Newsletter | January 2024

The new California form reports all furnishings and supplies that are part of a rental property.

Starting in 2024, owners of short-term rentals (such as rentals offered through platforms like Airbnb) will need to complete new Form BOE-571-STR, Short Term Rental Property Statement, to report business personal property. Unlike real property, business personal property generally is reappraised annually. Business owners must file a business property statement each year detailing costs of all supplies, equipment, and fixtures at each location.

The proposed version of Form BOE-571-STR that was approved by the BOE for California counties to adopt is now available at the following link (PDF form): www.caltax.com/files/cat/BOE-571-str.pdf.

What must be reported?
Rental of all or a portion of a property, including a residential unit, means that the property owner is subject to business property tax assessment on furnishings, including furniture, appliances, equipment, and supplies used in the rental activity.

Items such as furniture (televisions, computers, bed frames, mattresses, tables, chairs, entertainment units, artwork), kitchen items (such as dishes, flatware and appliances), washing/drying machines, and any other property provided to renters as part of the rental activity are considered business personal property.

The proposed form provided by the BOE contains a table for itemizing the original cost of belongings for various rooms and the furniture and equipment/supplies that may appear in each, plus an “other” category for items such as bikes, hot tub, gazebo, sports equipment, vacuum cleaner, security system, patio furniture, and pool equipment.

Values and rates
Every business that owns taxable personal property (other than a manufactured home) having an aggregate cost of $100,000 or more for any assessment year must file a signed property statement with the county assessor. The assessor will apply a depreciation factor based on the property’s economic life.

In the event a taxpayer rents out their residence on a part-time basis or rents one room of their residence, they will still need to file Form BOE-571-STR to report property within the rented room, and any property in other rooms (e.g., bathroom, kitchen, living room, laundry room) that the renter or guest is permitted to use. The form does not allow for prorated reporting.

CAUTION!
Even if the owner knows that the personal property is valued at less than $100,000, it is still better to complete the form and submit it. If the property owner doesn’t submit the form, then the county assessor will make “assumptions” about the property’s value that may far exceed the actual costs.

The tax rate is usually a little more than 1% of the assessed value. Generally, using a rate of 1.2% will give a conservative estimate. For example, if the cost basis of your business assets is $150,000 and the depreciated assessed value is $120,000, your property taxes on your business assets will be about $1,440 ($120,000 x 1.2%).

Businesses with property below the threshold value are required to file only upon request of the county assessor unless the property qualifies for direct billing. Direct billing may be used for smaller, established businesses whose aggregate property cost is under $100,000 and the value of which changes very little from year to year. These businesses may only be required to file statements every three or four years.

Filing due date
Form BOE-571-STR is sent to taxpayers by the California county in which the property is located and must be submitted by May 7, 2024 to avoid penalties. When a taxpayer receives this form from the county, it is required to be completed if the property was still being rented as of 12:00 AM on January 1, 2024, even if the property is no longer being rented out at the time they receive the form.

More information can be found on the county assessor’s website for the county where the property is located.

To find your county assessor, navigate to:

Please let our office know if you would like our assistance completing the Form BOE-571-STR. We offer this service at our regular hourly rate.