Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified California tax professional before filing.
San Diego, California · USA · Short-term rental taxes
Short-Term Rental Taxes in San Diego
Short term rental taxes in San Diego: a zone-based 11.75–13.75% Transient Occupancy Tax since May 2025, a STRO licence with a capped whole-home tier, and California income tax that ignores bonus depreciation.
The 30-Second Answer
- Short term rental taxes in San Diego start with the city's Transient Occupancy Tax (TOT): since May 1, 2025 (Measure C) it is 11.75%, 12.75% or 13.75% depending on the tax zone your property sits in, on stays of less than one month.
- You need a TOT Registration Certificate first, then a Short-Term Residential Occupancy (STRO) licence — Tier 1 (≤20 days a year), Tier 2 (home sharing, host on site), Tier 3 (whole home, capped at 1% of the city's housing units) or Tier 4 (Mission Beach whole home).
- Airbnb collects and remits San Diego TOT on bookings of 30 nights or less. TOT is reported monthly and due by the last day of the following month — you remit it yourself on any booking a platform does not cover.
- Net rental income is taxed federally and by California at 1%–12.3% (2025 schedule). California does not follow federal bonus depreciation and caps Section 179 at $25,000, so keep a separate California depreciation schedule.
Deductions
What San Diego STR Hosts Can Deduct
Ordinary and necessary costs of the rental reduce both your federal and California taxable income — but depreciation is calculated differently for each.
TOT you collect from guests and pass to the City is not your income or your expense if you account for it separately. If you also use the home yourself (common with Tier 1 and Tier 2), split costs between rental and personal days under IRC §280A.
Filing Calendar
Key Dates & Filing Calendar
San Diego TOT runs on a monthly cycle; income taxes follow the federal and California annual calendar.
Your TOT certificate comes with a monthly filing cycle. If a platform remits all of your TOT, ask the Office of the City Treasurer how to report those months rather than simply skipping the return.
City of San Diego Office of the City Treasurer — Transient Occupancy Tax and STRO pages (sandiego.gov/treasurer)
Income Tax Treatment
Schedule E or Schedule C for a San Diego STR?
Your STRO tier does not decide your income-tax treatment — the IRS test of average stay and services does, and California follows the same classification.
Passive rental — Schedule E
Most Tier 1–3 hosts
- Report rents and expenses on Schedule E; California picks up the same net figure on Form 540, adjusted for depreciation differences.
- No self-employment tax on the net rental income.
- Building depreciation over 27.5 years; any federal bonus depreciation on furnishings must be reversed for California.
- Losses are generally passive unless you materially participate in a rental with an average stay of 7 days or less.
No income ceiling; passive loss rules apply
Active business — Schedule C
When you provide hotel-like services
- Applies when the average stay is 7 days or less and you provide substantial services (daily housekeeping, meals, tours).
- Net profit carries self-employment tax (15.3% up to the 2026 wage base of $184,500).
- The federal QBI deduction (Section 199A) may apply to qualifying business income.
- California taxes the same profit at its ordinary rates — there is no lower state rate for business income.
No income ceiling; SE tax on profit up to $184,500
Depreciation
Depreciation for San Diego Rentals: Federal vs California
The building is depreciated the same way for both returns; furnishings and equipment are where federal and California numbers split.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building | 27.5 years (straight-line) | Land is excluded — coastal San Diego lots can be a large share of the price, so get a supportable land/building split. |
| Furniture, beds & appliances | 5 years (MACRS) | Federal bonus depreciation is a permanent 100% for property acquired after January 19, 2025; California does not allow it. |
| Section 179 expensing | Year placed in service | California limits the Section 179 deduction to $25,000 — far below the federal limit. |
| Land improvements (decks, fencing, landscaping) | 15 years (MACRS) | Outdoor spaces are a big part of STR value in beach areas; track them separately from the building. |
Use Form FTB 3885A to compute California depreciation and report the difference as an adjustment on Schedule CA (540). A cost segregation study speeds up federal deductions but produces much smaller early-year benefits in California.
On sale, depreciation is recaptured federally at up to 25% (unrecaptured Section 1250 gain); California taxes the whole gain at ordinary rates, using its own (often higher) adjusted basis.
Transient Occupancy Tax (TOT)
San Diego Transient Occupancy Tax by Zone
The City of San Diego charges TOT on every stay of less than one month. Since May 1, 2025 the rate depends on which of three tax zones the rental sits in.
Measure C replaced the flat 10.5% TOT with zone-based rates from May 1, 2025. Look up your zone on the City's interactive tax zone map before setting your direct-booking tax rate — the zone, not your neighbourhood name, decides the rate.
11.75%–13.75% TOT (by zone)
City of San Diego Office of the City Treasurer — TOT/TMD (sandiego.gov/treasurer/taxesfees/tot)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking | Airbnb collects 11.75–13.75% San Diego TOT on reservations of 30 nights or less and remits it to the City | Record gross rent and platform-remitted TOT separately; still file your monthly City return |
| Vrbo or other hosting platform | Under the STRO rules, hosting platforms must verify your licence and collect and remit TOT where applicable | Confirm in your dashboard that TOT is being charged; if not, you collect and remit it |
| Direct booking | You collect the zone rate from the guest and remit monthly to the Office of the City Treasurer | Show the occupancy tax as a separate line, hold it apart from rent, and pay by the last day of the following month |
The 2% TMD assessment applies to lodging businesses with 70 or more rooms, so a typical vacation rental does not pay it. Homes outside City limits (for example in unincorporated San Diego County or neighbouring cities) fall under a different jurisdiction's lodging tax and rules.
Platforms
Airbnb Tax in San Diego and Other Platforms
San Diego's STRO rules make hosting platforms check your licence number and handle TOT — but your income reporting and monthly City return remain yours.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Form 1099-K when 2026 payouts exceed $20,000 and 200 transactions | Yes — San Diego TOT (11.75–13.75%) on stays of 30 nights or less | Earnings summary in the host dashboard; tax forms by January 31 |
| Vrbo | Form 1099-K above the same federal thresholds | Required by STRO rules to collect where applicable — confirm on your listing | Annual payout summary in the owner dashboard |
| Direct bookings | No platform reporting | No — you collect and remit TOT monthly | Your own booking ledger |
Listing on Several Platforms?
Every platform you use — Airbnb, Vrbo, Booking.com — must verify your STRO licence, and each one tests the 1099-K threshold separately. Reconcile payouts from every channel against your monthly TOT returns — the City receives monthly data from platforms and can match it to what you report.
US Reporting: Form 1099-K, Not DAC7
DAC7 is an EU rule and does not apply in San Diego. US platforms report on Form 1099-K once payouts exceed $20,000 and 200 transactions in a year; Form 1099-MISC/NEC uses a $2,000 threshold for payments after December 31, 2025. All rental income is taxable whether or not you receive a form.
Airbnb Help Center — Occupancy tax collection in California (airbnb.com/help/article/2297); City of San Diego STRO program (sandiego.gov/treasurer/short-term-residential-occupancy)
Illustrative P&L — Tier 3 Whole-Home Rental
Example for a North Park whole-home STR grossing $60,000 a year (TOT excluded). For illustration only — not tax advice.
Record-Keeping
Stay Audit-Ready: What San Diego Hosts Should Keep
The City Treasurer audits TOT, the Franchise Tax Board audits your California return, and the IRS audits the federal one.
| Keep | How long | Why |
|---|---|---|
| TOT Registration Certificate, STRO licence and renewal records | For as long as you operate plus 4 years | Proves you were licensed for your tier during every booking |
| Monthly TOT returns and platform TOT statements | At least 4 years | Shows which TOT the platform remitted and which you paid on direct bookings |
| Nights-rented log (Tier 3/4: 90-day minimum; Tier 1: 20-day limit) | Through the licence term plus 4 years | Supports your tier and your personal-vs-rental day split for income tax |
| Expense receipts and 1099-Ks | At least 4 years after filing | California's general assessment window is longer than the federal 3 years |
| Separate federal and California depreciation schedules (FTB 3885A) | Until 4 years after you sell | Your California basis differs from your federal basis if you took bonus depreciation |
A missed month is expensive: late TOT carries 1% on the first day plus one-third of 1% per day after, up to 25%. Set a recurring reminder for the last day of each month.
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
Rates verified September 2026 at the official pages below. Educational information only — confirm your tax zone and current fees with the Office of the City Treasurer and a qualified California tax professional before filing.
- City of San Diego — Transient Occupancy Tax (TOT) / Tourism Marketing District (TMD) — Zone rates from May 1, 2025, 10.5% prior rate, TMD 70+ rooms, monthly due date, penalties, registration certificate. sandiego.gov/treasurer/taxesfees/tot
- City of San Diego — Short-Term Residential Occupancy (STRO) — Tiers 1–4, 1% and Mission Beach caps, fees from March 1, 2025, two-year term, platform duties. sandiego.gov/treasurer/short-term-residential-occupancy
- Airbnb Help Center — Occupancy tax collection in California — San Diego TOT 11.75–13.75% collected on stays of 30 nights or less. airbnb.com/help/article/2297
- California Franchise Tax Board — 2025 Instructions for Form FTB 3885A — No conformity to federal bonus depreciation; $25,000 Section 179 limit. ftb.ca.gov/forms/2025/2025-3885a-instructions.html
- California Franchise Tax Board — 2025 Tax Rate Schedules — Rates from 1% to 12.3%. ftb.ca.gov/forms/2025/2025-540-tax-rate-schedules.pdf
- IRS — Publication 527, Residential Rental Property — Schedule E reporting, 27.5-year depreciation, personal-use rules. irs.gov/publications/p527
Questions
Frequently Asked Questions — San Diego STR Taxes
Mr Props Team
Property & Short-Term Rental Tax specialists
Make Tax Season a Non-Event
Mr. Props tracks your STR income, expenses and remittances all year, so your California filing is ready to file instead of reconstructed in a panic.
Join Hosts Running Smarter Portfolios
Monthly tactics on STR tax, pricing and operations — written for operators, not accountants.
No spam. Unsubscribe anytime.