California now taxing the ASSETS of Short Term Rental Businesses

[Rex0]

How are you Californians dealing with this new law? Personally, I think it's California's way to try and get more housing on the market. I'm surprised that I'm not hearing any pushback about it online.

California strikes again!

California is coming after small businesses once again by assessing a business tax to Short Term Rental businesses, based not on income but the book value of their business assets.  

The new STR tax

If you own an AirBnB or VRBO, expect to receive a new tax form and bill (form number is BOE-571-STR) from the county that must be filed and paid by May 7, 2024, and then every year thereafter.

This is not called the STR tax, but we are calling it what it is. California is wanting more tax from any source in its grasp. STRs have grown in California and so they see another tax opportunity.

Short-term rental businesses (even if you own it and don't have an LLC) may be required to report the basis of assets, reappraising your business property annually.  This filing will require you to list out things like furniture, appliances, equipment, televisions, tables, mattresses, etc. This does not apply to the real estate itself, but the assets you hold within the real estate that you are renting out.

Similar reporting and filing requirements apply to commercial real estate properties and business owners of those properties. Now California is extending that same business tax, filing, and payment of taxes to short-term rentals.

Who does this apply to?

This new filing applies to you if you rent out all or a portion of your property.

Every business that owns taxable personal property (other than a manufactured home) having an aggregate cost of $100k or more for any assessment year must file a signed property statement with the county assessor.

If you receive a notice and feel you are below the threshold, complete and send it in to avoid fines.  If you fall below the threshold, you may not receive the form or only receive the request to file every three or four years.

What is the tax?

The tax rate varies, but is usually a little more than 1% of the assessed value. A conservative estimate is 1.2% of the book value of your total assets (purchase price - depreciation).

[Kitty-and-Creek0]

@Rex0 

This is not a new tax, as far as we know. We've been filing this form for our STR and for our other business, for many years already. Definitely file this, and on time. 

[Rex0]

I've had two STRs in California for several years, and this is a brand new tax. Maybe an assets tax is common in other states?

[Rex0]

Oh wait - I see that you're also in California. You have filed an assets tax before, which includes your furnishings and washer and dryer? Maybe it finally made its way to Santa Cruz county...

[Deborah325 · Accepted solution]

When I received this form, I was really upset, I was thinking who decided I was a business. I had empty space in my home  and wanted to share with others. The space was furnished with my own personal property, which I purchased without Airbnb dollars and paid sales tax on my personal property. My home is only open to guests 90 days a year, I hardly call that a business.

I have been reporting my income to state and Federal on my tax returns and have been paying a bed tax . This new condition makes me mad as heck, Like you shocked people are not putting up  more opposition.  I wonder since they have decided we are  a business, if we are entitled to small business loans?  small business grants? 

If the state thinks, this is a way to get more homes on the market for full time rentals, they are mistaken with all the renter rights being a full time landlord has it's problems.

Have you read any information on AB2216 ? They want to make it law you must accept pets.  Next thing you will see, you must take pets in your vacation rental, just wait , it would not surprise me.

A very unhappy Host

A very unhappy California Tax Citizen

[Rex0]

Hi Deborah, I called the assessor's office and learned that this has apparently been on the books in California for several years, but it just now is kicking in where I live in Santa Cruz. I am looking at the list of items they want to tax, which include hand towels and linens, rugs and lamps. It is all just so absurd.  I explained that many items I purchased in the 1980's and 90's and the appliances came with the property. They said to give your best guess on the value. 

  On top of hitting my guests up for a 14% occupancy tax, the outrageously high property tax I already pay, and the fee for the honor of having an inspection every year - which they charge for even if it's a self inspection, I am just overloaded with it all. But I will not go away! I do believe it's their ploy, to get us to throw up our hands and sell.

   Thanks for responding. 

[Susie332]

Rex, is there no group fighting this?  I would have through Airbnb would fight it for us!

This is way the California is crazy out of control.!

Susie