The city of San Luis Obispo has relatively stringent policies on how its residents can use Airbnb, but the process of paying taxes for guest lodgings has been made easier — both for the city and those who host.
The city entered into an agreement with Airbnb to automate tax collection, meaning the company will voluntarily collect and remit transient occupancy taxes (TOT).
The new arrangement begins Wednesday and removes the responsibility of homeowners to file taxes if they participate in the city’s Homestay Program, which requires owner occupancy and a permit to rent out rooms to guests, among other conditions.
“By collecting hotel and similar taxes from our community and remitting on their behalf, Airbnb ensures a streamlined process for our hosts and lightens the administrative burden for state and local governments,” the company said in an email.
Last year, San Luis Obispo County entered into a similar agreement with Airbnb, an online company that offers a platform for short-term lodging — connecting prospective guests with homeowners willing to rent out their private spaces.
San Luis Obispo officials also say the new collection agreement likely will generate new revenue for the city that otherwise likely would not be discovered through the city’s permitting process.
Permitting in the city costs about $900, including $830 to use the Homestay Program and about $70 for a required business license. Other homestay rules require no more than four guests and stays of no more than 30 consecutive days. But some people rent illegally and don’t pay taxes, according to the city.
Michael Codron, San Luis Obispo’s community development director, estimates the city has fewer than 50 permitted homes citywide. The city contracts with a compliance monitoring company, Host Compliance, to uncover illegal rentals.
Airbnb will assess taxes for homes that are permitted and those that aren’t, though the voluntary tax-collection agreement won’t be used as an enforcement tool; Host Compliance will still continue to monitor illegal rentals, Codron said.
The city’s goal in establishing a Homestay Program was to deter “vacation rentals,” which involve the use of homes that aren’t occupied by the owner. Vacation rentals aren’t allowed in the city.
“The city’s housing stock is so important,” Codron said. “The idea is we don’t want a housing unit taken out of circulation for a resident and used for vacation rentals. Housing is too precious of a commodity to turn them over to vacation rentals.”
San Luis Obispo’s policy requires permitted homeowners to designate a responsible party to respond to any problems if the owner is away during a guest stay.
Airbnb has entered into individual voluntary tax-collection agreements with 400 jurisdictions around the world and 45 in California. San Luis Obispo joins six other cities to start the program Wednesday, according to Airbnb.