what are weekend rentals in San Diego going for for apartments whose target market are visiting business persons ? what are such rentals called and how are they taxed and best managed?
ChatGPT said:
Here’s what I found regarding weekend rentals in San Diego catering to business travelers:
🏨 What they’re called
-
Corporate housing or serviced apartments/aparthotels: These are fully furnished units (often with kitchens and workspaces), available for nightly or weekly bookings. Designed to bridge the gap between hotels and long-term rentals.
-
Brands include Sonder, AltoVita, Ready Stays, and Candlewood Suites—all offering business‑ready amenities .
💵 Typical pricing for weekend stays
Local providers report:
-
1‑bedroom corporate units start around $120/night
-
2‑bedrooms at $147/night
-
3‑bedrooms at $167/night, plus applicable fees.
While advertised as “monthly,” many accept shorter stays over weekends with prorated nightly rates.
🧾 How they’re taxed in San Diego
-
Transient Occupancy Tax (TOT)
-
Required for all stays under 30 days. As of May 1 2025, rates are 11.75%–13.75% based on proximity to the Convention Center .
-
Collected from guests and remitted (usually monthly) by the host; platforms like Airbnb/VRBO may handle collection .
-
-
Business Tax & STRO License
-
Renting <1 month requires a Short‑Term Residential Occupancy (STRO) license.
-
Licenses are tier‑based (Tier 1–4) with fees from ~$193 to $1,129 .
-
Non‑owners (e.g., lessees) must get a Business Tax Certificate and pay Rental Unit Business Tax annually .
-
-
Rental Unit Business Tax
-
Anyone renting a property for more than 6 days/year must pay a yearly tax .
-
-
Income Tax
-
Federal: report income on Schedule E (if no services) or Schedule C (if services offered), with self‑employment tax implications .
-
State: California income tax applies (1–13.3%).
-
Tax deductions possible: mortgage, utilities, cleaning, depreciation, etc. .
-
-
14‑Day Rule
-
If you rent the unit ≤14 days/year and use it personally, that income may be tax‑free federally—useful for high‑demand weekends like Comic‑Con.
-
🔧 Best practices for management
-
Use a property manager experienced with business‑oriented rentals—they can handle marketing, guest screening, cleaning, maintenance, and compliance with local rules .
-
Market toward business travelers by highlighting high‑speed Wi‑Fi, ergonomic workspaces, and proximity to business hubs or the Convention Center.
-
Choose between STR vs mid‑term rentals:
-
Short‑term rentals (STR): more revenue per night but heavier tax/licensing burden and supply limits (1% city‑wide cap) .
-
Mid‑term rentals (MTR): simpler rule set (no STRO license if ≥30 days), steadier revenue, but potentially lower nightly yield .
-
-
Keep meticulous financial records: track income, dates rented, fees paid, and expenses for accurate tax filing and potential deductions .
✅ Summary table
| Aspect | Details |
|---|---|
| Type of rental | Corporate housing / aparthotel |
| Nightly rates | ~$120–167 for 1–3 BR |
| TOT rates | 11.75%–13.75% based on zone |
| Licenses needed | STRO license (Tier 1–4); Business Tax Certificate |
| Annual tax | Rental Unit Business Tax if ≥6 days |
| Income taxes | Federal + CA income tax; deductions available |
| Mgmt tips | Use property management, market to business guests, track finances meticulously |
If you’re planning to operate such rentals, it’s wise to consult with a local accountant or property‑management specialist to ensure full compliance with San Diego’s regulations and optimize tax efficiency. Want help finding a manager or diving deeper into zoning or tax brackets? Just say the word!
You said:
ChatGPT said:
You’re mostly right. Let’s break it down with your example and clarify each tax component step by step:
🧾 Your Example Rental Scenario:
-
6 nights per month
-
$167/night
-
Monthly gross revenue: $167 × 6 = $1,002
✅ 1. Local Taxes (Passed to Guest)
a. Transient Occupancy Tax (TOT)
San Diego charges 11.05%–13.05%, depending on location. Let’s assume 11.05% for this example.
-
TOT = $1,002 × 11.05% = $110.74
-
✅ This is passed to the guest, not absorbed by you.
-
Platforms like Airbnb and VRBO often automatically collect and remit TOT for hosts, but if you book directly, you must do this yourself (monthly filing with the City Treasurer).
✅ 2. City of San Diego Business Taxes (Owner Responsibility)
a. Short-Term Residential Occupancy (STRO) License
Required for renting <30 days. This is a yearly license fee, not charged per guest.
-
Tier-based based on how and where you rent. If you’re not onsite, likely Tier 3 or 4:
-
Fee range: $200–$1,100/year
-
b. Business Tax Certificate (BTC)
Annual requirement for anyone doing business in San Diego.
-
Fee: ~$34–$100/year depending on revenue and entity type
c. Rental Unit Business Tax
This is a yearly tax charged if you rent out the property more than 6 days/year (you would).
-
Estimated at ~$50–$150/year
✅ These are fixed annual obligations. They are not passed to guests — you pay them.
✅ 3. State of California Taxes (Owner Responsibility)
-
California income tax applies to the profit (net income) you earn from the rental.
-
Tax rate: 1%–13.3%, depending on your total income bracket.
-
You can deduct related expenses (cleaning, utilities, supplies, depreciation, platform fees).
✅ This is your responsibility, not passed to the guest.
✅ 4. Federal Taxes
You’re correct:
-
No federal taxes like sales tax or TOT.
-
You’ll report rental income on Schedule E (or Schedule C if you’re offering hotel-like services).
-
Federal income tax rates apply based on your income bracket.
-
You can deduct related expenses — potentially reducing your taxable profit.
📊 Summary Table
| Tax Type | Rate/Cost | Who Pays It? | When |
|---|---|---|---|
| TOT (Transient Tax) | 11.05% (~$110/mo) | Guest pays | Monthly |
| STRO License | $200–$1,100/year | Owner pays | Annually |
| Business Tax Cert. | $34–$100/year | Owner pays | Annually |
| Rental Unit Biz Tax | $50–$150/year | Owner pays | Annually |
| CA Income Tax | 1–13.3% on profit | Owner pays | Yearly (filed with CA FTB) |
| Federal Income Tax | Based on bracket | Owner pays | Yearly (IRS) |
💡 Net Effective Tax Burden
-
Of the $1,002/month, about $110 in TOT is passed to the guest.
-
The rest (licenses + income taxes) are your responsibility, but can often be deducted as business expenses.
Want a calculator to estimate your federal + state income tax on this? I can build a custom one for your tax bracket and deduction assumptions.