San Diego Officially Kills the $8,000 STR Tax (Cue the Applause)

San Diego Officially Kills the $8,000 STR Tax (Cue the Applause)

For months, San Diego short-term rental owners were forced to watch a truly brutal idea crawl its way through City Hall: an $8,000 annual tax on so-called “vacant” homes and full-time vacation rentals.

This week, that idea finally met its end — and frankly, good riddance.

San Diego STR Tax Rejection

After hours of public testimony, heated debate, and no shortage of eye-rolling from anyone who’s ever opened a spreadsheet, the City Council’s Rules Committee voted the measure down. The proposal will not appear on the ballot. No new tax. No forced sell-offs. No economic self-own.

For STR owners, investors, and anyone who understands basic math, this was a very good day.

The Tax That Tried (and Failed) to Sound Smart

Let’s be clear about what was being proposed here.

This wasn’t a minor fee or a targeted policy tweak. The so-called “Vacancy Tax” would have slapped roughly $8,000 per year on homes deemed vacant or used as full-time short-term rentals, with additional surcharges for corporate ownership and alleged violations.

In some scenarios, corporate owners could have been staring down five-figure annual penalties once all existing taxes and fees were layered in.

The stated goal? Fix housing affordability.

The actual outcome? Likely torch tourism revenue and punish responsible property owners.

Why the Tax Imploded (Hint: The City Did the Math)

The proposal failed in the Rules Committee by a 3-2 vote, stopping it before it could ever reach voters.

The deciding factor wasn’t ideology... it was reality.

The City Would’ve Lost Money

San Diego depends heavily on Transient Occupancy Tax (TOT) revenue from hotels and STRs. The city’s own analysis showed that if even half of STRs exited the market, the resulting loss in TOT would likely wipe out any gains from the new tax.

In other words:

• Less tourism

• Less tax revenue

• Same housing problems

That’s not policy, that’s fiscal malpractice.

Councilmembers opposing the measure made it clear: this tax risked doing the exact opposite of what it claimed to fix.

The “Corporate Greed” Narrative Didn’t Hold

Supporters tried to frame the tax as a strike against faceless corporate landlords. But testimony told a different story.

Many STR owners in San Diego are individuals, retirees, and families using rental income to offset mortgages, fund retirement, or heaven forbid keep a second home they actually use.

Even a last-minute attempt to rewrite the proposal to target only corporate owners failed to convince the committee. The logic simply didn’t survive scrutiny.

What This Means for STR Owners (Right Now)

1.Immediate Relief

The $8,000 annual threat is gone. Existing STR licenses and the city’s current cap structure remain intact.

2.Validation of STRs as a Legitimate Use

This vote reaffirmed that compliant short-term rentals are not some fringe loophole — they’re a core part of San Diego’s tourism economy.

3.A Warning Shot for the Future

Let’s not kid ourselves: this wasn’t unanimous. The vote was close, and the political pressure isn’t going away. Future proposals will almost certainly reappear — likely more narrowly targeted at corporate ownership.

The Bigger Takeaway

This wasn’t just a win for STR owners. It was a win for basic economics.

San Diego avoided passing a tax that:

• Would have reduced tourism revenue

• Penalized responsible owners

• Failed to meaningfully increase housing supply

For now, the market gets to breathe.

But in California, vigilance matters. Regulations change fast, and investors who stay informed (and properly advised) are the ones who win long-term.

Need Help Navigating San Diego’s STR Landscape?

Whether you’re buying, selling, or optimizing a short-term rental, you need guidance from people who understand both the numbers and the politics.

Joshua Guerra & Kailen Wilkerson specialize in STR-focused real estate.

Don’t guess. Don’t panic. Don’t navigate this market blind.

Let’s talk.