New short-term rental rules starting in California, Colorado, and Hawaii

Short-term rentals have become a hot topic in many communities, and more and more cities, counties, and states have passed laws to regulate these types of rentals. Several new rules will start to apply in various locations in the United States over the next few months — so if you’re a vacation rental host in these places, you need to be aware of the changes. Here are a few new short-term rental regulations that go into effect soon.

California

Pacific Grove

The city of Pacific Grove held a lottery last year for short-term rental licenses, and it was determined that 51 licenses would expire on April 30 of this year. Short-term rental hosts who hold the expiring licenses must deactivate or cancel any listings starting May 1.

The city imposes serious fines for violations of the short-term rental law — penalties equal 100 percent of the total revenue earned through illegal hosting and are assessed beginning the day the illegal activity begins. They accrue until the activity stops. Not only that, but illegal short-term rentals are barred from getting another license for two years.

The lottery was part of rules passed in 2017 that allow a maximum of 250 vacation rental licenses in the city at a time and limit the density of short-term rentals.

Vacation rental hosts are also required to collect the city’s transient occupancy tax (TOT) from guests and file monthly TOT returns with the city. While Airbnb collects this tax from guests on behalf of its hosts, other short-term rental platforms (such as HomeAway and VRBO) do not. Short-term rental operators using those platforms are responsible for collecting it themselves.

Redwood City

Last year, Redwood City passed a new short-term rental law. Short-term rental properties will need to be in compliance with the ordinance by May 1. Under the new rules:

• Short-term rental operators must register with the city, get a business license, and collect TOT from guests.
• Hosts must provide on-site parking for guests and designate a local contact person who will respond to complaints while the host is absent.
• Short-term rentals are only allowed in homes that are primary residences, and rentals are limited to no more than 120 days per year when the host is not present.
• Short-term rental properties may not host special events such as weddings or corporate retreats.

In order to collect the required lodging tax, vacation rental hosts are required to register for a TOT certificate and file regular TOT returns with the city. However, if your short-term rental platform collects the tax from guests on your behalf, the platform is required to register, but you are not.

While Airbnb collects TOT for its hosts in Redwood City, other platforms (such as HomeAway and VRBO) do not. Keep in mind that the TOT registration requirement is waived only if all the platforms you use collect the tax for you. If you rent your property out privately or use platforms that don’t collect TOT, you’re responsible for registering, collecting tax, and filing TOT returns.

MyLodgeTax can help hosts automate TOT registration and return filing for vacation rentals in California. For more information on lodging taxes in the state, see our California Lodging Tax Guide.

Colorado

Summit County

Summit County passed a new ordinance last year that will be enforced starting June 30. Under the new rules, every short-term rental unit must have a permit, and hosts have a deadline of June 1 to apply. The permit number must be included in all online advertisements.

The new law also:

• Requires short-term rental hosts to provide at least one parking space for guests and include the number of parking spaces available in ads
• Requires hosts to designate an agent responsible for responding within an hour to problems such as parking, garbage, and noise
• Limits the number of people who can occupy short-term rentals

Vacation rental hosts must also collect state and county sales taxes from guests, which means they must register with the state and file sales tax returns.

Airbnb collects state and county taxes on behalf of its hosts in Summit County, but other platforms (such as VRBO and HomeAway) do not.

If you only use Airbnb to book your rentals, Summit County does not require you to get your own sales tax number and you can use Airbnb’s number for your short-term rental permit.

However, if you use other short-term rental platforms that do not collect and remit for you, you must obtain your own sales tax license. Automated solutions such as MyLodgeTax can help Summit County short-term rental operators comply with all lodging tax obligations. For more information on Colorado lodging taxes, see our Colorado Vacation Rental Tax Guide.

Hawaii

Big Island

Last November, the Hawaii County Council passed a new short-term rental law that specifies:

• Where Big Island short-term rentals can legally operate
• How short-term rental hosts should register and what standards they must meet
• How existing short-term rentals in prohibited areas can get permission to continue to operate

The ordinance created a new zoning classification for short-term vacation rentals, defined as dwelling units with no more than five bedrooms for rent, where the owner does not live on site, and which are rented for 30 consecutive days or less.

Vacation rental hosts are required to register with the county and pay a $500 fee.

Short-term vacation rentals are barred in residential and agricultural zones and only allowed in hotel, resort, and commercial zones.

While the new measure went into effect on April 1, the draft of the ordinance’s rules is still being reviewed by the county Planning Department. The final version of the rules are expected to be adopted by late April.

In the state of Hawaii, short-term rental income is subject to a 10.25 percent transient accommodations tax (TAT) as well as general excise tax

(GET). Hosts can pass these taxes on to their guests. In Hawaii County, the GET rose to 4.25 percent on January 1 of this year.

Unlike many states, Hawaii does not allow short-term rental platforms such as Airbnb, HomeAway, or VRBO to collect lodging taxes on behalf of their hosts. This means short-term rental hosts are responsible for collecting all lodging taxes, filing tax returns, and paying the taxes to authorities. MyLodgeTax can help you manage short-term rental tax compliance in Hawaii. For more information on Hawaii lodging taxes, see our Hawaii Vacation Rental Tax Guide.