Starting in 2024, California is mandating owners of short-term rental properties to file the new personal property tax statement (Form BOE 51-STR– page 32-33). According to the California Senate Bill No. 60, Chapter, 307, a “short-term rental” in the state refers to any residential property or portion of a residential property that is rented to an individual or group for 30 consecutive days or less. This is not the proposed 15% tax (SB 584) on short-term rentals that would be effective 2025. SB 584 passed the California Senate but would need two-thirds approval of the state Assembly.

Here are some things you should know:

1. The deadline for filing is May 7th, 2024.

2. You must file if the total value of personal property within the rental exceeds $100,000. You are encouraged to file no matter the value, to prevent the county from making assumptions about personal property values and overtaxing.

This is how the tax works:

1. Individuals must provide the original cost and acquisition year for all personal property items used in the short-term rental (furnishings, appliances, equipment, supplies, etc.).

2. The county then applies a depreciation factor to these items to calculate the net value, which is subject to a tax rate of just over 1%.

3. Penalties can be hefty, from 50% for failure to timely file to 75% for fraud. Counties can also cross-check short-term rental platforms, such as Airbnb and VRBO, to ensure compliance.

Whether or not you choose to file, don’t be surprised if you receive future correspondence from local counties related to the above. We collaborate with our clients and their CPAs to make sure you are compliant and put your mind at ease. If you would like to contact us, please speak with your advisor or you can reach us at financialplanning@bfsg.com.

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