The California State Board of Equalization (BOE) has approved proposed Form BOE-571-STR to report information to compute personal property tax for short-term real estate rentals, effective January 1, 2024. The 2024 report is due to be filed by May 7, 2024.
Airbnb, VRBO and other short-term rental services and property managers report gross income from those activities on information returns to the IRS, which shares the information with state tax entities.
The BOE considers these short-term rentals to be a trade or business, subject to personal property tax.
That means owners of short-term rental real estate, including short-term rentals of rooms in a residence, will be subject to this reporting requirement next year.
The property owner is subject to business personal property tax assessment on furnishings, including furniture, appliances, equipment and supplies used in the rental activity. The form does not allow for prorated reporting of items in shared rooms (living room, dining room, bathroom, kitchen) available for guest use, so the total cost should be reported for those items. The county assessor will apply a depreciation factor based on the year the property was acquired.
The cost of the property is listed on the form for each year of acquisition. Some taxpayers might find it hard to find that information, when they bought the property for personal use many years ago. Now would be a good time to start assembling that information.
Every business that owns taxable personal property (other than a manufactured home) with an aggregate cost of $100,000 or more for any assessment year must file a signed property tax statement with the county assessor.
Businesses with property below the threshold value are only required to file upon request of the county assessor, unless the property qualifies for direct billing. Direct billing may be used when the value of property is below the $100,000 threshold and changes very little from year to year. Those businesses may only be required to file statements every three or four years. The BOE will get the information to request the report from various sources, including information reports received by the IRS, business license registrations, and transient tax reports.
This is an agenda item for your year-end planning meeting with your tax advisor.