Santa Clara County, California Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Santa Clara County, California?

Short-term rentals, popularized by platforms like Airbnb and VRBO, have become increasingly common in Santa Clara County. However, hosts must navigate a patchwork of regulations that vary by city. Here's an overview of the key rules for short-term rentals in Santa Clara County.

Starting a Short-Term Rental Business in Santa Clara County

Before listing your property on Airbnb or VRBO in Santa Clara County, it's crucial to understand the specific regulations in your city, as they can vary significantly.

In July 2023, the town of Santa Clara passed Local Law 01-2023, requiring all short-term rental hosts to obtain a permit. The annual permit fee is $150 per unit. Operating without a permit can result in fines of up to $1000. The law also caps short-term rentals at 5% of residential properties in each zoning district.

To get a permit in Santa Clara, hosts must provide details on the rental's location, occupancy limits, local contact, and proof of insurance. Strict rules apply regarding noise, parking, trash, and responding to complaints within 30-60 minutes.

However, regulations differ in other parts of the county. San Jose has a 180-day annual cap for unhosted rentals but no limit if the host is present. Hosts must also register with the city and collect transient occupancy taxes.

Sunnyvale prohibits whole-home rentals entirely, allowing only hosted "home-sharing" for a maximum of 90 days per year. The host must be present during guest stays.

Mountain View caps whole-home Airbnb rentals at 90 days annually but has no limit on renting just a portion of the home. Hosts have one hour to resolve any guest complaints.

Palo Alto is even more restrictive, permitting only hosted stays of 90 days or less per year. Cupertino has similar 90-day caps and hosting requirements.

Unincorporated areas of Santa Clara County impose a 10% transient occupancy tax on short-term rentals. Additional city taxes often apply on top of this.

So, in summary, before starting an Airbnb business in Santa Clara County, carefully review the specific city ordinances. Prepare to register with the city, obtain permits, pay occupancy taxes, and follow operational rules around occupancy, noise, and parking. With proper planning, short-term rentals can be a great business opportunity in this high-demand area.

Short-Term Rental Licensing Requirements in Santa Clara County

To legally operate a short-term rental (STR) in Santa Clara County, hosts must obtain the proper permits and licenses. Requirements vary by city, so it's important to check your local regulations. Here's an overview of the licensing process in key cities:

Santa Clara

• Hosts must obtain a Short-Term Rental Permit from the Town of Santa Clara. The annual permit fee is $150 per unit.
• Submit the STR permit application, fee, a completed compliance checklist, and supporting documents to the Code Enforcement Officer.
• Fines for operating without a permit can reach $1000.

San Jose

1. Register your STR with the city and obtain a Business License. Pay the annual Business Tax.
2. Designate a local contact person who can respond to issues within 1 hour.
3. STRs must comply with city parking, noise, and occupancy requirements.

Sunnyvale

1. Whole-home rentals are prohibited. For hosted stays, obtain a Home-Sharing Registration and pay the Transient Occupancy Tax.
2. STRs limited to 90 days per year and host must be present.
3. Property inspection is required prior to approval.

Mountain View

1. Register your STR and pay the Transient Occupancy Tax to the city.
2. Whole-home rentals are capped at 90 days per year. No limit for renting a portion of your home.
3. Respond to any complaints within 1 hour or face penalties.

Palo Alto

1. Only hosted stays are allowed, capped at 90 nights per year. Host must live on-site.
2. Obtain a STR permit, provide proof of liability insurance, and remit the Transient Occupancy Tax.
3. Designate a local contact available 24/7 to handle issues.

Cupertino

1. Obtain a STR permit and pay the Transient Occupancy Tax. For multi-family properties, HOA approval may be required.
2. Whole-unit rentals limited to 90 days annually. Occupancy limits and parking rules apply.
3. Respond to problems within 1 hour to avoid fines.

Processing time for STR permits and licenses varies by city but generally takes 2-4 weeks. Failure to obtain required permits can result in substantial penalties - for example, fines of at least $1000 per day per unit in Milpitas.

To streamline the licensing process, Santa Clara County now allows online registration and payment of the Transient Occupancy Tax for STRs. However, it's still crucial to verify the specific requirements with your city's planning or finance department before listing your property on Airbnb or other STR platforms.

Required Documents for Santa Clara County Short-Term Rentals

To legally operate a short-term rental (STR) in Santa Clara County, hosts must submit several required documents as part of the permitting process. These documents ensure the property meets safety standards and the host complies with local regulations. Here are the key documents needed, based on the Santa Clara Town STR ordinance (Local Law 01-2023):

Short-Term Rental Permit Application: This is the main form to register your STR with the town. It captures key details about the property, host, and local contact person. Submit the completed application, along with the $150 annual permit fee, to the Code Enforcement Officer.

Proof of Primary Residence: For STRs in residential zones, you must demonstrate the property is your primary residence. Provide two documents showing the address, such as a driver's license, vehicle registration, voter registration card, or utility bill.

Floor Plan: Submit a floor plan of the STR unit showing all rooms, exits, and locations of fire extinguishers and smoke/CO alarms. This helps verify occupancy limits and fire safety compliance.

Proof of Insurance: Provide a certificate of insurance showing the property has adequate liability coverage for rental use. Minimum coverage amounts may be specified.

Good Neighbor Policy Acknowledgement: Sign an agreement to abide by town rules on occupancy limits, noise, parking, trash disposal, and complaint response. This shows your commitment to being a responsible STR operator.

Local Contact Designation Form: Identify a local person (or property management company) who can respond to any issues at the STR within 30-60 minutes. Provide their full contact details.

Transient Occupancy Tax Registration: Register with the county to collect and remit the required 10% Transient Occupancy Tax on STR stays. You can register and file returns online.

Smoke Alarm and Carbon Monoxide Alarm Self-Certification: Certify that working smoke and carbon monoxide alarms are installed in all required locations in the STR unit.

Parking Plan: If required, submit a plan showing the location and number of on-site parking spaces available for STR guests.

These documents must be submitted to the Santa Clara Town Code Enforcement Officer for review. The approval process typically takes 2-4 weeks. Once issued, the STR permit must be renewed annually. Operating without a permit can result in fines of $1000 or more.

By carefully compiling these required documents, STR hosts can navigate Santa Clara County's permitting process and operate in full compliance with local regulations. This protects hosts, guests, and the community.

Santa Clara County Short-Term Rental Taxes

Short-term rental hosts in Santa Clara County are subject to several taxes, which can vary depending on the specific city. Here's a breakdown of the key taxes to be aware of:

Transient Occupancy Tax (TOT)

The Transient Occupancy Tax, also known as a hotel tax or lodging tax, applies to stays of 30 days or less. In unincorporated parts of Santa Clara County, the TOT rate is 10% of the rental price. For a $100 per night rental, the tax owed would be $10.

However, cities within the county may charge additional TOT on top of the county rate. For example, in 2023 the city of Santa Clara raised its TOT from 11.5% to 12.5%, with the ability to go up to 13.5% within two years. San Jose charges a combined TOT rate of 10%.

It is the host's responsibility to collect the appropriate TOT from guests and remit it to the county and/or city. Hosts can register and pay the county TOT online.

Business License Tax

Many cities in Santa Clara County, such as San Jose, require short-term rental operators to obtain a business license and pay an annual business license tax. The amount varies by city.

Income Taxes

Short-term rental income is subject to federal and California state income taxes. Hosts must report rental income on their tax returns. However, many expenses can be deducted to offset taxes owed, such as:

1. Mortgage interest
2. Property taxes
3. Cleaning fees
4. Utilities
5. Repairs and maintenance
6. Supplies
7. Insurance
8. Platform service fees
9. Depreciation

Hosts may need to make quarterly estimated income tax payments. Working with a tax professional is advisable to optimize deductions and ensure compliance.

Personal Property Tax

Starting in 2024, California is requiring short-term rental businesses to pay an annual tax of 1-1.2% on the value of the rental's furniture and equipment, like appliances, TVs, and mattresses. This is similar to a business property tax. Hosts with over $100,000 in personal property will need to file Form BOE-571-STR with the county assessor each year.

So, in summary, Santa Clara County short-term rental hosts must navigate TOT, business taxes, income taxes, and new personal property taxes. Rates and rules vary by city. Careful tracking and professional guidance can help hosts comply with all tax obligations while maximizing deductions. With the proper planning, short-term rentals can still be a profitable venture in this high-cost region.

California Wide Short-Term Rental Rules

While most short-term rental regulations in California are set at the city or county level, there are a few state laws that Santa Clara County hosts should be aware of:

Definition of a Short-Term Rental: California law defines a short-term rental as any residential property rented out for 30 days or less. This broad definition applies to all types of short-term rentals, including vacation homes and portions of a residence.

Transient Occupancy Taxes (TOT): California allows cities and counties to levy transient occupancy taxes on short-term rentals. While the state doesn't impose its own lodging tax, Santa Clara County charges a 10% TOT on rentals of 30 days or less. Cities within the county may charge additional TOT on top of this. Hosts are responsible for collecting the tax from guests and remitting it to the proper authorities.

Business Licenses: Short-term rental operators may need to obtain business licenses and pay business taxes, as required by their local city or county. For example, San Jose requires STR hosts to register their business and pay an annual business tax.

Rental Agreements: California law distinguishes between lease terms exceeding 30 days and terms of 30 days or less. Many protections for long-term tenants do not apply to short-term rentals. STR hosts should use rental agreements tailored specifically to short-term stays.

Subletting Restrictions: A state law requires STR platforms to notify hosts that their lease agreement may prohibit subletting or restrict short-term rentals. Hosts should review their lease or HOA rules before listing their property.

Insurance Considerations: The same state law requires STR platforms to advise hosts to review their insurance policy to ensure proper liability coverage for short-term rentals.

So, while cities and counties are the primary regulators of short-term rentals in California, Santa Clara County hosts still need to follow a few key state-wide rules. Hosts must collect applicable occupancy taxes, obtain business licenses, use proper rental agreements, and make sure STRs are permitted under their lease. By complying with both state and local regulations, hosts can operate legally and successfully in this top tourist destination.

Does Santa Clara County Strictly Enforce STR Rules?

Santa Clara County has taken a relatively strict stance on short-term rental regulations compared to some other California counties. The county actively enforces its STR ordinances, with significant penalties for non-compliance.

According to discussions on real estate forums like BiggerPockets and Reddit, many Santa Clara hosts find the county less than friendly to Airbnb and other short-term rental platforms. Hosts complain about the complex web of city-specific rules they must navigate on top of the countywide regulations.

Cities like Santa Clara have capped the number of allowable STR permits, conduct inspections, and prohibit rentals in most residential areas. Sunnyvale has banned whole-home rentals entirely. Palo Alto only allows hosted stays for 90 days per year maximum. These restrictions make it challenging for hosts to operate profitably.

Heavy fines for violations also deter many would-be hosts. The county imposes a 10% transient occupancy tax on STRs, and cities charge their own TOT on top, some as high as 12.5%. Failure to register, obtain permits, or remit taxes can result in penalties of $1000 or more per day.

As a result, a significant number of STR listings in Santa Clara County appear to operate illegally. A recent report estimated 1000-1500 unpermitted rentals in the city of Santa Clara alone. However, the risk of getting caught is high. Cities are ramping up enforcement, with San Jose allocating over $1 million to STR compliance efforts.

So in summary, while Santa Clara County's STR market holds immense potential due to the booming tech industry and tourist attractions, the county is far from Airbnb-friendly from a regulatory perspective. Hosts determined to operate STRs must diligently comply with all local rules or face steep consequences. For many, the operational headache and financial risk outweigh the benefits, leading them to pursue STRs in other, more lenient markets.

How to Start a Short-Term Rental Business in Santa Clara County

Starting a short-term rental business in Santa Clara County can be a lucrative venture, but it requires careful planning and compliance with local regulations. Here's a step-by-step guide to get you started:

Research local regulations: Before investing in a property, thoroughly review Santa Clara County's short-term rental ordinances. Regulations vary by city, with some limiting rentals to certain zones, capping the number of rental days, or requiring permits and inspections. Failure to comply can result in hefty fines.

Choose a property: Look for a property in a desirable location with amenities that appeal to your target guests. Consider factors like proximity to attractions, parking, and public transportation. If you already own a property, ensure it meets all safety and zoning requirements for short-term rentals.

Register your business: Apply for a business license with your city's finance department. You'll also need to register for a Transient Occupancy Tax (TOT) certificate to collect and remit lodging taxes. Santa Clara County requires STRs to pay a 10% TOT, and cities may charge additional taxes on top of this.

Obtain necessary permits: Apply for any required short-term rental permits with your city's planning or housing department. This may involve submitting a detailed application, paying fees, and undergoing inspections. Some cities, like Santa Clara, cap the number of STR permits issued.

Secure insurance: Purchase liability insurance to protect yourself in case of guest injuries or property damage. Check with your homeowners insurance provider about adding a vacation rental rider, or look into specialized STR insurance policies.

Set up your rental: Furnish and equip your rental with essential amenities like high-speed Wi-Fi, kitchen supplies, and linens. Install smoke and carbon monoxide detectors, fire extinguishers, and first-aid kits to meet safety requirements. Provide a house manual with important information for guests.

Create a compelling listing: Take high-quality photos of your property and write an engaging description highlighting its best features. Be transparent about amenities, house rules, and any quirks or limitations. Optimize your listing with popular keywords to improve visibility on booking platforms.

Establish pricing and policies: Research comparable rentals in your area to determine competitive nightly rates. Use dynamic pricing tools to automatically adjust rates based on demand. Set clear policies around minimum stays, cancellations, extra guests, and house rules.

Automate your operations: Utilize vacation rental software to streamline tasks like booking management, guest communication, cleaning coordination, and financial tracking. Automation can save you valuable time and ensure a smooth experience for guests.

Launch and market your listing: List your property on popular vacation rental platforms like Airbnb and Vrbo. Leverage social media and targeted ads to reach potential guests. Encourage satisfied guests to leave reviews, which can greatly boost your bookings.

Some additional tips for success:

1. Prioritize guest communication and aim for quick response times
2. Develop a reliable cleaning and maintenance routine to keep your property in top shape
3. Consider partnering with a reputable property management company if you need help with day-to-day operations
4. Stay up-to-date on changes to local short-term rental regulations and tax requirements
5. Analyze your booking and revenue data regularly to identify areas for improvement

By following these steps and continuously optimizing your strategy, you can build a thriving short-term rental business in Santa Clara County. Just remember to always put guest experience first while staying compliant with local laws.

Who to Contact in Santa Clara County about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations or zoning in Santa Clara County, here are the key contacts and resources:

Santa Clara County Department of Planning and Development
70 W. Hedding Street, East Wing, 7th Floor
San Jose, CA 95110
Phone: (408) 299-5700
Website: https://plandev.sccgov.org/

The County's Department of Planning and Development handles zoning, permitting, and code enforcement for properties in unincorporated areas. Their website provides forms, checklists, and information on the short-term rental ordinance.

Transient Occupancy Tax (TOT) Questions
Phone: (408) 550-8678
Website: https://santaclaracounty.hdlgov.com/Home/Home/

Contact the County's TOT processing center with questions about registering for and remitting the required occupancy taxes on short-term rentals.

City-Specific Contacts

For properties located within city limits, contact the city's planning or code enforcement department directly. A few key cities:

1. San Jose Planning Division
   Phone: (408) 535-3555
2. Santa Clara Planning Division
   Phone: (408) 615-2450
3. Sunnyvale Planning Division
   Phone: (408) 730-7444
4. Milpitas Planning Department
   Phone: (408) 586-3279

Connect with Other Hosts

Consider joining online forums and Facebook groups where local short-term rental hosts share experiences and advice on navigating the regulations:

• Airbnb Hosts Forum - San Francisco & Bay Area: https://airhostsforum.com/c/local-groups/san-francisco-bay-area
• San Jose Short-Term Rental Alliance (Facebook Group): https://www.facebook.com/groups/sanjosetourismalliance/
• VRBO/Homeaway Hosts - San Francisco Bay Area (Facebook Group): https://www.facebook.com/groups/1526155607653525/

By contacting the appropriate city or county department and connecting with the host community, you can get the most up-to-date and accurate information on short-term rental rules in Santa Clara County. Local regulations are subject to change, so it's important to stay informed and engaged.

What Do Airbnb Hosts in Santa Clara County on Reddit and Bigger Pockets Think about Local Regulations?

Scanning through Reddit and Bigger Pockets threads, it's clear Santa Clara County short-term rental hosts have strong opinions about the complex web of local regulations they must navigate. Here are a few key takeaways from their real-life experiences:

On the r/SanJose subreddit, one host shared their frustration with the city of Santa Clara's strict ordinance passed in July 2023 that requires permits, caps STRs at 5% of residential properties, and imposes fines up to $1000 for violations. The host complained, "The permit process is a headache, and the city seems determined to make STRs as difficult as possible."

Another Santa Clara host on the r/AirBnB subreddit described their awful experience trying to file a damage claim with Airbnb after a guest trashed their mountain cabin rental. Despite clear evidence, Airbnb denied the claim over a technicality. The host lamented, "Airbnb talks a big game about supporting hosts, but when push comes to shove, their guarantee is worthless. I'm moving all my listings to VRBO."

Over on the Bigger Pockets forums, a Bay Area real estate investor started a thread titled "Renting out rooms in own home vs living in a rental" to weigh the pros and cons of house hacking in the expensive Silicon Valley market. Most replies encouraged investing out-of-state for better cash flow. One host commented, "With the cost of real estate here and all the red tape around STRs, you're better off deploying capital in markets with less regulation and higher returns."

However, not all Santa Clara County hosts feel the local laws are too burdensome. In response to a Reddit post about Sunnyvale's ban on non-hosted rentals, a host shared, "I actually appreciate that Sunnyvale is trying to preserve housing for residents. The 90-day annual cap on my hosted rental still allows me to make good side income without taking a whole home off the market."

This sentiment was echoed by a Sunnyvale host on the AirbnbHosts subreddit, who wrote, "By cracking down on de facto hotels and party houses, the regulations help legitimate STR operators like me who are just renting out a spare room."

So, while the majority of Santa Clara County hosts on these forums express some level of frustration with the patchwork of local STR regulations, a few do see the rationale behind the laws. The most common complaints center around permit hassles, tax headaches, and liability concerns. Out-of-area investors seem more likely to take their STR dollars elsewhere, while local owner-occupants are finding ways to work within the regulatory framework.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.