Airbnb Host Taxes in San Diego, California - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in San Diego, California

With San Diego’s consistently high tourism and demand for short-term rentals, being an Airbnb host can be a lucrative venture. However, alongside the income comes the responsibility of understanding and fulfilling tax obligations at both the federal and California state levels. This guide provides an overview of the key tax considerations for Airbnb hosts operating in San Diego for the 2025 tax year.

California State Tax Rules for Rental Income

As a resident of California, even if your Airbnb property is located elsewhere, you are required to file a California state income tax return. California operates on a graduated tax system, meaning the tax rate increases as your income increases. For the 2025 tax year (filed in 2026), understanding these rates is crucial for accurate tax planning. The primary form for reporting self-employment income, including Airbnb rental income reported on Schedule C, is Form 540. Even if reporting on Schedule E, you still need to file Form 540 to report all income. California also has specific rules regarding the allocation of income and expenses if you rent out a portion of your primary residence. The Franchise Tax Board (FTB) provides detailed guidance on this topic. Furthermore, San Diego hosts should be aware of any local ordinances or regulations that might impact their tax obligations, such as TOT (Transient Occupancy Tax) collection and remittance, which is separate from state income tax. Failure to comply with these local regulations can result in penalties. Keep meticulous records of all rental income and expenses, as California is known for its rigorous enforcement of tax laws. Consider consulting with a California-licensed tax professional to ensure full compliance, especially if your rental activity is substantial or complex. The FTB website is a valuable resource for all California tax information: California Franchise Tax Board.

The Critical Tax Question: Are You a Business or a Rental?

This is the most important tax question for an Airbnb host, as it determines if you owe self-employment tax. The IRS classifies rental activities differently, impacting your tax liability.

• Schedule E (Passive Rental Income): Most casual hosts report on Schedule E (Passive Income) and are exempt from Self-Employment Tax. This applies if you only provide basic lodging and cleaning between guests. For example, simply providing a clean space and key access typically falls under Schedule E.
• Schedule C (Active Business Income): However, if you provide "substantial services" (daily cleaning, meals, concierge services, providing toiletries beyond basic soap), you report on Schedule C and must pay the 15.3% self-employment tax (Social Security and Medicare). Offering a daily breakfast or providing extensive guest support could trigger Schedule C reporting.

Top Tax Write-offs for San Diego, California Hosts

Maximizing deductions is key to minimizing your tax burden. San Diego hosts have access to several potential write-offs.

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible.
• Mortgage Interest & Property Taxes: Deduct the portion corresponding to the rental space and period. If your property is used for both personal and rental purposes, you can only deduct the percentage attributable to the rental use.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items (leaky faucets, broken appliances), professional cleaning, and supplies. Consider the cost of maintaining landscaping, especially important in San Diego’s climate.
• Depreciation: A powerful but complex deduction for wear and tear on your property. Often requires a tax professional. This applies to the building itself and certain furnishings.
• Insurance: Deduct the portion of your homeowner's or rental insurance that covers the rental portion of your property.
• Utilities: If you pay utilities directly, you can deduct the portion used for the rental space.
• Parking: If you incur parking costs related to managing your rental (e.g., for cleaning services or inspections), these may be deductible. Parking can be particularly challenging in areas of San Diego like Pacific Beach or the Gaslamp Quarter.