Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified California tax professional before filing.
California · USA · Short-term rental taxes
Short-Term Rental Taxes in California
STR income in California is taxed as ordinary income, both at the federal and California state level, and is also subject to local Transient Occupancy Tax (TOT) collected city-by-city or county-by-county.
The 30-Second Answer
- Federal income tax: Report STR income on Schedule E (passive rental) or Schedule C (if you provide substantial services); taxed at your ordinary federal income tax rate.
- California state income tax: Report the same income on California Form 540 (Schedule CA); taxed at California's graduated rates from 1% to 13.3% — the highest state rate in the US.
- 14-day rule: If you rent your home for 14 days or fewer per year AND use it personally, the rental income is federally tax-free and need not be reported — but California conforms to this rule.
- Local Transient Occupancy Tax (TOT): Most California cities and counties charge a TOT of roughly 8%–15% on each guest stay of 30 days or less; platforms like Airbnb collect and remit this automatically in many jurisdictions.
Deductions
Deductions That Reduce Your California STR Tax Bill
Hosts who report rental income can offset it with a range of ordinary and necessary expenses — tracked proportionally if the property is also used personally.
If you also use the property personally, deductions must be allocated between rental and personal days. California conforms to federal passive-activity loss rules, which may limit how much loss you can deduct in a given year.
Filing Calendar
Key Dates & Filing Calendar
California STR hosts face both federal and state filing deadlines, plus monthly or quarterly local TOT remittance obligations.
California's Franchise Tax Board (FTB) matches 1099-K data against filed returns — unreported STR income is a common audit trigger.
IRS Publication 527 (2024); California FTB — ftb.ca.gov; IRS Topic 414
Tax Treatment
Schedule E vs. Schedule C: Which Applies to Your STR?
Unlike some countries, the US does not offer a flat-rate simplified regime. Instead, the key question is whether your STR is a passive rental (Schedule E) or an active business (Schedule C).
Schedule E — Passive Rental
Standard treatment for most STR hosts
- Income is not subject to self-employment (SE) tax — saving up to 15.3% vs. Schedule C.
- Losses are 'passive' and generally deductible only against other passive income (subject to $25,000 rental loss allowance for AGI under $100,000).
- Depreciation, mortgage interest, repairs, and platform fees are all deductible.
- Report on federal Schedule E and California Schedule CA (540).
No income ceiling
Schedule C — Active Business
Required if you provide hotel-like services
- Net profit is subject to self-employment tax (~15.3% on first $168,600 in 2024) in addition to income tax.
- Losses are active and can offset other income without passive-activity limits.
- All ordinary business expenses are deductible, including a home-office deduction if applicable.
- Report on federal Schedule C and California Schedule CA (540).
No income ceiling
Depreciation
Depreciation: Your Largest Non-Cash Deduction
The IRS allows residential rental property to be depreciated over 27.5 years. California conforms to federal depreciation rules for most assets.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential building structure | 27.5 years (straight-line) | Land is not depreciable. Allocate purchase price between land and building. |
| Appliances, furniture & fixtures | 5 years (MACRS) | Bonus depreciation may allow faster write-off federally; California does not conform to federal bonus depreciation. |
| Carpeting & flooring | 5 years (MACRS) | Treated as personal property if easily removed; otherwise 27.5 years as structural component. |
| Roof, HVAC, structural improvements | 27.5 years | Qualified Improvement Property (QIP) rules may apply for commercial; residential stays at 27.5 years. |
California does NOT conform to federal bonus depreciation (100% or 60% first-year write-off). California depreciation is generally straight-line MACRS. A cost segregation study can identify shorter-life components and accelerate deductions.
When you sell, depreciation previously claimed is 'recaptured' and taxed federally at up to 25% (Section 1250 unrecaptured gain). California taxes this recaptured gain at your ordinary CA income tax rate (up to 13.3%).
Transient Occupancy Tax (TOT)
California Local Lodging Taxes: TOT Varies by City & County
California has no statewide STR lodging tax. Instead, each city or county sets its own Transient Occupancy Tax (TOT) rate, typically ranging from 8% to 15% of the nightly rate.
TOT applies to stays of 30 days or fewer. Rates differ significantly by jurisdiction. The examples below illustrate common California markets.
8%–15% typical range across California jurisdictions
LA County TOT: ttc.lacounty.gov; Avalara MyLodgeTax California Guide (2024); BNBCalc California STR Tax Guide (2025)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking in a jurisdiction with a platform agreement | Airbnb collects TOT from guest and remits directly to the local authority | You do not handle TOT cash — but verify your city has an agreement; keep records of Airbnb's remittance confirmation. |
| VRBO / direct booking in most CA cities | Host collects TOT from guest and remits to city/county | You must register with the local tax authority, collect TOT on each booking, file returns (often monthly), and remit on time. |
| Stay over 30 days | TOT does not apply | Stays of 31+ days are exempt from TOT in California; document the length of stay carefully. |
Always verify your specific city or county TOT rate and registration requirements directly with the local authority — rates and platform collection agreements change frequently. Some cities also add Tourism Business Improvement District (TBID) assessments on top of TOT.
Platforms
How Airbnb, VRBO & Other Platforms Handle California Tax Reporting
Platforms report your income to the IRS and, in many California cities, collect and remit local TOT on your behalf — but your obligations depend on the platform and the jurisdiction.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Issues Form 1099-K if gross transactions exceed $20,000 and 200+ transactions (2025 threshold); 1099-MISC for bonuses ≥$600 | Yes — in most California cities where Airbnb has a collection agreement | Earnings Summary available in host dashboard by January 31 |
| VRBO / Vrbo | Issues Form 1099-K at the same federal threshold | Partial — collects in some CA jurisdictions; host must verify and may need to self-remit | Annual income statement available in host account |
| Direct / other OTAs | Payment processors may issue 1099-K; host is responsible for tracking all income | No — host must register and remit TOT directly to local authority | No automatic summary; host must maintain own records |
Hosting on Multiple Platforms?
Add up gross income from all platforms before applying the 14-day exclusion test or calculating deductions. Each platform reports independently to the IRS, so the FTB and IRS can cross-reference totals. Keep a master income log combining all sources.
US Information Reporting (not DAC7)
California is a US state — EU DAC7 rules do not apply. Instead, US platforms follow IRS Form 1099-K rules. The IRS has proposed lowering the 1099-K threshold to $600 in future years; check IRS.gov for the current threshold each filing season.
Airbnb Help Center — US tax documents (airbnb.com/help/article/414, 2025); IRS Topic 414 (irs.gov/taxtopics/tc414)
Illustrative P&L — Schedule E Host
Example: California STR earning $40,000/yr, property basis $500,000 (building $400,000), mixed-use 60% rental.
Record-Keeping
Stay Audit-Ready: What California STR Hosts Should Keep
The FTB matches 1099-K data against filed returns. Good records protect you if questioned.
| Keep | How long | Why |
|---|---|---|
| Booking confirmations & guest receipts (all platforms) | 7 years | Proves gross income and number of rental days vs. personal-use days for the 14-day rule and deduction allocation. |
| Expense receipts (cleaning, repairs, supplies, insurance, utilities) | 7 years | Substantiates deductions on Schedule E or C; required if FTB or IRS questions your return. |
| TOT registration certificate & remittance records | At least 4 years (CA statute of limitations) | Proves compliance with local TOT obligations; cities can audit TOT separately from income tax. |
| Depreciation schedules & property purchase documents | Life of property + 7 years after sale | Needed to calculate adjusted basis, depreciation recapture, and capital gain on eventual sale. |
California's statute of limitations for FTB audits is generally 4 years from the return due date, but there is no limit if income is substantially underreported. Keep records longer when in doubt.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
This page is for educational purposes only and does not constitute tax advice. Tax laws change; always verify current rates and rules with the IRS, California FTB, and your local tax authority before filing.
- IRS — Topic No. 414, Rental Income and Expenses — irs.gov/taxtopics/tc414 — authoritative federal guidance on rental income reporting, Schedule E vs. C, and the 14-day rule.
- IRS — Publication 527, Residential Rental Property — irs.gov/publications/p527 — comprehensive federal rules for depreciation, mixed-use property, and vacation home rules.
- California Franchise Tax Board (FTB) — ftb.ca.gov — California income tax rates (1%–13.3%), Form 540 filing requirements, and conformity to federal rules.
- LA County Treasurer & Tax Collector — TOT — ttc.lacounty.gov/tot — official source for LA County unincorporated area TOT rate (12%) and registration forms.
- Airbnb Help Center — US Tax Documents — airbnb.com/help/article/414 — 1099-K and 1099-MISC thresholds and issuance dates for Airbnb hosts (2025).
- Avalara MyLodgeTax — California Vacation Rental Tax Guide — avalara.com/mylodgetax — overview of California local TOT rates and platform collection agreements (2024).
- KDA Inc. — Rental Property Depreciation Strategies (2026) — kdainc.com — California-specific depreciation guidance including non-conformity to federal bonus depreciation.
Questions
Frequently Asked Questions — California STR Taxes
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