7 Step Guide to Palm Springs Rental Regulations
1. City Overview: Short-Term Rental Landscape
Homes in Palm Springs have depreciated by -0.72%, with the median home value at $640,446, according to Zillow. The average property tax is 0.94%, per SmartAsset. These figures suggest potential investment opportunities for short-term rental (STR) investors due to favorable property tax rates and steady tourism demand.
Palm Springs currently has 3,942 active short-term rentals. The average daily rate for these rentals is $510, leading to an annual revenue of $58,433 as of October 2024. The average gross yield for STRs in the city is 9.12%. Despite a higher unemployment rate of 6.2% compared to the national average of 4.1%, Palm Springs remains a strong market due to consistent guest demand, particularly from Los Angeles, San Francisco, and San Diego.
The most popular property types are 2-bedroom units, with an average daily rate of $510 and an annual revenue of $75,774. Top-performing amenities include Cleaning before checkout, Garden or backyard, and Pianos, reflecting guest preferences.
2. Quick Facts
Insurance Required? Strict enforcement applies, with penalties for violations, including fines, suspension, or revocation of the Vacation Rental Registration Certificate.
Chalet Palm Springs Investor Potential & Regulation Score: Friendly
Permit Required: Yes
Zoning Restrictions? Yes, STRs are restricted to single-family residential zones with a neighborhood-based density cap limiting Vacation Rental Registration Certificates to 20% of all residential units within a specific neighborhood.
Maximum Occupancy: Two persons per bedroom, plus two additional guests, with a maximum of eight guests. Up to two children under 12 are allowed beyond the maximum limit.
Tax Requirements: Hosts must collect and remit an 11.5% Transient Occupancy Tax (TOT) and a 1% Tourism Business Improvement District (TBID) fee.
Renewal Frequency: Annually
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3. Getting Started with STRs in Palm Springs
Step-by-Step Guide:
Step 1: Understand Zoning Laws
- STRs are allowed in single-family residential zones but are subject to a 20% neighborhood-based density cap.
- Zoning Contacts and Resources:
For zoning information in Palm Springs, you can contact the Planning Department:
- https://www.palmspringsca.gov/government/departments/planning/for-land-development
- Address: 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262
- Phone: (760) 323-8245
- Email: planning@palmspringsca.gov
To review the Vacation Rental Neighborhood Percentage Information, you can visit this website: https://www.palmspringsca.gov/government/departments/special-program-compliance/vacation-rentals/vacation-rental-density
Step 2: Organize Required Documents
- Required documents include:
- Proof of property ownership.
- Evidence of a valid business license.
- Valid Transient Occupancy Registration Certificate.
- Completion of building, fire, and safety inspections.
- Short-term rental insurance documentation.
- Additional Requirements:
- Neighbor notification may apply, and adherence to Good Neighbor Brochure guidelines is necessary.
Step 3: Apply for an STR Permit
Applications must be submitted to the City’s Department of Special Program Compliance, and the current registration certificate must be displayed on-site and in all advertising.
The Department of Special Program Compliance – Vacation Rentals
425 N. Civic Drive
Palm Springs, CA 92262
Phone: 760-322-8382
TDD: 760-864-9527
Vacation.Rentals@palmspringsca.gov
Monday-Thursday 7:30am to 5:30pm (Closed Fridays)
Step 4: Health and Safety Compliance
Required safety features include smoke detectors, carbon monoxide detectors, fire extinguishers, and compliance with all fire and building codes. Annual safety inspections are mandatory.
Step 5: Pay Taxes and Fees
STR operators are responsible for collecting and remitting an 11.5% Transient Occupancy Tax (TOT) and a 1% TBID fee. Monthly tax returns must be filed even if there is no rental activity.
4. Regulatory Breakdown
Frequently Asked Questions provide detailed answers to the most common regulatory questions.
Example Questions:
- Do I need a permit to operate a short-term rental in Palm Springs?
- What are the occupancy limits for STR properties in Palm Springs?
Local Ordinance Links:
https://www.palmspringsca.gov/home/showdocument?id=51396
https://www.palmspringsca.gov/home/showpublisheddocument/87996/638466182387670000
5. Key Considerations for Investors
Investment Potential Regulation Score in Palm Springs
Palm Springs offers a well-regulated STR market with strong enforcement, neighborhood caps, and strict compliance measures, which can impact profitability and market access. We consider this market as friendly.
Regulatory Changes
Recent changes include stricter density caps and enhanced enforcement measures. As of May 25, 2023, the City Council adopted Resolution No. 25113, modifying certain user fees and charges related to vacation rentals. No recent updates have been recorder, however it is essential to stay informed of any updates.
6. Taxes and Financial Obligations
Tax Breakdown:
- Occupancy Tax Rate: 11.5% TOT plus a 1% TBID fee.
- Who Collects the Tax: In Palm Springs, short-term rental operators are responsible for collecting and remitting the Transient Occupancy Tax (TOT) and the Tourism Business Improvement District (TBID) fee. As of November 2024, Airbnb does not automatically collect these taxes on behalf of hosts in Palm Springs. Therefore, hosts must ensure they collect the 11.5% TOT and the 1% TBID fee from guests and remit them to the City of Palm Springs as required. For detailed information on tax obligations and remittance procedures, please refer to the City’s official guidelines.
- Insurance Requirements: Short-term rental insurance with a minimum coverage of $500,000 per occurrence is mandatory.
- Payment Deadlines: Monthly returns are required even if no rental income is earned.
7. How Chalet Can Help
- Local Realtor Partnerships:
Looking to invest in short-term rental properties? Chalet’s nationwide network of specialized realtors is here to guide you. Our experts understand the nuances of vacation rentals and local markets, helping you identify high-ROI properties and navigate complex regulations with ease. Best of all, their services come at no extra cost to you. Click here to connect for free. - Chalet’s Regulation Updates:
Chalet email subscribers receive updates regarding regulatory changes in cities. Subscribe here! - Connect with Local Experts:
At Chalet, our goal is to enable everyone to create wealth with short-term rentals. We bring the experience and expertise to optimize your rental property. Connect with a STR professional in your area here.
Recommended Tools and Resources
- Chalet STR Market Insights Tool
Chalet offers a free market analytics tool that allows investors to explore detailed data on occupancy rates, average daily rates, revenue estimates, and market trends for specific cities. This tool helps investors make informed decisions based on comprehensive insights. Access the STR Market Insights Tool. - Airbnb Income Guide
Investors can dive into this guide to better understand how to maximize income from STRs. It covers critical aspects such as dynamic pricing, guest management, and how to boost profitability through effective listing strategies. Read the Comprehensive Guide to Airbnb Income. - Chalet Investor Guides
These investor guides provide city-specific insights, including tax obligations, regulations, investment potential, and detailed market data. Investors can select from over 200 city guides to find data tailored to their target market. Explore Investor Guides. - AI-Powered Market Comparison Dashboard
Chalet’s market comparison dashboard offers a powerful tool for comparing different STR markets based on yield, occupancy rates, and other key performance indicators. This tool is particularly useful for investors looking to diversify across different regions. Check out the Market Dashboard. - Chalet STR Calculator
The free Chalet STR Calculator is a powerful tool designed to help short-term rental investors evaluate potential property performance with ease. It enables users to estimate revenue, analyze expenses, and project profitability for any STR market, streamlining investment decisions. Whether you’re comparing properties or exploring new opportunities, the Chalet STR Calculator simplifies the process with precision. Learn more about the Chalet STR Calculator.
DISCLAIMER: The information provided in these guides is for entertainment and general informational purposes only. It may not reflect the most up-to-date regulations, and Chalet is not responsible for any inaccuracies or changes to the information on third-party sites. These guides are not legal advice. We highly recommend verifying details directly with local authorities and consulting professionals before making any investment decisions. Ultimately, it is your responsibility as an investor to ensure compliance with local laws.
