Tax compliance for short-term rentals is becoming more burdensome at the State and local level: We've got income tax reporting, property permitting, a variety of local ordinance compliance matters, and now we have the Board of Equalization coming in with a new compliance project for landlords. Read on to see what you need to do to be prepared for the new reporting beginning in 2024.

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Starting in 2024, landlords offering short-term rental services — Airbnb or Vrbo are great examples — must file a the new Form BOE-571-STR (PROPOSED), known as the "Short Term Rental Property Statement", for declaring business personal property. Business personal property, unlike its real property counterpart, typically undergoes an annual reassessment. Each year, business owners and operators are required to submit a statement for their business property, meticulously recording the expenditure on supplies, equipment, and fixtures at every site and location. When a property, or a segment of it, such as a residential unit, is rented out, the property owner becomes liable for business property tax on all furnishings utilized in the rental process. This includes items like furniture (e.g., televisions, computers, bed frames, mattresses, tables, chairs, entertainment units, artwork), kitchen appliances, laundry machines, and any additional items provided to tenants as part of the rental service, all categorized as business personal property on which a business property tax is assessed.

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If an owner rents out their residence temporarily or leases a single room, it's mandatory to file Form BOE-571-STR (PROPOSED). This form is for reporting items within the rented space and any belongings in communal areas (like the bathroom, kitchen, living room, laundry room, etc.) accessible to the renter or tenant.

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Note that the form doesn't support partial reporting. In terms of values and rates, any business owning taxable personal property (excluding a manufactured home) totaling $100,000 or more must submit a completed property statement to the county assessor. The assessor uses a depreciation scale reflecting the property's economic lifespan. Even if the owner estimates the property's value to be below $100,000, filing the form is advisable to avoid higher assumed values by the assessor, which would then trigger a noncompliance action.

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The tax rate typically exceeds 1% of the assessed value. An estimated rate of 1.2% is often used for conservative calculations. For instance, if your business assets originally cost $150,000 and the depreciated value is assessed at $120,000, the business assets' property taxes would be approximately $1,440.

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Businesses whose property falls below the aforementioned threshold are only required to file at the county assessor's request, unless qualifying for direct billing. This method suits smaller, established businesses with consistent property values below $100,000, potentially leading to filing requirements every three to four years.

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Form BOE-571-STR is distributed by the county of the property's location and should be filed by May 7th (as far as we can tell based on limited proposed literature as of the date of this writing) to avoid penalties. The form is obligatory if the property was available for rent as of 12:00 a.m. January 1, regardless of its rental status when the form is received. Further details are available on the website of the county assessor in the relevant area.

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