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Orange County, California Short-Term Rental Regulation: A Guide For Airbnb Hosts

Orange County, California

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What are Short-Term Rental (Airbnb, VRBO) Regulations in Orange County, California?

Short-term rental regulations in Orange County, California, vary by city. Some cities like Anaheim, Garden Grove, and Irvine have banned short-term rentals altogether, while others like Huntington Beach, Fullerton, and Orange allow them with permits and restrictions. It's important for hosts to understand the specific rules in their city before listing a property on Airbnb or VRBO.

Starting a Short-Term Rental Business in Orange County

To start a short-term rental business in Orange County, the first step is to research the regulations in your specific city. For example:

  • The city of Orange implemented a Short-Term Rental ordinance in June 2021 that allows a maximum of 125 permitted STRs. Hosts must obtain a short-term rental permit for $250 and a business license for $260. The city has reached the 125-unit cap and now maintains a waitlist.
  • Huntington Beach passed Ordinance Number 4224 outlining STR requirements. Owner-occupied STRs are allowed citywide with a permit, while unhosted STRs are only permitted in Sunset Beach. Hosts must provide a local contact available 24/7 to respond to complaints within one hour.
  • Fullerton requires Short-Term Rental Permits and adherence to Good Neighbor Guidelines on issues like trash, parking, safety, and noise. The city initially capped STRs at 325 in 2021 but later reduced this to 100. Permits are non-transferable upon property sale.

Even in cities that allow short-term rentals, hosts must typically register with the city, obtain a business license and STR permit, and pay transient occupancy taxes on stays under 30 days. Failure to comply can result in fines of up to $1000 per day or misdemeanor charges.

According to discussions on Reddit and Bigger Pockets forums, some hosts continue to operate STRs in cities where they are banned, hoping to avoid detection and fines. However, cities are increasingly cracking down on illegal rentals based on complaints and online listing data.

The bottom line is that anyone considering starting a short-term rental business in Orange County needs to carefully review the rules for their specific city. Consulting with a local real estate attorney and ensuring full compliance with permitting, tax collection, and other requirements is critical to avoid legal issues down the road. With proper due diligence, STRs can provide a lucrative income stream, but ignoring local regulations is very risky.

Short-Term Rental Licensing Requirement in Orange County

To legally operate a short-term rental in unincorporated areas of Orange County, property owners must obtain a Short-Term Rental Permit from OC Development Services. The key requirements based on the official Orange County website include:

  1. Completed Short-Term Rental Permit Application submitted online via the myOCeServices.ocgov.com portal
  2. Letter outlining the proposed STR use type and operation details
  3. Floor plan of the residence
  4. Copy of a blank rental agreement
  5. Proof of ownership for the STR property
  6. Initial inspection of the rental property by the County

STR Permit Applications must be submitted electronically through the myOCeServices.ocgov.com website along with the required documentation. The STR permit fee is $250, and permits must be renewed every two years.

The County's stated processing time for STR Permit Applications is approximately 3-4 weeks from the submission of a complete application package. However, anecdotal reports on forums like BiggerPockets and Reddit suggest the approval process can sometimes take longer, around 6-8 weeks, if multiple rounds of corrections are needed.

Orange County Code Enforcement proactively monitors STR listings and will issue notices of violation to any property advertised or operated as a short-term rental without a valid permit. The penalty for unpermitted rentals is $1000 per day, and each day the violation continues constitutes a separate violation. Two or more violations can result in permit revocation and ineligibility to operate an STR for one year.

In summary, Orange County requires all short-term rentals in unincorporated areas to obtain a permit, with a $250 fee, prior to operation. The application process typically takes 3-8 weeks and significant financial penalties apply for unpermitted activity. Hosts should plan accordingly and not advertise, or book stays until their permit is approved to avoid violations.

Required Documents for Orange County Short-Term Rentals

To apply for a Short-Term Rental Permit in unincorporated Orange County, property owners must submit the following documents according to the Orange County Development Services website:

  1. Short-Term Rental Permit Application: This is the main application form that collects key information about the rental property, owner, and local contact person. It is submitted online through the myOCeServices.ocgov.com portal.
  2. Letter outlining proposed STR use and operation: This letter provides an overview of how the STR will be used (entire home, private room, etc.) and key operational details like maximum occupancy, parking arrangements, house rules, etc. It helps the County understand and evaluate the rental plans.
  3. Floor plan of the residence: A simple floor plan sketch is required to show the layout of the rental property, including bedrooms, living spaces, entries/exits, and smoke detector locations. This is used to verify bedroom count and occupancy limits.
  4. Copy of a blank rental agreement: Applicants must provide a sample rental contract that will be used with STR guests. This allows the County to ensure all required disclosures and rules are included, such as quiet hours, occupancy limits, parking restrictions, etc.
  5. Proof of ownership for the STR property: Documentation proving the applicant owns the property to be used as an STR, such as a property tax bill, property deed, or mortgage statement. This confirms the applicant has the legal right to use the property for short-term rentals.

These documents must be compiled and submitted together electronically with the online STR Permit Application at myOCeServices.ocgov.com. The County reviews the application package for completeness and compliance with all STR ordinance requirements.

Failure to provide all required information and documents will delay the processing of the STR permit. Applicants should double-check that their submission is complete and accurate to avoid additional requests from the County that can extend the approval timeline.

Orange County Short-Term Rental Taxes

Short-term rental owners in Orange County must collect and remit several types of taxes on their rental income. The main taxes that apply to short-term rentals are:

Transient Occupancy Tax (TOT): Also known as a hotel tax or bed tax, the TOT is a tax on the rental of rooms or other living spaces for periods of 30 consecutive days or less. In Orange County, the TOT rate varies by city but is typically around 10% of the rental amount. For example, the City of Orange charges a 10% TOT on all short-term rentals.

Income Tax: Short-term rental income is subject to federal and state income taxes. Rental income must be reported on your annual tax return and is taxed at your marginal tax rate based on your total income. The due date to file tax returns and pay any tax owed is typically April 15th of each year.

Self-Employment Tax: If you are actively involved in operating your short-term rental business and it is not classified as a passive activity, you may need to pay self-employment tax on your rental income. As of 2024, self-employment tax is 15.3%, which covers Social Security and Medicare taxes.

However, there are several deductions and expenses that short-term rental owners can claim to reduce their taxable income:

  1. Mortgage interest
  2. Property taxes
  3. Rental insurance premiums
  4. Utilities
  5. Cleaning and maintenance costs
  6. Repairs
  7. Supplies
  8. Advertising and platform fees
  9. Depreciation of the rental property

It's important to keep accurate records of all rental income and expenses to properly report your taxes. Short-term rental owners should consult with a tax professional to ensure they are complying with all tax requirements and maximizing their deductions.

Additionally, starting January 1, 2025, a new California law will impose an additional 15% statewide tax on short-term rentals on top of existing local TOT taxes. This means the total tax rate on short-term rentals in Orange County will increase significantly next year.

In summary, the main taxes on short-term rentals in Orange County are the Transient Occupancy Tax (around 10%), income tax, and potentially self-employment tax. However, various deductions are available to reduce taxable rental income. Short-term rental owners need to carefully track income and expenses to properly report and pay all required taxes.

California Wide Short-Term Rental Rules

While most short-term rental regulations in California are determined at the city or county level, there are a few state laws that affect Orange County hosts:

Definition of a Short-Term Rental: California law defines a short-term rental as a residential property rented out for 30 consecutive days or less. This broad definition applies statewide and encompasses various rental arrangements like vacation homes, and Airbnb stays.

TOT (Transient Occupancy Tax) Collection: Many cities and counties in California levy a Transient Occupancy Tax (TOT) on short-term rentals. While the exact tax rate varies by locality, Orange County hosts are generally required to collect TOT from guests and remit it to the proper authorities. Some booking platforms like Airbnb collect and pay the TOT on behalf of hosts for certain jurisdictions.

Business Licenses and Permits: California requires short-term rental operators to obtain the necessary business licenses and permits from their local city or county. Orange County hosts must check their specific area's requirements, which often include a general business license and a specific short-term rental permit.

Hosting Platform Regulations: California law places some requirements on short-term rental booking platforms like Airbnb and Vrbo. Platforms must notify hosts of local regulations, collect TOT taxes where applicable, and remove listings for illegal short-term rentals upon city request. This provides some oversight of the industry at the state level.

Building and Housing Standards: All short-term rentals in California must comply with basic building, health, and safety codes. This includes regulations on occupancy limits, fire safety, and habitability. Orange County cities may have additional standards that hosts need to meet.

While these overarching state laws provide a foundation, the bulk of short-term rental regulation happens at the city and county levels in California. Orange County hosts must carefully research the specific rules for their properties' locations, as the regulations can vary significantly from city to city within the county. Consulting with the local planning department and a qualified attorney is advisable to ensure full compliance with all relevant laws.

Does Orange County Strictly Enforce STR Rules?

Orange County has a mixed record when it comes to enforcing short-term rental regulations. While some cities like Anaheim, Garden Grove and Irvine have completely banned STRs and dedicate significant resources to enforcement, others like Huntington Beach and Orange allow them with permits and restrictions.

Compared to major cities like Los Angeles and San Francisco, Orange County is generally less Airbnb-friendly overall. The majority of OC cities have either banned STRs entirely or implemented strict permit caps, fees, and zoning limitations. This contrasts with LA and SF, which allow STRs in most areas with registration and tax collection.

However, enforcement of STR rules varies significantly by city within Orange County. Cities like Garden Grove are known for their proactive and aggressive enforcement, with potential $1000/day fines and misdemeanor charges for violations. But in other cities, enforcement is more complaint-driven and sporadic.

Based on discussions on Reddit and Bigger Pockets, it appears that a number of hosts do operate STRs illegally in Orange County, especially in cities with less active enforcement. Several hosts reported running unpermitted rentals without major issues, hoping to avoid detection. Others had received violation notices but continued operating.

That said, the consensus is that operating an illegal STR in Orange County is very risky. Cities are increasingly cracking down and dedicating more resources to finding and citing illegal rentals. And the penalties if caught, can be severe, including large fines, criminal charges, and bans on future STR activity.

So, in summary, Orange County is relatively strict and unfriendly towards STRs compared to other major California destinations. While some hosts do skirt the rules, illegal rentals are becoming harder to sustain as enforcement increases. For hosts, carefully researching and complying with the specific regulations in each city is critical to avoid costly penalties. Orange County is not an easy place to operate off-the-books STRs long-term.

How to Start a Short-Term Rental Business in Orange County

Starting a short-term rental business in Orange County requires careful planning and compliance with local regulations. Follow these steps to successfully launch your STR:

  1. Research local regulations: Short-term rental rules vary by city in Orange County. Carefully review the specific ordinances, permit requirements, zoning restrictions, and taxes that apply to your property's location. Consult with the city's planning department and consider hiring a local attorney specializing in real estate to ensure a full understanding of the rules.
  2. Obtain necessary permits and licenses: Most Orange County cities require a specific short-term rental permit and a business license to legally operate. Apply for these through your city, submitting all required documentation like proof of ownership, a property diagram, and a sample rental agreement. Budget for application and license fees. The approval process can take several weeks.
  3. Register to pay transient occupancy taxes: Orange County STRs must collect and remit a Transient Occupancy Tax (TOT) on stays under 30 days, typically around 10% of the booking amount. Register with your city's tax department and set up processes to collect the tax from guests and file regular TOT returns.
  4. Set up your property for rental:Outfit your property with all necessary furnishings, amenities, and safety equipment to make it guest-ready. Hire professional cleaners and consider using keyless entry and noise monitoring systems to streamline operations and ensure compliance with local regulations like occupancy limits and quiet hours.
  5. Create a property listing: Take high-quality photos of your rental and write a detailed, inviting description. List your property on popular STR platforms like Airbnb and Vrbo, making sure to highlight unique selling points and amenities. Be upfront about house rules, local regulations, and any booking restrictions.
  6. Implement a guest screening and communication process: Establish clear rules for your ideal guest profile and reservation requirements. Consider requiring profile verifications, positive prior reviews, and rental agreements. Set up template messages to quickly respond to inquiries, share key check-in details, and address any guest issues promptly.
  7. Arrange for ongoing management and maintenance: Decide whether you will self-manage your STR or hire a professional property manager to handle things like cleaning, restocking, repairs, and guest communication. If self-managing, vet and contract reliable service providers. If hiring a manager, thoroughly interview candidates and understand their fees and services.
  8. Ensure regulatory compliance and neighbor relations: Regularly review your city's STR ordinances to stay current on rule changes. Keep detailed records of all bookings, taxes, and expenses. Provide neighbors with contact information to report any issues, and promptly address any complaints. Consider additional insurance coverage for your STR business.

Successfully operating a short-term rental in Orange County requires diligent upfront research and setup, as well as ongoing management to ensure compliance and positive guest experiences. With careful planning and execution of these key steps, STR hosts can build a thriving and rewarding business while being good neighbors in their local communities.

Who to Contact in Orange County about Short-Term Rental Regulations and Zoning?

For questions about short-term rental regulations and permits in unincorporated areas of Orange County, contact:

Orange County Development Services
Phone: (714) 667-8888
Email: myOCeServices@ocpw.ocgov.com
Website: https://ocds.ocpublicworks.com/

For questions about zoning in Orange County, contact:

Orange County Zoning Division
Phone: (407) 836-3111
Email: zoning@ocfl.net
Address: 201 S. Rosalind Ave., 1st Floor, Orlando, FL 32801
Website: https://www.orangecountyfl.net/PermitsLicenses/Zoning.aspx

Note that many cities within Orange County have their own specific short-term rental regulations and permitting processes. For city-specific questions, contact the relevant city departments:

  1. City of Orange Short-Term Rental Office: (714) 744-2225 or stradmin@cityoforange.org
  2. Anaheim Planning and Zoning: (714) 765-5139 or planninginfo@anaheim.net
  3. Huntington Beach Community Development Department: (714) 536-5271 or planning.counter@surfcity-hb.org
  4. Irvine Community Development: (949) 724-6308 or shortterm@cityofirvine.org

In addition to official government resources, Orange County short-term rental hosts may find useful information and community support in these groups:

  1. Orange County Short-Term Rental Alliance (OCSTRA): https://ocstra.org/
  2. Anaheim Short-Term Rental Alliance (ASTRA): https://anaheimstra.org/
  3. Orange County Airbnb Hosts Facebook Group: https://www.facebook.com/groups/1091866614171604/
  4. Southern California Airbnb Hosts Forum on BiggerPockets: https://www.biggerpockets.com/forums/530-southern-california-airbnb-hosts

These communities allow hosts to connect, share experiences, and get advice from fellow short-term rental operators in Orange County. However, always verify any information against official city and county sources.

What Do Airbnb Hosts in Orange County on Reddit and Bigger Pockets Think about Local Regulations?

Based on discussions in Orange County short-term rental forums on Reddit and BiggerPockets, many hosts express frustration with the patchwork of city regulations across the county:

  1. In r/orangecounty, one host shared that their city (Santa Ana) recently banned all short-term rentals under 30 days. The host said "Fuck everything about airbnbs" after dealing with parties, noise, and trash from guests in their residential neighborhood before the ban. Other commenters supported the ban, saying neighborhoods shouldn't become "hotel substitutes."
  2. Another Reddit thread asked about operating STRs in Huntington Beach. Commenters explained that the city only allows hosted rentals in most areas, with unhosted STRs limited to the Sunset Beach neighborhood. However, they noted enforcement is complaint-driven, and some illegal unhosted listings still exist.
  3. On BiggerPockets, an investor asked about "loopholes" to allow STRs in Orange County cities that prohibit them. Respondents advised against trying to skirt the rules, warning that cities are cracking down and fines can be steep. One suggested looking in nearby mountain towns like Big Bear instead.
  4. A Fullerton rental property owner on BiggerPockets asked about others' experiences with the city's STR permit process and caps. Commenters said the city had waitlisted new permits after hitting the cap, and advised considering "mid-term" 31+ day rentals instead.
  5. Another BiggerPockets thread questioned if any Orange County areas still offered decent returns on STRs. Investors said most of the county either bans STRs outright or has very limited permits. Some suggested looking out-of-state in less saturated markets.

The overall sentiment is that Orange County is an increasingly challenging market for short-term rentals. While some cities still allow them with restrictions, many have banned or severely limited new STR permits and licenses. Hosts are frustrated by the inconsistent rules and enforcement across city lines. Several are considering selling or switching to long-term rentals. The consensus is that operating STRs in Orange County is still possible but increasingly risky and less profitable compared to the past.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.

⚡️
Reveal your property’s rental profitability

Buy this property and list it on Airbnb.