Santa Monica has one of the most strictly regulated short-term rental markets in California. Since adopting the Home-Sharing Ordinance in 2015, the city has allowed limited hosting activity only under very specific conditions. This 2025 guide breaks down exactly what you need to know about Santa Monica’s short-term rental regulations so you can stay compliant while hosting legally through platforms like Airbnb or VRBO.
What Is and Isn’t Allowed in Santa Monica?
Santa Monica makes a clear distinction between the two types of short-term rental activity:
- Home-Sharing (Allowed):
- You may rent out a room or rooms in your primary residence for 30 days or less, but you must live on-site throughout the guest’s stay.
- Vacation Rentals (Banned):
- Renting out an entire home or unit to guests while you are not present is prohibited, regardless of ownership status.
The law is designed to facilitate genuine home-sharing rather than real estate speculation or absentee hosting.
How to Legally Host: Home-Sharing Permit & Business License
To operate legally, every Santa Monica host must obtain:
- A Home-Sharing Permit
- A Business License
There’s a single application process for both permits.
You must provide:
- Proof that the address is your primary residence
- Your residency status (owner or long-term tenant)
- Type and size of the dwelling unit
- Number of bedrooms and maximum guest capacity
- Insurance coverage
- Contact info for all designated hosts living in the home
- $100 application fee + $4 State fee
- Signed certification agreeing to comply with all city regulations
Annual Renewal:
The permit must be renewed yearly for $50.
Occupancy & Vehicle Limits
To prevent neighborhood disruption, the City enforces strict limits:
Max total occupants (including host):
- 10 people total OR
- 1 person per 200 sq. ft., whichever is less
- 2 adults per bedroom (children excluded)
Visitor Parking Limitations:
- 1 vehicle per rented bedroom
- In preferential parking zones: max two visitor permits
Tax Requirements for Santa Monica Hosts
Business License Tax
Santa Monica classifies home-sharing as a business under Tax Rate Group III:
- First $60,000 in Gross Receipts: $75 flat tax
- Over $60,000: 0.3% per $1,000
Example:
If you make $75,000 in rental revenue (no deductions), your tax is:
- $75 (on the first $60K)
- $45 (on remaining $15K)
- Total = $120
Note: This is separate from income tax and is based on gross receipts—no expense deductions allowed.
Small Business Exemption
If you earn under $40,000/year, you may qualify for an exemption—only if taxes are paid on time.
Transient Occupancy Tax (TOT)
- A 14% total occupancy tax (TOT) applies to all short-term rental stays.
- Hosts or platforms like Airbnb may collect and remit this tax on behalf of their users.
- TOT exemptions apply only to government employees on official business.
Penalties for Illegal Vacation Rentals
Violating Santa Monica’s STR regulations can result in serious consequences:
- $1,000/day in administrative fines
- Additional penalties for repeat offenses
- Investigative costs
- Legal action from the City Attorney
If you’re caught advertising or operating an illegal vacation rental, expect swift enforcement.
Final Notes for Santa Monica Hosts
As a responsible host, don’t overlook:
- Lease agreements or HOA/community rules
- Rent control restrictions
- Additional citywide regulations that might affect your property
For the latest information or to start your application, visit the City of Santa Monica’s official website. If you want to simplify the entire process while maximizing your income, consider partnering with our expert Airbnb Management Santa Monica team.