Short-Term Rental

The City’s regulations of short-term rentals are designed to:

  1. Maintain the long-term rental housing stock in the City
  2. Provide residents an opportunity to generate income
  3. Provide visitors to the City another way to experience the local community
  4. Ensure that such short-term rental activities do not become a nuisance, or threaten the public health, safety or welfare of neighboring properties
  5. Safeguard the residents of Milpitas by ensuring that short-term rental activities do not threaten the character of residential neighborhoods
  6. Ensure the collection and payment of Transient Occupancy Taxes (“TOT”)

On March 3, 2020 the Milpitas City Council adopted an Ordinance that created the short-term rental (STR) program.

Register as a Host

The Short-Term Rental Permit application consists of an online application and the submittal of several supplemental forms. You must complete the supplemental forms prior to initiating the online application. Follow these steps to operate an STR in Milpitas.

ONLINE REGISTRATION PORTAL

STR Eligibility

Qualified Dwelling Unit:

A qualified dwelling unit is a structure that the City has legally permitted as habitable space. The table below lists typical examples of some common permitted structures and their eligibility for STR use. Under the City’s STR Program, accessory dwelling units (ADU) may not be operated as STRs. If you are unsure whether your STR is legally permitted as habitable space, please contact the City’s Building Department to confirm before you apply. Your application fee will not be refunded or reimbursed if we discover that you are renting an unqualified structure.

Qualified for STR use Not Qualified for STR use
Single Family Dwelling or portion thereof Single-Room-Occupancy (SRO) or dormitory
Individual units in a multi-family property or portion thereof Below-Market-Rate (BMR) or Public Housing unit
Maid Quarters Commercial and industrial spaces are not permitted.
Apartment or portion thereof Pool houses
Sleeping quarters in outdoor areas, including treehouses and vehicles
  ADUs or Junior ADU

STRs must be hosted:

You must live in the actual dwelling unit (e.g., apartment, suite, condominium) that you wish to offer as a short-term rental,  as either an owner or a tenant. If your property features multiple dwelling units, you may not live in one dwelling unit while operating short-term rentals in a different dwelling unit. This is a core requirement of the City’s short-term rental rules intended to preserve long-term housing availability/opportunities and preserve neighborhood character.

  • An Operator may only conduct a Hosted Rental. Un-hosted Rentals are prohibited in STRs.
  • If you are a new resident, you must have resided in this specific dwelling for at least 60 consecutive days prior to your application.
  • If you own/rent a multi-unit building, you may only register the specific residential unit (apartment, suite, condominium) in which you reside.

Are you a tenant (renter), condominium owner?

Many private agreements such as leases, homeowner’s association bylaws, and Covenants, Conditions & Restrictions (CC&Rs) prohibit subletting (or use of your dwelling unit as a short-term rental). While the City does not enforce these types of private agreements, the Planning Department strongly recommends that you review such agreements before submitting an application.

  • If you are a renter and your dwelling unit is also subject to rent control rules, you may not make more than your monthly rent from short-term rental fees charged in the same month to guests.

Have property liability insurance:

You must have property liability insurance in the amount of no less than $500,000 or prove that property liability coverage in an equal or higher amount is being provided by any and all hosting platforms through which you will rent your unit. Proof of liability insurance is not required if hosting activity is only handled by a platform (website) that already extends similar liability coverage.

Resolve any code violations:

Ensure that your dwelling unit remains compliant with all Building, Housing, Planning, and other City codes. If your dwelling unit (apartment/suite) is located within an apartment, then the entire property (including other dwelling units) must be compliant and not subject to Code Enforcement.

Fines and penalties for illegal short-term rental hosting:

If you are not permitted, and you advertise/rent a dwelling unit for periods of less than 30 nights, you are violating the City’s short-term rental laws and are subject to possible enforcement action, including substantial penalties

Violations of the City’s short-term rental laws are subject to penalties of at least $1000*per day for each dwelling unit in violation. These daily penalties begin on the day that a Notice of Violation is issued by Code Enforcement and continue to accrue until the violation is fully abated. Repeat violations may be subject to escalated penalties and referral to the City’s Attorney’s Office for additional civil and/or criminal penalties.

STR Operating Requirements

To assist those who are considering operating an STR in the City of Milpitas, the following represent some (but not all) of the requirements that the host/operator will need to follow as outlined in the Ordinance.  Please reference the Ordinance for additional information.

Transient Occupancy Tax:

The host/STR operator shall be required to collect, report, and pay a Transient Occupancy Tax (TOT) on a monthly basis to the City.  These taxes are based on gross receipts of rented stays.  Taxes can be paid through the same portal as registration. See “Transient Occupancy Tax” below for more information.

Annual Application/Registration Fee:

The fee for the City to review your STR application or any subsequent renewal application is $488.  The annual term of STR registration shall commence on the date of the City-issued registration number.

Local Contact Person:

The host/STR operator shall be available twenty-four (24) hours per day, seven (7) days a week or identify a local contact person who shall be available twenty-four (24) hours per day, seven (7) days a week for:

      1. Responding within one (1) hour to complaints regarding the condition, operation, or conduct of the STR or its occupants; and
      2. Taking any remedial action necessary to resolve such complaints.

Maximum Occupancy:

Maximum occupancy shall be two (2) persons per bedroom plus one (1) more person. The Operator shall not allow the STR to be used for any gathering where the number of persons will exceed the permitted maximum occupancy limits.

STR Advertising:

All marketing and advertising of a registered STR, including any listing on a hosting platform, shall clearly list the City-issued STR registration number.

Guest Information Posted:

Each STR shall have a notice posted within the unit in a location clearly marked and accessible to the guest (e.g., posted on the refrigerator, included within a binder with additional information on the unit, etc.), containing the following information:

    1. The maximum number of occupants permitted in the unit;
    2. Parking capacity, location of parking spaces, and parking rules, if any;
    3. Trash and recycling pickup information;
    4. The name of the local contact and a telephone number at which that person may be reached on a twenty-four (24) hour basis;
    5. Emergency contact information for summoning police, fire, or emergency medical services; and
    6. Evacuation plan for the unit showing emergency exit routes, exits, and fire extinguisher locations
    7. Use of all outdoor pools, spas, and hot tubs shall be prohibited between the hours of 10:00 p.m. and 7:00 a.m.
    8. No sign shall be posted on the exterior of the STR premises to advertise the availability of the STR rental unit to the public.

"How-To" Apply Video

The “How-To” Video is helpful to review before submitting your Short Term Rental application via the Host Compliance Online Permitting System.

Documentation Required

  • Documentation of Primary Residence: Two (2) of the following documents must be provided as part of the registration application.  The documents provided must indicate the host’s name and address which should match the primary residence address and name on the STR registration application:
      • Current Driver’s License or State issued ID card with the address of the unit you wish to register
      • Proof of Vehicle Registration with the address of the unit you wish to register
      • Voter Registration
      • Utility Bill (water or trash)
  • Use the Santa Clara County Assessor website to look up your address and find your Assessor’s Parcel Number (APN): 028-12-022
  • Good Neighbor Manual signed by the Owner
  • Smoke Alarm & Carbon Monoxide Alarm Self Certification
  • A copy of your Online Business License Application or the email from staff with your account number
  • Site & Floor Plan: A site plan indicating the dimensions of the parking space required for the STR and a Floor Plan indicating the number and location of bedrooms comprising the STR. See this example.
  • Proof of Liability: Proof of liability insurance in the amount of no less than $500,000 (if utilizing a Hosting Platform that provides equal or greater coverage proved this COI)

Step 1: Register as a business

Apply online for the Business License

Recommendations:

When you complete the online business registration, make sure to use the street address of your home where you plan to host short-term rentals as the “business location.”
Include the apartment/condominium suite number or suffix, if applicable. For example: “222 49th Avenue Unit B.” Do not use a post office box as the physical business location.

  • For the business type field, choose: “Short-Term Rental”
  • Indicate “YES” when asked if your business involves transient occupancy tax (“hotel taxes”)
  • Use SIC code  6519001 for the lessor of real property not elsewhere classified
  • For the business name, you have a number of options, including using your own name (a fictitious business name, or “LLC” is not required)
  • Please do not choose “exempt” for business licensing, as that option is typically reserved for non-profit organizations.
  • Please retain a copy of your Online Business License Application or email from staff with the account number to upload to the registration portal. 
    • You will receive your business account number to use during registration once a member of the Business License Unit has determined you have provided the required documents.

If you already have a business registration for a separate type of business you operate in Milpitas, then add a “new business location” for Accommodations at the physical address of the residential unit. You can still add a second location even if it is the same location as your current business location.

*This step will be finalized after you register and are approved to operate an STR.

Step 2: Register Here for a STR Permit

Before You Begin

Regardless of the amount, earning income from a short-term residential rental is considered a business. Therefore, you are required to obtain a Business License Number, also known as a Business Account Number.

Register your hosting business with the Business License Center before registering with the Planning Department. You will need to retain a copy of your Business License Online Application.

Click on the “Online Registration” button to begin the registration process.  You will be taken to our registration portal and, from there, will click on “Application to Register an STR.”  The registration approval timing will depend on the accuracy and validity of the materials submitted and any follow-up.

PLEASE NOTE:

  • Staff can arrange for assistance in different languages if needed. Don’t hesitate to get in touch with us at shorttermrentals@milpitas.gov.
  • You will not be able to save your place should you close your browser or navigate away to another page while working through the registration pages.
  • The application/registration fee ($488.00) shall be paid before the City reviews your application. The payment of this fee does not guarantee approval of your application. Application fees are not refundable once the application has been submitted.
  • The permit is valid annually on a rolling basis, expiring each year on December 31.
  • This program is funded primarily by application fees and enforcement penalties and does not include funding from hotel taxes (also known as transient occupancy taxes)
  • Hosting short-term rentals without registration numbers from the Business License Center and the Planning Department can result in significant fines and penalties.
Registration portal for STR

Stay Compliant

As a registered host, there are steps and procedures to follow in order to meet compliance, which includes submitting monthly TOT payments and reports

Pay your Transient Occupancy Tax (TOT)

Anyone in Milpitas who receives rent for a stay of fewer than 31 days must collect a 14% tax on the amount that they earn from their guests. This is called the “Transient Occupancy Tax (TOT)”.

For hosts that use a platform other than or in addition to Airbnb, please refer to our FAQ section to learn more about calculating TOT and follow this link to a step-by-step guide.

NOTE: Currently, the only hosting platform that we have a collection agreement with is Airbnb. If you ONLY list your residence on Airbnb you do not need to collect TOT unless you have opted for this in your agreement with Airbnb.  Regardless if you list your residence on Airbnb or other hosting platforms, you must still follow the guidelines above to fulfill your reporting obligations on earnings. 

TOT payment portal for STR

After you get a short-term rental permit

Remain the permanent resident at the dwelling where you host short-term rentals. If you sell your dwelling unit, the permit can not be transferred to the new owner or a different dwelling unit. Only one Permanent Resident may be associated with a Residential Unit on the Registry, and it shall be unlawful for any other person, even if that person meets the qualifications of a “Permanent Resident,” to offer a Residential Unit for Short-Term Residential Rental.

  • Pay your hotel taxes: Transient occupancy taxes (“hotel taxes”) apply to short-term rentals. If the hosting platform you are using does not automatically remit taxes to the Finance Department, you will need to ensure that taxes are remitted. Please be aware that additional State and
  • Federal income taxes may also apply.
  • Renew your business license annually with the Business License Center, Renewals are due every January 1 and can be submitted online.
  • Renew your registration with Planning Department every year.
  • Ensure your property remains free of violations of Building, Housing, Planning, and all other City codes.
  • No exterior signage is allowed as short-term rentals are intended to remain incident to the residential nature of the dwelling unit. In addition, a permit can be revoked due to ongoing noise/event/party complaints.
  • Fines and penalties for illegal short-term rental hosting

How to stop hosting

  • Remove all (online) listings that advertise your short-term rental, and cancel pending short-term rental reservations for stays of less than 30 days.
  • Hosts will also have to close their (separate) business license, by contacting the Business License Center to declare that they are no longer hosting.
  • Email  shorttermrentals@milpitas.gov with the following information:
    • Your STR permit number
    • Your street address
    • Your full name
    • A statement that you no longer intend to host short-term rentals

Short-Term Rental FAQs

What is a short-term rental?

A short-term rental (also called an STR) is a furnished, self-contained single–family residence, apartment, or room rented for a short period (up to 30 consecutive days) as opposed to month to month or annually. Short-Term Rentals are also known as vacation rentals, transient rentals, short-term vacation rentals, resort dwelling units, and are typically found through companies such as Airbnb™, HomeToGo™, Flipkey™, Vrbo™, Tripping.com™, and other vacation rental websites.  For a more complete overview, read the Short-Term Rental Ordinance in the Milpitas Zoning Code Section 13.

What is a “host”?

A host is either the property owner or resident of the property where the STR is located. 

How do I register with the City of Milpitas as a business and a short term rental?

You may only offer short-term rentals once you have obtained a Home Occupation Business License for your property from the Milpitas Business License Center and then received a permit from the Planning Department. The permit number must be posted on all listings advertising a short-term rental.

Did the primary law on short-term rentals change?

Yes. Prior to 2020, all short-term residential rentals (stays of less than 30 days) were illegal in Milpitas (per the City’s Planning Code). This included rentals for the entire home, or just a portion (e.g. private room listings). However, beginning in July 2020, hosts were eligible to register, with the Planning Department, in order to host limited short-term rentals; and only in eligible homes where the host also lives at least 275 nights per year. Short-term rental hosts are required to register with the Planning Department.

Rules for Live/Work Units

  • You can host short-term rentals in the residential portion of a live/work unit, if you are a permanent resident of that unit and both live in AND host short-term rental guests exclusively in the “live” area of the unit.
  • Short-term rental activity (e.g. sleeping, lounging/resting, or cooking areas) is NOT allowed in the “work” portion of the live/work or artist live/work unit. This is typically noted as such in a Notice of Special Restrictions, or “NSR,” recorded on the overall property.
  • You may not reside in the “work” area and use the “live” area of the live/work unit for short-term rentals.
  • Please note that many NSRs require that the resident of a live/work unit use the work space for specific types of business activities and hold a business registration for that specific activity. Short-term rentals would not be considered qualifying business activity.

What properties are ineligible for short-term rentals?

Certain types of properties are never eligible for short-term rental. Please contact us at shorttermrentals@milpitas.gov you are not sure how your property is classified.

  1. Income-restricted affordable housing, including Below-Market-Rate (BMR) units and public housing.
  2. Legally-established Accessory Dwelling Units (ADUs); which are a specific type of “in-law” or “granny flat” approved by the Department of Building Inspection. Only rentals/listings for 30 days or longer, per guest (30-day minimum stay), are allowed in ADUs. Short-term rentals hosts must live in the same individual dwelling unit, so they could not reside in the main unit and utilize the “ADU” for short-term rentals (or vice versa).
  3. Sleeping quarters in most shipping containers and outdoor areas, including tipis (teepees) and tree houses.
  4. Sleeping quarters in vans or (RVs) recreational vehicles (this may also violate the Police Code). RVs are not considered residential units.
  5. Non-residential areas within buildings, such as living/sleeping quarters added in garages.
  6. Commercial office/retail or industrial (warehouse) spaces.

Are there any fees associated with operating an STR?

Fees include the cost of a business license ($100) to be renewed annually, a Short-Term Rental permit ($509) also to be renewed annually, and monthly occupancy tax payments. 

What are the laws regarding other types of rentals?

Rentals Longer than 30 Nights: Renter Rights and Rent Control

Rentals for more than 30 consecutive nights (by the same visitors) are not subject to short-term rental regulations or subject to hotel (transient occupancy) taxes. Business personal property taxes may still apply (administered by the Santa Clara Assessor-Recorder).

In addition, rental/tenant protections and rent control provisions may apply to stays of 30 days or more. The Planning Department cannot provide advice on tenant protection or rent control rules and laws. Contact the Housing Department for more information.

If rentals are offered for more than 30 nights per guest stay (for those dwelling units not authorized to offer short-term rentals by the Planning Department)  ensure that booking calendars and advertisements for all online listings clearly indicate a 30-day minimum stay.

Renting Your Home for Meetings and Events

Some hosts use online platforms to rent out portions of their home for daytime events such as work space usage by individuals booking short time segments; or for ceremonies, conferences or meetings. This type of activity generally violates Planning Code rules if the space being used is intended for residential use.

Short-Term Rentals in Commercial and Industrial Buildings

Short-term rentals may only be hosted in areas that are permitted for residential use. For example, short-term rentals may not be held in a institutional, commercial or industrial building, unless a specific portion of the building is authorized (per the Department of Building Inspection) as a residential dwelling unit. In addition, vehicles (including RVs and Camper Vans) and temporary structures (such as tents, sheds, tree houses, etc.) may not be used for short-term rentals. Short-term rentals can be hosted in residential portions of live-work units; if the host is a permanent resident. However, the short-term rental activity is not considered a qualifying business activity in those specific live-work units where a notice of special restrictions (NSR), recorded on the property, requires a business activity/registration for the “work” area. Also see: “Ineligible Properties.”

What is the basis for the City of Milpitas to create regulations for short-term rentals?

The Milpitas Charter references it’ss authority as a charter city to make and enforce all local laws and regulations that are not in conflict with general state laws per the California Constitution, Article XI, Section 7.

TOT Remittance & Monthly Reports FAQs

What is “Occupancy Tax”?

Occupancy tax is a tax (in conjunction with the fee) on the rental of an STR.  The City requires the collection of occupancy tax for STRs in Milpitas.  The guest generally pays the occupancy tax, but the host (or property owner) is responsible for paying the tax to the City of Milpitas. 

What is the TOT rate?

The current TOT rate is 14%

Do I need to submit a monthly report even though AirBnb collects and remits TOT on my behalf?

Yes, all hosts must still submit a monthly report, even those who list on Airbnb exclusively. Airbnb only remits TOT on behalf of Milpitas hosts but they do not submit the required monthly report information.

What does 'taxable receipts' include?

Taxable receipts INCLUDES, but is not limited to, nightly rents, weekly rents, standard cleaning fees, pet fees, parking fees, internet charges, late check-out fees, extra person fees, and resort fees. Taxable receipts EXCLUDES refundable deposits and any additional items included in a special package rate, such as ski passes, or other recreational activity or additional service subject to CA sales tax.

What information do I need to provide for the monthly report?

The monthly report requires you to report the following:

  • The number of nights a short-term rental was rented for during the reporting month.
  • The total amount of taxable receipts for short-term rentals during the reporting month. See the previous question for a definition of ‘taxable receipts’.

When and how do I remit TOT and my monthly reports?

TOT remittance and reports will be submitted ONLINE only via this link. You will need to have already registered and obtained a Short-Term Rental permit to access the system. You will also need to have your Short-Term Rental permit number ready.

The deadline for monthly reports and TOT remittance: shall be on or before the last day of the month following the close of each calendar month. For example, certain rental activities for the month of April will be due on or before May 31.

Can I remit the TOT payment in person, or can I mail it and pay via check?

No, TOT remittance can only be made online.

I did not conduct any rentals during the reporting month. Do I still need to complete a monthly report?

Yes, all host must submit a monthly report every month regardless of whether or not they had any short-term rental activity.

What happens if I do not remit TOT or submit a monthly report by the specified deadline?

Penalties and interest begin to accrue beginning the 31st day after the month’s end. For example, penalties will begin to accrue beginning December 1 if you failed to remit TOT for October by November 30.

Operators shall pay a penalty of 25% of the amount of the tax in addition to the amount of the tax. In the event of continued delinquency (defined as failure to remit any delinquent remittance on or before thirty (30) days following the date on which the remittance first became delinquent), an additional 25% penalty of the amount of the tax shall be assessed. Assessment of this penalty shall not prevent the City from pursuing criminal or civil actions against the operator to the extent allowed by law.

In addition to the penalties imposed, any operator who fails to remit any tax imposed by this Chapter shall pay interest at the rate of 1% per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid. For more information, please refer to Chapter 13 – TRANSIENT OCCUPANCY TAX

Who can claim a tax exemption?

Non- Transient: any person occupying space in a hotel shall be deemed to be a transient until the period of 30 consecutive days has expired unless there is a written and legally binding agreement between the operator and the occupant providing for a longer period of occupancy.

Domestic Government: any federal or State of California officer or employee on official business

Foreign Government: any officer or employee of a foreign government who is exempt by reason or express provision of

federal law.

If you are claiming any tax exemptions on your stay, please complete this form, and attach it to your remittance report

Questions on Short-Term Rental Operating Standards

For questions on Short-Term Rental regulations or the permit application process, please contact us at shorttermrentals@milpitas.gov

Questions on remittance of Transient Occupancy Tax (TOT)?

For questions on TOT remittance,
call (408)586-3100