Santa Barbara’s Peer-to-Peer Rental Market Comes of Age

In an article naming Airbnb its company of 2014, Inc. Magazine wrote that Airbnb’s “disruptive, brazen, and overall brilliant (and possibly illegal) home-sharing empire has become the biggest lodging provider on Earth.” While 2014 was a banner year for the short-term rental industry, 2015 is the year that some Santa Barbara vacation rental hosts will be compelled to understand their responsibilities to our community. Here’s what you need to know now.

Once They Find You, TOT Comes Due

In case you needed further evidence that you can’t have your cake and eat it too, if you rented out any part of your home for less than 31 days anywhere on the South Coast, you’ve technically operated a business. Congratulations, you entrepreneur, you! You’ve joined the ranks of small business owners who pay taxes. It may have felt groovy to peer-to-peer your unused living space, but if you’ve earned money on Airbnb or VRBO or any of the other ways to find a vacationing short-term renter, then you need a business license and must pay a Transient Occupancy Tax (TOT).

If that news makes your blood pressure go up, you may find some limited solace in the 30-day “amnesty” that’s in place for your sordid past as a lodging house operator. The tax collectors have been combing vacation rental websites looking for possible TOT evaders, and the results of that research end up in a polite “come on down!” letter that gives you 30 days to register and comply.

New Two-Buck Assessment on Vacation Rentals

Happy New Year! Now pay up.

The South Coast Tourism Business Improvement District (TBID) is assessing a new $2/night fee on vacation rental stays throughout most of the county this side of the Santa Ynez Mountains. Vacation rental owners are on the hook for this fee as of January 1, 2015. In addition, these proprietors should know that they are (and always have been) responsible for declaring their liabilities and remitting the associated payment each month, even if they did not rent out their home at all during the previous month. (That payment may be zero dollars, but you have to let the taxing agency know.)

While the TBID seems to have had a lot of success marketing the Santa Barbara region as a travel destination over the past several years, the interests of vacation rental hosts are not represented in the TBID’s organization. Not yet at least. As vacation rental platforms such as Airbnb and VRBO continue dramatic growth in 2015, one could anticipate that the short-term vacation rental industry will be granted a bigger say about how TBID funds are allocated in the new year.

Worldwide, Airbnb booked more the 20 million nights for travelers, making it the largest hotel operator last year. When you think about it like that, Airbnb might just be the biggest hotel operator in our region as well. Vacation rental visitors have roughly the same impacts on our infrastructure as visitors who stay at the Fess Parker, so it only seems fair that they be taxed accordingly. While nobody enjoys paying taxes, the public goods like roads and a clean environment that our tourist economy relies upon are not free. It is hard to argue the taxes and fees being paid by hotels and formal businesses shouldn’t be paid by vacation renters as well.

Jack Ucciferri’s Our Town Property Management helps Santa Barbara-area residents earn passive income from renting out their homes while they travel.