New Proposal Would Tax Airbnb’s to Fund Affordable Housing

A proposal in the California State Senate would tax short-term rentals like Airbnb to fund affordable housing projects. 

As of 2021, there were over 300,000 Airbnb’s in the state, which many believe has taken away from the housing supply. 

What’s in the Proposal? 

The short-term rental tax was proposed in Senate Bill 584 by Santa Barbera Democrat Monique Limon. The bill would tax short-term rental properties, homes rented out for less than days, at a rate of 15%. 

It is estimated that it would generate $150 million in revenue when combined with local taxes as well. Revenue would go towards building or fixing housing developments for low-income housing. 

It’s not the first time California legislators have tried to regulate rental properties such as Airbnb and Vrbo. However, policies to address the topic have largely only been successful at the local level. 

One of the reasons why regulatory policies at the local level is because the effect of short-term rentals depends on what area of the state it is in. According to a Milken Institute study, in Big Bear, a large tourist destination, short-term rentals make up 23.5% of the housing market. 

Alternatively, they only make up 1% of California’s total housing market. While many believe Airbnb and similar services have caused a major dent in the housing supply, evidence in the study suggests that they are not a “meaningful driver of California’s housing shortage…” 

Regardless of the effect on the housing market, Limon’s proposal faces an uphill battle. Tax policies require two-thirds approval in both houses. With a major state deficit and uncertain economy, it might prove difficult to find the votes. 

Opposition

Following the proposal’s introduction, Airbnb sent an email urging California hosts to contact their legislators to oppose the bill. The company wrote, “While the bill aims to boost housing affordability, it does so at the expense of regular Californians who are struggling to keep up with the rising costs of living.” 

Although they didn’t explicitly oppose the bill, they did mention the potentially harmful effects it can have on travelers and hosts. 

On the other hand, the California Chamber of Commerce opposed the bill and warned the tax could give hotels and motels an unfair advantage over short-term rental properties. 

We’ll make sure to update you on the progress of Senate Bill 584 as it makes its way through the legislature. 

Until then, keep up with BOMA on the Frontline for the latest news in the Greater Los Angeles area.