Homeshare

Overview of the Home-Sharing Ordinance

On May 12th, 2015 the Santa Monica City Council adopted the "Home-Sharing Ordinance," adding chapter 6.20 to the Santa Monica Municipal Code clarifying prohibitions against short-term Vacation Rentals and imposing regulations on Home-Sharing.   This law becomes effective by June 12th, 2015. It allows eligible Residents (owners and tenants) to apply for a business license through the City's Business License program

This Home-Sharing Ordinance provides for regulations of two types of Short-Term Rentals:

  • Home-Sharing” – The new law authorizes Home-Sharing, which is an activity whereby a resident hosts visitors in their home, for periods of 30 consecutive days or less, while at least one of the primary residents lives on-site throughout the visitor’s stay.  The guest enjoys the non-exclusive shared use of the unit with at least one of the persons who is domiciled at the location. 
  • "Vacation Rental” – The new law continues the City’s longstanding prohibition against Vacation Rentals.  A Vacation Rental is a rental of any dwelling unit, in whole or in part, to any persons for exclusive transient use of 30 consecutive days or less, whereby the unit is only approved for permanent residential occupancy and not approved for transient occupancy.  The guest enjoys the exclusive private use of the unit.   

  

Home-Share Application and Regulations

Information for Home-Sharers

 

Frequently Asked Questions

Why did the Council adopt the Home-Sharing Law?

What will happen to Vacation Rentals that are currently operating?

How much does it cost to register and to get a business License to operate a Home-Share?

Do I need a Business License to operate a Home-Share?

How much does it cost to apply for a Business License?

How much will I pay in Business License tax?

Is there an Enforcement "grace period?"

I don’t make very much money from my Home-Sharing rental, can I be exempt from having to have a business license?

Does the law apply to houses, apartments, or both?

What are Transient Occupancy Taxes?

Can a tenant operate a Home-Share?

Is there a maximum number of days I can operate a Home-Share?

May I rent a guest house?

Can I rent a unit that I do not live in for more than 30 days?

 

Why did the Council adopt the Home-Sharing Ordinance?

The number of Vacation Rentals has increased over the last few years, with the growth of online hosting platforms. This has reduced the number of rental units that would otherwise be available for long-term rentals. In some cities, entire apartment buildings have begun to only offer vacation rentals, essentially turning an apartment building into a hotel in a residential neighborhood. However, Council wanted to still allow individuals to rent out a room or couch to a guest in their home, whether that be an apartment or house.

 

What will happen to Vacation Rentals that are currently operating?

The City will be establishing a proactive enforcement program to identify Vacation Rentals that are operating. This is where an entire unit is rented out without a host on site. Vacation Rentals that are operating illegally may be issued fines of up to $500 per day, and could even face criminal prosecution if they do not cease operating.

 

How much does it cost to register and to get a Business License to operate a Home-Share?

There are no fees to register or obtain a business license.

 

Do I need a Business License to operate a Home Share?

Yes, anyone operating a Home-Share must apply for a City business license. For more information on applying for a Business License, visit www.smgov.net/businesslicense or call the Business License unit at (310) 458-8745.

 

How much will I pay in Business License Tax?

Home-Sharing activities are classified as services and assigned Tax Rate Group III. As such, the annual tax is $75 on the first $60,000 of gross receipts. Additionally, for every $1000 above $60,000 a tax of 0.3% is assessed. For example, if you make $75,000 in rent (without any deductions for expenses) in a calendar year, the Business License tax due would be:

  • $75.00 Tax on the first $60,000 of Gross Receipts, plus
  • $45.00 Tax on the remaining $15,000 of Gross Receipts
  • $120.00 Total Tax Due on $75,000 of Gross Receipts

Note: Business License taxes are not Income Taxes. Gross Receipts are the total amount of receipts collected from rentals. No deductions may be taken for expenses, like with an Income Tax.

 

Is there an Enforcement "grace period?"

No. Any vacation rentals that are operating or any home-share this is operating without a business license is doing so illegally.

 

Vacation Rentals. Individuals or businesses operating a vacation rental must begin winding down operations immediately and shoudl not accept any further reservations past August 31, 2015. Although the City will not begin proactive enforcement against Vacation Rentals until September 1st, Code Enforcement will respond to complaints and will begin enforcement immediately in response to complaints.

Home-Sharing. Anyone who operates a Home-Share is required to obtain a City business license. As of June 15, 2015, all individuals must register with the City and obtain a business license and comply with the Home-Sharing Ordinance and Administrative Rules and Regulations.

 

I don't make very much money from my Home-Sharing rental, can I be exempt from having to have a business license?

Anyone who operates a Home-Share is required to obtain a City business license. However, a person who makes $40,000 or less annually in gross receipts may apply for a Small Business Exemption (SMMC 6.04.025). A person must pay their tax on time to qualify for the exemption; otherwise the minimum tax of $75 and the applicable penalties will be due. Please check with the Business License office for more information at (310) 458-8745.

 

Does the law apply to house, apartments, or both?

The law applies to all residential units in all zones in the City, including single family houses, apartments and condominiums.

 

What are Transient Occupancy Taxes?

The City levies a 14% tax on the total amount paid for rental of a Home-Share in the City. Federal, State or City of Santa Monica employees on official business are exempt from this tax. The tax is paid by the guest. If payment by the guest is made through the hosting platform, it may collect the tax on your behalf. Please check with your hosting platform to see if these taxes are collected by them. Payment of Transient Occupancy Tax (TOT) is due on a monthly basis. For more information, please contact Treasury Operations at (310) 458-8741.

 

Can a tenant operate a Home-Share?

Yes. However, a tenant's lease may restrict such activities. Tenants should check their lease before operating a Home-Share.


Is there a maximum number of days I can operate a Home-Share?

No.

 

May I rent a guest house?

It depends. Any guest house that is located on a parcel that is classified as a single family can use the guest house for home-sharing. It may not be classified as multi-family. Additionally, the guest house many not be a "Rent Control Bootleg Unit as defined in section 9.04.18.075 of the Santa Monica Municipal Code. Form more information please see the Renting a Guest House as a Home-Share flyer.  

 

May I rent a unit that I do not live in for more than 30 days?

You may rent the unit for 31 days or more to a person or persons who do not live elsewhere and who intend to use the unit as their permanent residence. You may not rent the unit out for any period of time to a person or persons who reside elsewhere and intend their stay to be temporary.  This is defined as corporate housing and is a zoning violation.  A Residential Rental Business License is required to rent out a residence. Transient Occupancy Tax is not applicable if renting a unit for more than 30 days.

 

Contact Information

General Questions
Planning and Community Development
Department.
(310) 458-8341
planning@smgov.net

Business License Application Questions
Finance - Business License Division
(310) 458-8745
business.license@smgov.net

Transient Occupancy Tax Questions
Finance - Treasury Division
(310) 458-8741 
treasury@smgov.net

Rent Control Questions
Rent Control Board
(310) 458-8751
rentcontrol@smgov.net

 

Report Illegal Vacation Rentals

Code Enforcement

Online: www.smgov.net/sm_go.aspx
Phone: (310) 458-4984
Email: code.enforcement@smgov.net
Mail: 1685 Main Street, Room 111
Santa Monica, CA 90401>

Complaints can be made anonymously. Please include the address and unit number of the location. If you wish to speak with a Code Enforcement Officer, you will need to provide your name and contact information