Airbnb and Short-Term Rental Laws in California

California’s short-term rental market is buzzing with opportunity. With the vacation rental industry projected to grow at 3.62% annually in the U.S. by 2026 — potentially reaching a market value of $20.359 million, according to Statista — there’s no better time to dive in.

Whether you’re offsetting a mortgage by renting out a property or launching a unique short-term rental venture, the industry is proving to be a lucrative avenue for many property owners. However, with great opportunities come some important challenges: as the number of short-term rentals grows, so do the local laws and regulations designed to manage them.

In this guide, we’ll break down California’s short-term rental regulations into clear, actionable steps. From state guidelines to city-specific laws, we’ve got everything you need to know to make your journey as a short-term rental operator smooth, successful and stress-free.

Definition of Short-Term Rental in California

Before diving into the ins and outs of short-term rental regulations, it’s essential to understand what qualifies as a “short-term rental” (or STR) in California. The state provides a baseline definition under California Senate Bill No. 60, Chapter 307: a short-term rental refers to any residential property — or part of a property — rented to an individual or group for 30 consecutive days or less.

Sounds straightforward, right? Well, not entirely. While this definition gives a general idea, it excludes commercially operated hotels, motels, bed-and-breakfast inns and timeshare properties. Instead, a residential dwelling is typically defined as a private structure designed for use and occupancy as a home by one or more individuals.

It’s also important to note that terminology can vary. In some California markets, “short-term rental” and “vacation rental” are used interchangeably. But be cautious — certain municipalities outright ban vacation rentals, so it’s crucial to know the specific language and regulations in your area.

As we explore the regulations, keep this foundational definition in mind — it’s a helpful starting point for anyone deciding whether the short-term rental business is the right fit for them.

Key Considerations When Starting a Short-Term Rental Business in California

Launching an Airbnb or short-term rental business in California requires navigating a series of steps and complying with both state-specific rules and local regulations. While requirements vary depending on the city or county, there are several key areas all short-term rental operators should address to ensure compliance and success.

1. Business registration

Most California cities require short-term rental operators to register their business. While forming an LLC isn’t mandatory, you’ll need to establish a business entity to handle taxes and demonstrate legitimacy.

2. Transient Occupancy Tax (TOT) Certificate

California Airbnb hosts are required to collect and remit transient occupancy tax (TOT) on rental income. This often requires obtaining a TOT certificate. The good news? Many listing platforms, such as Airbnb and Vrbo, handle TOT collection and payment on behalf of hosts.

3. Licensing and permitting

Although California does not have state-level permits or licenses for short-term rentals, most cities and counties require annual registration and permit renewals. Failure to secure the necessary licenses can result in significant fines.

4. Fee payments

Applying for a short-term rental license or permit typically involves paying an annual fee, which can range from a few hundred dollars depending on the city or county.

5. Health and safety regulations

All short-term rentals in California must adhere to specific health and safety standards to protect guests and neighbors. These rules include requirements for safety devices (such as smoke detectors and fire extinguishers), maximum occupancy limits, quiet hours and more.

6. Safety inspections

In many jurisdictions, short-term rental properties must pass a safety inspection before receiving a license or permit.

7. Zoning regulations

Zoning compliance is critical. Some California cities only allow short-term rentals in designated residential or commercial zoning districts. Before launching your business, check your property’s zoning restrictions to avoid legal issues.

8. Short-term rental insurance

While not legally required, short-term rental insurance is highly recommended. Policies can cover property damage, liability and lost rental income, providing an essential safety net for property owners.

9. Required paperwork

When applying for a permit or license, you’ll likely need to provide documentation such as proof of ownership, proof of residence (for owner-occupied rentals), local-specific forms, etc.

10. Best practices for success

To set your short-term rental business up for success:

• Research local regulations at both the county and city levels (these are often available on local government websites).

• Consult a local legal expert if you’re unsure about compliance.

Registering Your Short-Term Rental Business in California

The first step to launching your short-term rental business in California is registering it with the appropriate state and local agencies. Not only is this a legal requirement, but it’s also the first step in building a professional and legitimate operation.

By registering your business, you ensure it’s compliant with local codes, which can protect you from potential legal or financial headaches down the road. Plus, if you plan to apply for business loans or open a dedicated business bank account to manage your (hopefully growing!) profits, proper registration is essential.

Think of it as laying the groundwork for your success: a registered short-term rental business positions you as a serious operator while giving you peace of mind that you’re meeting California’s regulatory requirements.

Creating an LLC for your short-term rental business

When setting up your short-term rental business, you must decide on a legal structure. In California, your options include:

• Corporation

• Limited Liability Company (LLC)

• Limited Partnership

• General Partnership

• Limited Liability Partnership

• Sole Proprietorship

Each structure has its own advantages and disadvantages, so it’s worth investing some time to research which one best aligns with your goals. For a detailed explanation of each, check out the California Secretary of State’s “Entity Types” page.

So, which structure should you choose? Ultimately, that depends on your priorities. Many short-term rental operators opt to register as a Limited Liability Company (LLC) for the added financial protection it provides. 

An LLC separates your personal assets from your business assets, shielding you from personal liability if your business faces legal issues or debts. In other words, an LLC acts as a financial safety net — helping you sleep a little easier, knowing your personal savings and property are safeguarded.

For more information on the implications of setting up an LLC — including fees, tax structures and additional requirements — visit the State of California Franchise Tax Board’s website.

Documentation Required to Start a California Short-Term Rental Business

After deciding on a business structure, the next step is gathering the necessary documentation to officially register your short-term rental (STR) business in California. This process involves submitting specific forms to the California Secretary of State, including:

• The proposed name of your business

• Articles of Organization or Incorporation (depending on whether you’re forming an LLC or a Corporation)

In addition to state registration, you’ll also need to secure a variety of permits and business licenses to operate legally. Here’s what that entails:

1. Apply for an Employer Identification Number (EIN): Obtaining your EIN from the Internal Revenue Service (IRS) is a crucial step for tax purposes and establishing your business identity.

2. Check local requirements: Beyond state registration, most cities and counties have their own regulations for short-term rental businesses.

3. Secure local permits and licenses: Depending on where your property is located, you may also need specific short-term rental permits and be subject to local tax obligations. (We’ll explore these in more detail later.)

Short-Term Rental Licensing Requirements in California

California does not issue short-term rental (STR) licenses or permits at the state level. However, most counties and cities across the state require operators to secure local permits or licenses to run their Airbnb or vacation rental legally.

What does the licensing process involve?

• Submitting information: The lensing process generally includes submitting key documents and information.

• Fee payments: An initial licensing fee and annual renewal fees (often a few hundred dollars).

• Safety inspections: Properties typically must pass a safety inspection conducted by local authorities before a license is issued.

Essential documentation for California short-term rental licensing

The documents required to obtain or renew a short-term rental license in California can vary by city or county. However, some paperwork is commonly requested across most jurisdictions. Here’s a list of the most frequently required documents:

To ensure a smooth application or renewal process, short-term rental owners should carefully review the regulations specific to their city or county. Local government websites typically provide detailed guidance and confirming these requirements in advance can save time and prevent unnecessary delays.

License validity and renewal

Short-term rental licenses and permits in California are typically valid for one year, with some exceptions depending on the municipality. Renewal must be completed before the license expires and it usually involves paying both a renewal fee and a fee for an updated safety inspection.

Why compliance matters

Operating a short-term rental without the required licenses and permits can lead to hefty fines and penalties. Staying compliant not only ensures the legality of your business but also protects your reputation and avoids potential disruptions to your operations.

Understanding Tax Obligations for California Short-Term Rentals

If you’re operating a short-term rental in California, taxes are an important consideration. As a state with income tax, California requires you to account for both federal and state income taxes on any earnings from your short-term rental.

In addition, most short-term rentals are subject to a Transient Occupancy Tax (TOT). This tax applies to rental income generated from guests staying less than 30 consecutive days. The TOT rate varies by location, typically ranging from 6% to 14%, depending on your city or county.

Federal tax implications for short-term rentals

The U.S. government considers a property to qualify as a short-term rental business if it meets these criteria:

1. The property is rented out for at least 14 days in a calendar year.

2. The owner uses the property personally for no more than 14 days per year (or no more than 10% of the total days the property is rented).

If your property meets both conditions, it must be registered and treated as a short-term rental business for tax purposes.

Understanding these tax requirements ensures you’re fully compliant and helps avoid potential penalties. For added peace of mind, consider consulting a tax professional to navigate the complexities of federal, state and local tax obligations.

The Transient Occupancy Tax (TOT)

One of the most common taxes for California short-term rentals is the Transient Occupancy Tax (TOT), which applies to nearly all vacation rental properties in the state. If you’re accepting payment from guests staying less than 30 days in a home you own, you’re responsible for collecting this tax from them. The TOT, calculated as a percentage of the nightly rental rate, must then be paid to the appropriate state or local entities to ensure your business remains in good standing.

California does not enforce a single statewide TOT rate, instead, the rates are set by local governments and vary depending on your property’s location. Most TOT rates fall between 6% and 15%. For example, San Diego’s TOT rate is 10.5%, while San Francisco’s TOT is set at 14%.

Understanding and complying with TOT requirements is essential for maintaining legal operations, so be sure to confirm the rate and regulations specific to your property’s jurisdiction.

Tax deductions for California short-term rental hosts

Owning a short-term rental property is essentially running a business and California hosts can take advantage of numerous tax deductions to offset expenses and maximize profits. Some common deductions available to vacation rental hosts include:

• Real estate property depreciation (consider a cost segregation study to optimize this benefit)

• Property taxes

• Mortgage interest

• Mortgage insurance premiums

• Vacation rental insurance policies

• Furniture and appliances

• Management fees (e.g., Airbnb or property management services)

• Marketing and advertising costs

• Utility bills

• Cleaning fees

• Property maintenance expenses

• Accounting, legal and other professional fees

• Home office and business travel expenses

While paying taxes is a necessary part of running a business, it can also significantly impact cash flow. Taking full advantage of applicable deductions is a smart way to reduce taxable income and retain more of your earnings as a California Airbnb host.

Airbnb and Short-Term Rental Regulations in Major California Cities

When Airbnb entered the market, the short-term rental industry saw explosive growth, with over 300 million guest check-ins in its first decade. This rapid expansion, particularly in California, led to challenges as tourist-heavy communities struggled with the influx of short-term renters.

In response, many cities implemented regulations to balance the needs of guests, hosts, and neighborhoods. These rules aim to integrate short-term rentals into communities while preserving their character and managing the industry’s impact.

California’s short-term rental regulations vary widely by city, with requirements such as permits, licensing, and operational restrictions. Some cities limit rental nights or confine rentals to specific zoning districts.

Some Common Rules and Regulations for Short-Term Rentals in California

While regulations vary by city, many major California municipalities share common requirements for short-term rental businesses. Here’s a look at some of the most frequently enforced rules:

City registration and associated fees

In most California cities, short-term rental operators are required to register their business and/or property with the local government. This process is typically accompanied by application fees, which can vary significantly depending on the city or county. Registration ensures that your property complies with local guidelines and allows municipalities to track and regulate short-term rental activity within their communities.

Occupancy rules 

Many California cities require short-term rentals to also serve as primary residences. While the definition of a primary residence varies by municipality, it generally means that the property owner lives at the rental address full-time for at least part of the year — ranging anywhere from 60 days to 9 months.

Beyond primary residency requirements, local ordinances often enforce additional restrictions, including:

1. Dwelling type

Not all properties qualify as short-term rentals. Many cities impose restrictions on:

• Multi-unit residential complexes: Some municipalities limit the percentage of units that can operate as short-term rentals within a single building.

• Accessory structures: Properties like attics, pool houses or garages may not meet short-term rental criteria in certain areas.

2. Location

In larger, more populous cities — or high-demand tourist destinations — short-term rentals are often restricted to specific zoning districts or neighborhoods. 

3. Occupant limits

Many California cities cap the number of guests allowed in a short-term rental. A common rule is to allow two adults per bedroom, with a maximum total of 10 adults per unit, but this can vary by city.

4. Minimum stay lengths

Some municipalities require short-term rental reservations to meet a minimum number of days, such as two or three nights. In certain areas, minimum stay requirements are weeks — or even months — effectively eliminating the short-term rental market entirely in those zones.

Ensuring safety in short-term rentals

Safety and security are top priorities for guests staying in short-term rentals. To meet these expectations, many California municipalities have implemented safety-focused requirements for hosts. These commonly include:

• Clearly stated emergency information: such as visible and accessible emergency details within the rental property and signs indicating the location of fire extinguishers, emergency exits and other safety equipment.

• Designated contact person: Many cities require hosts to appoint a local contact person who can be reached at any time during a guest’s stay. This is crucial for un-hosted short-term rentals.

• Compliance with local building and safety codes: Many California cities explicitly include maintenance and code compliance in their short-term rental laws. 

Encouraging neighborliness in short-term rentals

Maintaining positive relationships with the surrounding community is a key focus of many California short-term rental regulations. Municipal codes often include provisions aimed at minimizing disruption and ensuring the well-being of neighborhoods. Common requirements include:

• Noise restrictions: This requires ensuring that guest activities do not disturb neighbors, especially during designated quiet hours.

• Parking limitations: In areas already impacted by traffic congestion, cities may impose parking restrictions for short-term rental properties. 

• Trash management: Several municipalities enforce garbage disposal guidelines for short-term rental units, requiring hosts to provide clear instructions to guests and ensure timely trash collection.

While these general rules apply broadly, individual California cities often expand upon or modify these guidelines. In the next section, we’ll explore the unique short-term rental requirements in some of California’s major cities, highlighting key variations, additions and exceptions to the broader regulations.

Short-Term Rental Laws by California City

1. San Diego

San Diego is one of California’s most popular tourist destinations and its short-term rental market reflects the city’s high demand. However, the city has implemented detailed regulations for San Diego Airbnb hosts to balance tourism’s benefits with the needs of local communities. These rules are governed by the Short-Term Residential Occupancy (STRO) Ordinance and Section 5 of San Diego’s Municipal Code. Short-term rental occupancy license tiers

Since July 2022, all short-term rental properties in San Diego have been required to obtain a license. Licenses are categorized into four tiers based on usage and location:

Tier 1: Part-time rentals

• Rentals for 20 days or fewer per year.

• Hosts are not required to live on-site.

Tier 2: Home sharing

• Rentals where a room/rooms in the property are rented while the host resides on-site.

• Hosts can be away from the property for up to 90 days per calendar year during whole-home rentals.

Tier 3: Whole-home rentals (excluding mission beach)

• Rentals of the entire home for more than 20 days per year.

• Located outside the Mission Beach Community Planning Area (CPA).

• Requires a minimum guest stay of 2 nights.

• The property must be rented for at least 90 days per year to maintain the license.

• Limited to 1% of San Diego’s total housing units outside Mission Beach.

Tier 4: Whole-home rentals in mission beach

• Rentals of the entire home in Mission Beach for more than 20 days per year.

• Requires a minimum guest stay of 2 nights.

• Limited to 30% of dwelling units in the Mission Beach CPA.

Licensing requirements and application details

Currently, applications are open for Tier 1, Tier 2 and Tier 3 licenses, but Tier 4 licenses are capped and unavailable. Hosts can only hold one license per tier and must apply personally (agents cannot apply on their behalf). Licenses are non-transferable, even in the event of property ownership changes.

To apply for a license, hosts must submit:

• A completed license application.

• A Transient Occupancy Tax (TOT) Certificate number or proof of application.

• Proof of payment for the Rental Unit Business Tax.

• Proof of primary residence (for Tier 2).

• Fees:

  • Application fees: $25 (Tier 1 & 2) or $75 (Tier 3 & 4).

  • License fees: $100 (Tier 1), $225 (Tier 2) and $1,000 (Tier 3 & 4).

Note: Licenses are valid for 2 years and must be renewed biannually with a renewal fee.

Operating requirements for hosts

San Diego’s STRO ordinance outlines several operational requirements that hosts must follow to remain in compliance. First and foremost, properties must be maintained for residential occupancy only, ensuring their primary use aligns with local regulations.

Hosts are also responsible for preventing their guests from creating public nuisances and are required to provide all visitors with a Good Neighbor Policy notice. Properties must meet all standards outlined in the California Fire Code, ensuring safety for guests and the surrounding community.

Additionally, hosts must post a notice on the property exterior displaying key information, including the TOT Certificate number, license number and contact information for either the host or a designated local contact. This transparency helps foster trust and accountability.

All advertisements for the property must also include the TOT Certificate and license numbers. Inside the rental, hosts are required to display guidance for guests on how to report human trafficking. Finally, hosts must adhere to all relevant chapters of the San Diego Municipal Code, covering the city’s comprehensive guidelines for short-term rentals.

Taxes and Fees

San Diego short-term rental operators must pay:

• TOT of 10.5% on rental income.

• Rental Unit Business Tax, with an annual fee of $34 for businesses with up to 12 employees and $125 + $5 per employee for larger businesses.

2. Los Angeles

Los Angeles is one of the top cities for Airbnb hosts, ranked fourth-best for new hosts in 2021 by the Los Angeles Daily News. However, setting up a short-term rental in LA requires compliance with the city’s Home Sharing Ordinance (CF 14-1635-S2). Here are the key steps and regulations:

1. Register for a Home Sharing Registration (HSR) number

To legally operate a short-term rental, you must register with the city to obtain an HSR number. Applications can be submitted online with an $89 fee and on approval you recieve an eight-digit registration number (HSR##-######) that must be included in all listings. Temporary numbers are issued while applications are processed. The HSR number is valid for one year and must be renewed annually.

2. Ensure your property meets city requirements

To qualify for an HSR number, your property must meet the following conditions:

• Primary residence requirement: Your short-term rental must be your primary residence, rented for no more than 120 nights per year.

• Proof of residency: Documents like a driver’s license, insurance bill, paystub, or voter registration card can serve as proof.

• Renters: If you’re renting the property, you’ll need a signed affidavit from your landlord approving its use as a short-term rental.

• Rent-stabilized properties: Properties under the Rent Stabilization Ordinance (RSO), typically single-family homes built before 1978, cannot be used for short-term rentals.

3. Obtain a TOT registration certificate

All short-term rental properties in Los Angeles must register for a Transient Occupancy Tax (TOT) Registration Certificate with the Department of Finance. Rentals of 30 days or more are exempt but require completion of a TOT Exemption Form.

4. Extended home sharing options

The city limits short-term rentals to 120 nights per calendar year. However, if you wish to rent for more than 120 nights, you can apply for an extended home-sharing permit by meeting these requirements:

• Hold a valid HSR for at least six months or have hosted for at least 60 days.

• Notify neighboring occupants by mail about your plans.

• Have no more than one citation against your property and no prior suspensions or revocations of your HSR number.

Extended home-sharing applications involve significant fees:

• Standard extended permit fee: $850.

• Applications requiring “discretionary review”: $5,660.

3. Long Beach

Compared to many other California cities, Long Beach takes a relatively flexible approach to short-term rentals. Both hosted and unhosted rentals are permitted, meaning your property does not need to be your primary residence. However, the city enforces important rules and regulations under City Ordinance 20-0045 to ensure compliance.

1. Annual registration

All short-term rental properties in Long Beach must be registered annually. The registration fee is $250 per year, and your registration number must appear in all advertisements or promotional listings for the property.

2. Meeting Property Eligibility Requirements

To obtain your Short-Term Rental Certificate, you must confirm your property’s eligibility by providing:

Proof of Residency:

• For primary residences: Submit official documents such as a driver’s license, loan documents, or voter registration card.

• For non-primary residences held by an LLC: Provide a notarized document stating your authority to make decisions on behalf of the business.

• Renters or tenants must also submit a Property Owner Authorization form to confirm the landlord’s approval for short-term rental use.

Approved Dwelling Types:

Long Beach allows short-term rentals in single-family homes, condominiums, apartments, maids’ quarters, and guest houses. Properties like pool houses, casitas, garages, or outbuildings are not eligible.

3. Capacity limits

Long Beach imposes specific caps on the number of short-term rental units in multi-unit residential buildings:

• 2–10 units: 1 short-term rental.

• 11–50 units: Up to 10% of units.

• 51–100 units: Up to 12% of units.

• 101+ units: Up to 15% of units.

Additionally, guest capacity is limited to 10 adults per rental unit (or 2 persons per bedroom).

4. Oakland

The City of Oakland is in the process of finalizing new regulations for short-term rentals, expected to take effect by spring 2025. Until then, the city enforces strict rules under existing categories, including Permanent Residential Activities, Semi-Transient Residential Activities, Bed and Breakfast Residential Activities, and Transient Habitation Commercial Activities

Current restrictions on short-term rentals

Renting Transient Habitation properties is treated similarly to hotel operations and is prohibited in most residential and commercial zones. Short-term rentals are only allowed in specific zones, such as:

• Downtown Oakland

• Along the waterfront

• Near the airport

• Along the I-880 freeway

• Specific Plan areas

Short-term rentals are strictly prohibited in secondary units like accessory dwelling units (ADUs) and in-law units.

In zones where Transient Habitation is permitted, operators must obtain a Conditional Use Permit (CUP). However, CUPs are challenging to acquire due to rigorous requirements and high fees.

Bed and breakfast residential activities

Properties can qualify as Bed and Breakfast Residential Activities if they meet the following criteria:

• The property is a single-family or two-family dwelling.

• It includes no more than six guest units and hosts a maximum of 12 paying guests at a time.

• The property is owner-occupied.

• The property has a historic rating of “A,” “B,” “C,” or “D,” or is a city-designated Landmark.

• The property provides incidental food and beverage services for lodgers, prepared in a single kitchen.

Bed and Breakfast activities are not permitted in all zoning districts and also require a CUP.

Taxes and future changes

Oakland’s Transient Occupancy Tax (TOT) is one of the highest in California, at 14%. Non-owner-occupied short-term rentals face significant restrictions under current laws.

Proposed regulations could reshape the market, but it remains uncertain whether the changes will be more permissive or prohibitive. Prospective Airbnb investors should closely monitor these developments.

5. Santa Clara 

For those looking to start a short-term rental business in Santa Clara, there’s good news: the city currently has no specific regulations governing short-term rentals. While the Santa Clara Spotlight has noted that new legislation may be on the horizon, as of now, hosts are free to operate without additional permitting or licensing requirements.

The only stipulation is that hosts must pay the Transient Occupancy Tax (TOT) of 13.5% on any short-term rental income. Santa Clara Airbnb operators should stay updated on potential regulatory changes, as the city may introduce new rules in the near future.

6. San Francisco 

As the birthplace of Airbnb, San Francisco is a sought-after location for short-term rental operations. However, the city enforces some of the strictest regulations in California, treating short-term rentals as a business with specific licensing, operational, and tax requirements. Here’s an overview:

1. Register as a business and a host

All short-term rental operators in San Francisco must:

• Register as a business: Earning income from short-term rentals, regardless of the amount, is considered a business. Operators must obtain a Business Registration Certificate

•  through the city treasurer. Fees vary based on gross receipts:

  • Less than $100,000: $52

  • $100,000–$250,000: $86

• Register as a host: Apply for a Short-Term Residential Rental Certificate with the Office of Short Term Rentals. The application fee is $450, and the certificate, valid for two years, must be renewed upon expiration.

2. Meet residency and property requirements

To qualify, operators must meet strict criteria:

• Primary residency: Hosts must live in the rental property for at least 275 days per year and have resided there for at least 60 days before applying.

• Dwelling type: Short-term rentals are prohibited in accessory dwelling units (ADUs) such as in-law apartments or attic conversions.

• Occupancy rules: Hosts may list only one unit in a multi-unit property and must ensure compliance with HOA or tenant rules if applicable.

3. Insurance and capacity limits

• Insurance: Hosts must maintain $500,000 liability insurance, which is included in AirCover if the property is listed exclusively on Airbnb.

• Capacity limits:

  • No more than five individual renters or five separate beds can be listed simultaneously by a single host.

  • Rent-controlled unit hosts cannot earn more in rental fees than their monthly rent.

4. Recordkeeping and reporting requirements

San Francisco’s administrative code requires regular reporting and documentation:

• Quarterly reports must be submitted in January, April, July, and October, documenting rental dates and occupancy.

• Maintain records of residency, insurance, and safety compliance.

• Post safety signage, including fire extinguisher and emergency exit locations.

Taxes for San Francisco short-term rentals

Transient Occupancy Tax (TOT):

• A 14% TOT must be collected from guests and remitted to the city annually by January 31st (or February 28th for 2025).

• TOT filings must account for the year of occupancy, even if the rental was prepaid in a prior year. For example, rent paid in December 2024 for a stay in March 2025 should be reported in the 2026 filing.

Tourism Improvement District (TID) fee:

• From January 2024, short-term rental properties were subject to the TID fee, which can also be passed on to guests.

• Annual TID filings are due alongside TOT filings, including zero-receipt filings if no rents were earned.

7. San Jose

San Jose regulates short-term rentals under its Transient Occupancy as an Incidental Use to a Residence provisions within the city’s municipal code (Section 20.80, Part 2.5). This regulation applies to properties rented for fewer than 30 consecutive days, referred to as incidental transient occupancy.

Eligible properties

San Jose permits short-term rentals in various property types, including single-family dwellings, two-family dwellings, multi-family dwellings, mobile homes, etc. However, it is prohibited in accessory dwelling units (ADUs), such as in-law apartments.

Occupancy restrictions

Occupancy limits vary depending on the property type and whether the host is present:

• When the host is present:

  • Up to 3 occupants for single-family homes and mobile homes.

  • Up to 2 occupants per dwelling unit for two-family and multi-family dwellings.

• When the host is not present:

  • 2 occupants in a studio unit.

  • 3 occupants in a one-bedroom unit.

  • 2 occupants per bedroom in multi-bedroom units, with a maximum of 10 occupants.

Rental duration limits

San Jose’s short-term rental laws distinguish between owner-occupied and non-owner-occupied properties:

• Owner-occupied properties: Unlimited rental days when the host resides on-site.

• Non-owner-occupied properties: Rentals are capped at 180 days per calendar year.

Additional requirements

Short-term rental operators in San Jose must meet the following conditions:

• Parking: Ensure the property meets the city’s parking requirements.

• Code compliance: Keep the property in compliance with local housing codes (as outlined in Chapter 17.20 of the city ordinances).

• Recordkeeping: Retain documentation for at least three years following each rental period, including proof of compliance with occupancy and rental caps and evidence of Transient Occupancy Tax (TOT) payments.

Transient Occupancy Tax (TOT)

San Jose imposes a 10% TOT on short-term rental income. Hosts must collect this tax from guests and either remit it directly to the city or rely on platforms like Airbnb to handle the payment. Accurate reporting and timely TOT payments are essential to remain compliant.

No short-term rental registration required

Unlike many California cities, San Jose does not require short-term rental operators to register their properties. This makes it relatively straightforward to enter the market. However, failure to comply with local regulations — such as occupancy or rental caps — can result in the termination of short-term rental privileges.

8. Palm Springs Short-Term Rental Laws

Palm Springs enforces detailed short-term rental regulations under Ordinance No. 1918, distinguishing between two primary types of rentals:

• Vacation rental: A single-family dwelling (or portion thereof) rented for 28 consecutive days or less, without the owner present during guest stays.

• Homeshare: Similar to a vacation rental but requires the owner to be present on-site throughout the guest's stay.

Both types of rentals must obtain a Vacation Rental Certificate, which is non-transferable and valid for one year. Rentals are allowed only as secondary uses of single-family dwellings and are prohibited in apartments. Additionally, vacation rentals are capped at 20% of total residential units in a neighborhood.

Rental limits and certificate options

Palm Springs imposes restrictions on the number of contracts (stays) allowed per year rather than total rental days:

• Vacation Rentals: Limited to 26 contracts per year.

• Junior Vacation Rentals: Limited to 6 contracts per year (with reduced registration fees).

Obtaining a vacation rental certificate

The application process requires the following:

• Owner’s and listing agent’s contact details.

• Local contact person’s 24/7 availability.

• Property details, including bedrooms and occupancy limits.

• Evidence of a valid business license and TOT registration certificate.

• Proof of insurance coverage with a minimum liability of $500,000.

• Acknowledgement of regulations, including a signed indemnification agreement.

• Written confirmation that HOA rules (if applicable) do not prohibit short-term rentals.

Fees and renewal

Palm Springs vacation rental hosts are subject to several fees:

• Vacation rental registration: $1,072 (6–26 stays) or $642 (up to 6 stays).

• Homeshare registration: $268.

• Land Use Permit (LUP) for estate homes: $453 (5+ bedrooms).

• TOT permit fee: $25.

• Additional administrative fees for appeals ($911) or property manager transfers ($175).

Certificates must be renewed annually and a single owner may hold only one active certificate at a time.

Taxes and assessments

Palm Springs imposes:

• An 11.5% Transient Occupancy Tax (TOT) on short-term rental income.

• A 1% Tourism Business Improvement District (TBID) assessment, also passed on to guests.

Short-Term Rental Rules in Other California Cities

In addition to the major markets like Los Angeles, San Francisco, and San Diego, other popular California destinations have their own unique regulations for short-term rentals. Below is a quick guide to some of these cities:

Berkeley

Berkeley defines short-term rentals as stays fewer than 14 days and allows them only if:

• The property is in an approved zone and is your primary residence.

• Hosts are present on-site, allowing unlimited rental days. If absent, rentals are capped at 90 days per year.

• The property carries $1,000,000 in insurance coverage.

The application fee is $220, and operators must pay both TOT (12%) and a monthly enforcement fee (2%).

Beverly Hills

Short-term rentals in Beverly Hills are restricted to a minimum rental period of six months. The city allows owners to collect short-term rental income twice a year (paying a 12% TOT), but only for single-family homes — multi-unit complexes are excluded.

Malibu

Malibu enforces strict regulations under City Ordinances 468 and 472:

• Short-term rentals must be registered with a $439 fee.

• Only one unit per single-family property can be rented at a time, with a cap of 40% or two units (whichever is smaller) in multi-unit complexes.

• Hosts must be on-site during rentals.

• TOT is 15%.

Pasadena

Pasadena short-term rentals must be the host’s primary residence, occupied for at least 9 months per year, per Ordinance 7137:

• Owners in multi-unit complexes can rent one additional unit.

• Unhosted stays are limited to 90 nights per year.

• TOT is 12.11%.

Sacramento

Short-term rentals in Sacramento are regulated under City Code 5.114:

• Rentals must be either primary residences or secondary residences capped at 90 days per year. Renting for more than 90 days requires a conditional use permit.

• Hosts pay an annual business tax of $50 and TOT (12%).

Santa Cruz

Santa Cruz currently allows only hosted short-term rentals, as new unhosted rentals are banned. Per Municipal Code Chapter 24.12:

• Permits are capped at 250 citywide and issued on a first-come, first-served basis.

• ADUs and single-family homes with ADUs are ineligible.

• TOT is 11%.

Sunnyvale

In Sunnyvale, short-term rentals are permitted only in primary residences with a valid permit. Occupancy is limited to 4 guests per night in single-family homes. Hosts must also collect TOT (12.5%).

West Hollywood

West Hollywood restricts short-term rentals to home-sharing scenarios, where the host remains on-site during guest stays. A Home Sharing Business License is required, and hosts must pay TOT (12.5%).

California Cities with Short-Term Rental Bans

While regulations may change in the future, the following municipalities currently restrict short-term rentals:

1. Burbank

The City of Burbank bans all short-term rentals. The ban is based on the omission of regulations for short-term rentals in the city’s ordinances. As of August 2021, the City Planning Board has been working toward implementing even more formal bans.

2. Calabasas

Short-term rentals of fewer than 30 consecutive days are prohibited in Calabasas. The only exceptions apply to hotels and bed-and-breakfast establishments.

3. Manhattan beach

In Manhattan Beach, short-term rentals of fewer than 30 days are only permitted in properties zoned for commercial use. Residential properties are excluded from this allowance.

California cities that completely banned all short-term rentals

Navigating California’s Short-Term Rental Market

The growing profitability and ease of managing short-term rental businesses have drawn increasing numbers of Americans to explore this lucrative opportunity. If you’ve considered joining this trend, now is the perfect time to make it work.

While navigating California’s short-term rental market can initially seem tedious—especially with each city and municipality setting its own rules—familiarizing yourself with these guidelines, as outlined in this guide, simplifies the process. Understanding the requirements for your location allows you to streamline operations and focus on the growth of your business.

It’s important to remember that much of the effort in establishing a short-term rental business is front-loaded. For instance, while certain cities may require significant fees for conditional use permits, these are often one-time expenses. Similarly, while the initial registration process might be time-consuming, subsequent renewals are typically faster and more straightforward as you gain familiarity with the requirements.

By investing the time and resources upfront, you’ll position yourself for long-term success in California’s dynamic short-term rental market.