By Randan Salyers, CPA, Tax Senior
In 2024, if you are the owner of a short-term rental property located in California (including rentals listed on platforms such as Airbnb, VRBO, etc.), you may now be required to report the personal property used in the rental on Form BOE-571-STR, Short-Term Rental Property Statement (see resources below for a link to sample form). This new filing, with your County Assessor, was authorized by the California State Board of Equalization because they consider short-term rentals to be a trade or business. This Statement, designed specifically for short-term rental properties, will be used to report the original cost of personal property used by your short-term rental and allow the Assessor to determine the property tax due.
An existing requirement applies to all residential rental activities, but this new requirement is specifically targeting short-term rentals whether or not the entire home or one bedroom is being rented out. The County Assessor is identifying landlords if they have registered as a rental business with the appropriate City or County office or if they are subject to charging renters the Transient Occupancy Tax (Hotel Tax) that generally applies to rentals of less than 30 days.
The owner of a short-term rental filing form BOE-571-STR will be required to report the year acquired and the original cost of personal property including, but not limited to, any supplies, furniture, appliances, electronic equipment, bedding and linens, etc., used in the rental activity. This also includes any property in a common or shared area the guest may be allowed to use, such as a kitchen, bathroom, or entertainment room. Even though these shared areas may have personal use by the owner, the costs reported cannot be allocated between rental and personal use. If the property used in the rental is old and was not originally purchased for the purpose of being used in the rental, the owner is still required to use their best knowledge to estimate the year each item was purchased and its cost.
Some counties have chosen to use the existing Form 571-L, Business Property Statement to have landlords comply with this new reporting requirement. If your County Assessor is taking this approach, we recommend contacting the Assessor for specific reporting requirements as the reporting categories on the form do not reflect the type of assets used in a short-term rental.
Landlords are required to file a Statement reporting the cost of personal property if the cost of such property exceeds $100,000. If the original cost is less than $100,000, a filing is only required if the owner receives a request to file from their County Assessor. Under this new program, County Assessors are identifying owners of short-term rentals and issuing requests to file. If a request is not received, the landlord is not required to file, however, some Assessors will simply estimate the value of personal property and send the landlord a bill for the related personal property tax. Landlords may consider filing, even if not required, so the assessed tax will be based on their actual information rather than the Assessor’s estimate.
The tax rate on the assessed value of the personal property will generally be between 1% and 1.25%. The assessed value is determined by the Assessor applying a depreciation factor to the original cost. Using a rate of 1.2% should give a conservative estimate of the tax. Form BOE-571-STR is due on April 1st of each year with an automatic extension to May 7th. The form or e-file instructions will be sent to the taxpayer directly by the County Assessor. If the cost of personal property exceeds $100,000 and a filing request is not received from the Assessor, landlords should contact their County Assessor for filing instructions to avoid penalties. The tax is assessed as of January 1st of each year. This means that if your rental was active on January 1st, but you ceased rental operations before the notice was received, you are still obligated to file for that year. More information can be found on the specific county assessors’ website where the short-term rental is located.
Our team of experts is here to guide you on reporting and complying with these new short-term rental property tax requirements. Please contact us for more information and to discover ways we can help.
Resources:
- Sample BOE-571-STR, Short Term Rental Property Statement for 2024
- Find your county assessor: Listing of County Assessors, Auditors and Auditor-Controllers, Clerks of the Board, and Tax Collectors