insurance premiums, bills on electricity and water, and legal and accounting fees.
However, the US government only considers this if you rent your property for a minimum of 14 calendar days every year.
The second consideration is that you are not allowed to use the property for personal reasons for more than a period of 14 calendar days (or more than 10% of the time that you rent your property for commercial purposes).
Conclusion
Even though these rules are widely followed across California, there are minute differences that you might encounter from one area to another. For example, the legal processes in Santa Barbara are much more stringent than in places like Palm Desert or Santa Monica. So, ensure you speak to real estate and financial professionals before making decisions.
