San Jose is known for its high-tech industry and endless business events that attract thousands of visitors. These people need a cozy place to stay for a few days, and Airbnb has become a great choice for many. But what about the San Jose rental laws? Are they easy to follow?
The steady demand inspires property owners to start short-term rentals and turn hosting guests into a means of income. San Jose is a nice location for vacation rentals, with an average price of around $188.6 per night.
Yet, you must mind San Jose Airbnb ordinances to stay regulatory compliant.
The San Jose Municipal Code regulates which properties are suitable for short-term rentals, restricts the number of guests, and introduces other limitations.
You must also get a tax certificate, pay taxes, and follow other rules. Learn more about San Jose Airbnb ordinances and steps to start short-term rentals in our guide.
Are short-term rentals allowed in San Jose?
Yes, the city has San Jose Airbnb ordinances and other STR limitations, but they are pretty lenient and shouldn’t prevent you from running short-term rentals. No rental license is required, unlike in many other US cities. You only need to establish the property as your primary residence and obey the following rules:
- Live in your primary residence for at least 60 consecutive days annually.
- Limit stays to 180 nights annually for non-hosted rentals.
- Limit occupancy to 2 people in a studio and 3 people in a one-bedroom unit, with 2 people per additional bedroom
- Get a business tax certificate
- Pay a 10% Transient Occupancy Tax
Below, we will cover these aspects in more detail, including licensing, primary residence requirements, San Jose Airbnb zoning laws, taxes, and more.
Key Airbnb regulations and requirements in San Jose
San Jose Airbnb ordinances still leave much space for making short-term rentals profitable despite limiting the number of properties and guests.
They are less strict than many short-term rental regulations globally, like in London or Barcelona. Compliance is pretty easy if you know the rules. So here are the main San Jose Airbnb ordinances and requirements to read through and follow.
- San Jose Municipal Code. Enacted by the city, the Municipal Code governs different aspects of city life, including short-term rentals (Section 20 – Zoning Code). It’s a must-read if you plan to start short-term rentals in San Jose. The Municipal Code allows Airbnb rentals in all legal homes and apartments apart from accessory dwelling units. It also specifies the number of guests allowed, requires designating a local contact person when you are not around, and introduces a 180-day limit on short-term rentals when hosts are not present.
- Business Registration and Tax. Every individual launching a business in San Jose must register with the city and pay the tax to get a business tax certificate.
- Transient Occupancy Tax. In San Jose, all kinds of short-term rentals of thirty days or less fall under the 10% transient occupancy tax. If you rent through Airbnb or Vrbo, the platform will remit this tax on your behalf. With direct rentals, you must pay the taxes yourself.
Note that we are not a legal advisor, and you may want to consult someone locally. These San Jose Airbnb ordinances may not be exhaustive, but they give a good idea of what to focus on.
California-specific regulations
If you have rentals in San Jose, you must meet California regulations in addition to local San Jose Airbnb ordinances. The state requires hosts and property owners to display the total rental price upfront, including mandatory fees.
California also requires STR hosts to be transparent about cleaning chores and penalties in listing descriptions. Besides, according to the Civil Code Sections 1748.40 and 1780.80, guests must be able to cancel a reservation within 24 hours without penalties when made at least 72+ hours before check-in and receive their funds back to the original form of payment.
Licensing and registration rules in San Jose
Hosts and property managers in San Jose can operate without a separate STR license or permit. Getting a business tax certificate is enough to comply with the law. The city also requires hosts to always display the certificate at their place of business.
Primary residence requirement
A property rented through Airbnb must be your primary residence. This means you must be registered there and live at least 60 consecutive days annually.
You must be able to prove that the place is your primary residence with a governmental ID matching the address, utility bills, homeowner’s or renter’s insurance, or voter registration card. The primary residence requirement also means you cannot have more than one short-term rental within the city.
San Jose Airbnb zoning laws
San Jose doesn’t limit Airbnb rentals to specific districts. Yet, you will need to mind the type of property. STRs are allowed in single- and two-family homes, multi-family dwellings, mobile homes, live/work units, and guest houses.
You cannot run short-term rentals in accessory dwelling units (ADUs), which are small living units with a kitchen and bathroom built on the same lot as a primary house.
Taxes and fines
According to the San Jose Business Tax ordinance, everyone doing business in the city must get a registration. Submit an application within 90 days after commencing business and pay the tax.
Then, you receive a business tax certificate confirming that you provide rental services officially. Tax payment delays result in penalties and additional charges you must pay. The longer it takes you to pay them, the higher the penalties.
Besides paying for the business tax certificate, you must also pay a 10% transient occupancy tax (TOT). Airbnb and Vrbo automatically collect and remit the TOT during bookings. But if you use other platforms, TOT remittance is your responsibility.
In addition to the penalties for failed taxes, fines may apply if you violate the California STR laws, including Fee Transparency, Guest Cleaning Penalties (Assembly Bill 537), and 24-hour Cancellation Refund (Senate Bill 644) requirements. Non-compliance may result in up to $10,000 penalties.
Number of guests allowed
The number of guests depends on the dwelling type and whether the host is present during a stay. If you live in the same place, you can have up to 3 guests in single-family homes and 2 in multi-family dwellings.
If you are absent during the stay, the limit is slightly higher — 2 guests per studio, 3 per one-bedroom unit, and 2 extra guests for each additional bedroom. The maximum number of people is ten, regardless of your place size.
Rental duration limits
Host presence during rentals determines how long you can have guests at your Airbnb. If you stay there, no annual limits apply. If the place is non-owner-occupied, the rental duration is capped at 180 rental days annually.
Short-term rental insurance
STR insurance is not mandatory according to San Jose Airbnb ordinances, but it’s one of the key best practices to make your hosting experience safe and profitable.
It’s an extra layer of protection besides Airbnb policies and an absolutely essential thing for direct bookings. You can get a fair reimbursement in a few days if guests damage your place intentionally or accidentally.
Damage protection providers like Truvi also allow you to implement custom damage deposits and waivers to minimize risks even more.
Additional things to note
Besides the rules we already mentioned, here are some other established practices to make your short-term rentals compliant. Follow them to make your place more secure and easily pass any checks.
- Safety requirements. Make sure you have functioning CO and smoke detectors.
- Lease agreement restrictions. Read your lease agreement (if you have any) to check for additional limitations regarding short-term rentals.
- Neighbor notification. Notify neighbors in writing if you won’t be present and provide a 24/7 local contact person.
- Recordkeeping. Keep all the records, including tax documents, rental dates, booking details, etc., for at least 3 years.
How to start a short-term rental in San Jose
Everything should go smoothly if you don’t rush and carefully prepare to start short-term rentals. Compliance with San Jose Airbnb ordinances is easy once you understand what restrictions apply. Use our step-by-step instructions on starting rentals for guidance.
1. Create a rental strategy
Analyze the market to understand the rates, occupancy, seasonality, and other things that may affect the profitability of short-term rentals.
Even if you don’t view Airbnb as your primary source of income, you can maximize your earnings with preliminary research.
Market data from Airbnb, AirDNA, and other websites sharing analytics helps set balanced prices and stay competitive.
2. Make sure the property is eligible
Since accessory dwelling units are not allowed for short-term rentals, you must check your place eligibility beforehand. A single-family home, duplex, triplex, mobile home, guest house, and live/work units — everything else can be used for Airbnb.
3. Obtain a business tax certificate
Get a business tax certificate within 90 days after starting short-term rentals and pay applicable taxes. Go to the portal to find more details and complete the registration form. Make sure you have the following documents at hand before registration:
- Tax Identification Number (SSN, FEIN, or TIN)
- Driver’s License Number of the principal owner
- Telephone number
- Ownership names & addresses
- Addresses of each location where you do business in San Jose
- Email address
- Contractor’s number (as necessary)
- State seller’s permit number (as necessary)
- County health permit number (as necessary)
After filling out and sending the form, you will receive an email confirmation with an application reference number. Within five business days, you will also receive an invoice, business tax account number, and tax payment instructions.
4. Register for transient occupancy tax
Use this link to find transient occupancy tax registration and remittance forms and fill them out. You need to provide the basic information about yourself and the property and indicate the principal and additional property owner (if any). If you plan to rent solely through Airbnb or Vrbo, the STR platform will collect and remit TOT for you. Otherwise, you need to handle this tax yourself.
5. Get an insurance
Take precautions against property damage since wear-and-tear is huge with short-term rentals. People come for several days and often don’t care much about keeping your place intact. That’s why you need specialized STR insurance to cover potential losses. Truvi damage protection services are one of the options to consider. You can get up to $5M protection and resolve damage resolution reports in 3 business days. Truvi also automatically runs guest screening to detect and flag suspicious accounts. It allows you to avoid hosting people with a bad reputation and reduce the risk of someone ruining your place.
6. List the property across platforms
Now, you can add property listings with high-quality photos and descriptions to different platforms. Airbnb is the basics, but there are many other nice STR platforms, such as Vrbo or Booking.com. You can also consider direct bookings to avoid STR fees and reach your potential guests directly.
Regulatory landscape in other US cities
San Jose is not the only US city with Airbnb limitations. Adoptioning STR regulations is a global trend and necessity since cities need more tools to regulate local housing markets. So, if you choose between San Jose and other places to start short-term rentals, our guide on Airbnb regulations by city can be helpful. We have also posted a series of articles on STR regulations, including the guides for: