Competing with Illegal short term rentals.

Level 2
Brea, CA

Competing with Illegal short term rentals.

Is there anything being done where illegal short term rentals are using the Airbnb platform?

Short term rentals that are operating legally have to pay at TOT tax at 10% or more.


These legal Airbnb or short term rentals have to compete with illegal short term rentals that are not burden with this tax, since they are working under the radar of code enforcement.


Is there any responsibility to the platform to make sure that short term rentals or cities do not allow it because of city law that they be banned from the platform?


There are literally hundreds of short terminals that are operating illegally or they’re running their property out for 30 days or less in  cities that do not allow them.


Example, cities, in California, Brea, Garden Grove, Yorba Linda, California, now in the state of California is suggesting SB 584, which will add additional 15% off the top, this will legal operators will now be at 25% disadvantage starting January 1, 2025.


I’m suggesting that if we could get all short term rentals to pay the 10% TOT tax, the 15% state tax would not be needed, but But since the Illegal operators are not paying the local 10% TOT, the state is taking it upon themselves to add additional 15% shortfall to existing legal operators.


Just wanna know what the process is for Airbnb to assure legal operation, or is it just on the honor system?


They claim that this tax goes back to local governments in California.


in the city of Santa Barbara alone there’s over 1000 illegal short term rentals, while there’s only 100 legal short term rentals, this is an example of the current taxes are not being paid, so they want to introduce an additional 15% tax for those that are paying to supplement all the legal activity.


It is my view if platforms like Airbnb and VRBO make sure that any listing must comply with local laws, it would make this additional tax not needed.. 




3 Replies 3

It is difficult to give an universal answer as laws differ from country to country. From Airbnb's point of view, it's hard to develop srategies that comply with every possible case, and the best it can do is to ask hosts to obey local laws. On the other side, local authorities/governments/administrations/... in each particular country should implement rules to allow only those who register to provide hosting services (and accordingly with this, pay taxes).

@James3024 , there not much that can done unless a city has implemented a STR program within the city’s jurisdiction to collect TOT and/or enforce STR program regulations. Your properties are in Placentia and not in cities that have banned STR..consider yourself lucky.


It is up to each municipality to approve/ban STR and/or collect TOTs and/or enforce program regulations. 


SB584, has not been finalized and has been in pending status in the California Assembly of Housing and Community Development Committee since June 2023 (according the the latest LegiScan). 




Level 10
Sierra Vista, AZ

We have the same problem in Bisbee, AZ. The city needs to communicate their laws to Airbnb and then Airbnb will email all of the bisbee listings, but as far as I know it hasn’t happened yet. We have about 1/3 licensed and 2/3 not licensed. However, Airbnb position is when you sign up you agree to comply with local laws. They can’t  and don’t enforce compliance.