Los Angeles is a very attractive market for short-term rentals, as it had over 20,000 Airbnb rental properties at the end of 2019. However, it is crucial for hosts to be aware of the new Los Angeles Airbnb laws, which could restrict the activities of some hosts. The latest Los Angeles short-term rental laws limit the types of properties that can host guests, and they require hosts to submit documentation to ensure they are compliant.
The Golden Age of Los Angeles Airbnb
Los Angeles was originally one of the most popular Airbnb markets, as it is one of the most popular tourist destinations in the country. The number of short-term Airbnb listings nearly doubled between 2016 and 2018 due to the increased demand for alternative short-term accommodation.
However, the local community eventually began to pushback on short-term rentals. Critics claimed excessive Airbnb listings weren’t in the best interest of permanent residents. The growing prevalence of short-term rentals also exacerbated the city’s housing crisis, driving prices even higher.
Eventually, the community’s frustrations amounted to regulations that placed conditions on short-term rental operations in the city. Now, property owners in the city can only rent out their primary residences, and they must keep up with LA’s latest Airbnb laws & regulations
Why Did LA Policymakers Crackdown on Short-Term Rentals?
LA policymakers decided to crack down on short-term rentals due to their adverse impact on the local real estate market. Over time, residents had limited housing options as a large percentage of properties that would have been long-term rentals were used as short-term rentals instead. This lower supply of long-term housing resulted in higher rent prices for people, prompting LA policymakers to make changes.
Another factor behind this decision was the community and neighborhood dynamics. Many residents were not in favor of short-term guests staying in their neighborhood, especially in cases where guests could be loud and disruptive. Because of these disruptions, The Los Angeles City Council also voted to require Airbnb hosts to obtain a police permit. This regulation was created to help crack down on Airbnb party houses and other types of illegal behavior. Moreover, LA also has a 24-hour complaint line for anyone who wants to report any type of activity from Airbnb guests.
LA policymakers have been trying to balance things to ensure that they can receive adequate tourism revenue without disrupting the long-term housing market. Airbnb provides many benefits for cities like Los Angeles, which need short-term accommodation offerings to attract tourists.
What Are the Current Airbnb Regulations in LA?
The new Homesharing Ordinance created new LA Airbnb laws, which were originally introduced in November 2019. Airbnb hosts need to register with the city to receive a home-sharing permit and pay an $89 annual fee. The application fee is $192 for a home-sharing permit and $1,030 for an extended home-sharing permit.
Below are some of the other Los Angeles Airbnb laws:
Primary Residence: Hosts are only able to list their primary residence on Airbnb. They must live in this property for more than 180 days every year. Residents can’t rent out any temporary structures in their primary residence, such as tents.
Limit: Airbnb hosts are only able to have guests stay at their property for 120 days every year. Hosts who want to have guests for more than 120 days need to apply for a permit, receive approval from the city, and pay a $850 fee.
Record Keeping: Hosts are required to keep records of all of their short-term rental activity. The city of Los Angeles will continue to monitor Airbnb listings to ensure they are compliant. Moreover, hosts need to report their rental income every month.
Is LA Considering Additional Regulations?
There is a strong chance that Los Angeles may implement additional restrictions on top of the new ones introduced in 2019. The fees to apply for a home-sharing permit have been increasing and could continue to increase in the coming years. Moreover, there could be pushbacks or changes in other Los Angeles Airbnb laws, given that some of the restrictions are stricter than the state-level legislation. For example, California state law allows short-term renters to have hosts stay for up to 6 months out of the year instead of just 120 days.
It is also important for hosts to monitor some of the ongoing filing and reporting options, as these may change in the coming years. Hosts need to ensure they are reporting their income and staying up to date with all of the requirements.
A 2022 study found that around half of LA Airbnb hosts were currently breaking the law. Moreover, the LA police recently noted that it needs more time to effectively implement some of the new laws. Hosts should expect a lot of changes during the initial years, as Los Angeles strives to balance the needs of the short-term and long-term housing markets.
Compliance Tips for LA Airbnbs
It can be difficult to navigate the Los Angeles short-term rental laws due to the complex filing and reporting requirements. If you rent your primary residence, it may be helpful to talk to a tax professional about the reporting requirements and tax implications. Doing this could also help you decide whether it is worthwhile to rent rooms in your primary residence and whether you should apply for the extended home-sharing option.
Airbnb hosts should be aware of the various taxes, such as the transient occupancy tax, which is equivalent to 14% of the amount the guest pays. Hosts also need to report this information every month. Hosts also need to ensure that they pay the annual fee, and upgrade to an extended home-sharing option if their hosting plans change.
The penalties for not complying are very severe. Hosts may need to pay 2x the average nightly rate, up to $2,000, if they do not comply with Airbnb’s new restrictions. Many Airbnb hosts may be unknowingly violating some of the new laws, so it is crucial to ensure that LA Airbnb hosts refresh themselves on some of the new LA Airbnb laws.
Closing Thoughts on Los Angeles Airbnb Laws
Many LA residents can benefit from renting out parts of their primary residences. For some, this may be one of the only realistic ways to stay afloat amid rising inflation. If you want to rent out part of your primary residence, it is very important that you keep up with all of the new Los Angeles Airbnb laws to avoid unwanted fines and penalties.
If you plan to host on Airbnb, consult with a tax professional first to identify any possible tax considerations. Shared Economy Tax specializes in tax services for Airbnb hosts and real estate investors. Get started now with a one-on-one strategy session to see how we can help you save on taxes.
