Short-Term Rental Owners Must File San Francisco Taxes

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

By Joyce E. Cutler

March 21 — Homeowners who offer flats, futons and fabulous views for rent on home-sharing services including Airbnb Inc. and HomeAway Inc. will receive notices from San Francisco’s Assessor-Recorder that they have to itemize and pay taxes on each toaster, mattress and television used in the residence.

The notice going out the week of March 21 is the latest in San Francisco’s push to ensure all taxes are paid by hosts offering crash pads for short-term rental. This also marks the first full year the city’s short-term rental registration and tax ordinance is in effect, Assessor-Recorder Carmen Chu told Bloomberg BNA.

“When people think about property taxes, naturally the thing people think about is land and improvements. But also there is a second” tax many businesses in the San Francisco area already file for covering tangible property used in a business, Chu said March 18. “It is a lesser-known tax and that’s why we thought it was important to get the message out to our constituents.”

Taxing Spoons

“Middle class families shouldn't have to pay extra taxes on their sheets. This invasion of privacy mandates that San Franciscans inventory and pay taxes on every picture frame, towel and spoon in their home,” Airbnb said in a statement.

Airbnb’s statement, e-mailed to Bloomberg BNA March 18, said the taxes were optional and not mandated by state law, but Chu disputed that point. She pointed to Calif. Rev. & Tax Code Section 441(a), which requires all business owners to file taxes. Rev. & Tax Section 201 states all property in California is subject to taxation.

“We’re disappointed that that’s the position they’re taking on it because I think they could have and could play a helpful role in helping” hosts, Chu said. “Honestly, this is new for many of us so we’re going to be seeing for the first time what the impacts are going to be for San Francisco.”

Those who registered must file the 571-R form on April 1 and are considered late after May 7. An updated version of the form will be posted on the Assessor-Recorder's office website.

Property owners will list and describe the property used in the short-term rental, when it was acquired and the purchase price. “We will be the ones to apply any depreciation factors to help come up with the current assessed value,” Chu said. “All we’re asking people to do is give us as much information they can.”

Expanding Tax Collections

In 2014, Airbnb began paying taxes to Portland, Ore., and San Francisco, Airbnb’s hometown, in 2014. The October 2014 ordinance covering San Francisco-based Airbnb, HomeAway and HomeAway-owned VRBO.com (Vacation Rentals by Owner) requires registration and payment of the 14 percent transient occupancy tax. Some 2,000 properties were registered .

Airbnb last month agreed to collect lodging taxes in Alabama, while Louisiana this month expanded the definition of hotels for tax purpose collection to include short-term rentals .

The company reached earlier agreements with Illinois, Florida, North Carolina, Rhode Island, Philadelphia, Phoenix, San Diego and Paris.

Airbnb Jan. 15 launched a partnership with H&R Block to help hosts file tax returns in the U.S. and pay income taxes.

To contact the reporter on this story: Joyce Cutler in San Francisco at jcutler@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com