The Second Home Tax Is Back

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The tax is back. 

A proposed ballot measure to tax second homes is coming back to the San Diego City Council Rules Committee this Wednesday. 

Councilmember Sean Elo-Rivera and his team took a loss on the first version of their proposal a few weeks ago. The initial plan was to tax empty second homes AND vacation rentals. Airbnb fought hard against it, and Elo-Rivera couldn’t carry it through committee. His frequent ally, Councilmember Kent Lee, voted against him, as did Raul Campillo and Vivian Moreno. 

The vacation rental part of the plan seemed to be giving a lot of people heartburn. But based on the last hearing, it seems likely a second-home-only tax could pass. 

Both Moreno and Lee said at the time they would support a tax on second homes. Lee called the idea a “clear progressive tax.” 

“If someone can afford a second home and not use it for any other purpose including long- or short-term rentals, they can afford to pay that tax and should,” he said.

So how much will it be?

For the first year, $8,000 per home. The next year it would be $10,000 per home. And there would be additional surcharges for corporate-owned empty homes, starting at $4,000 in 2027. 

Elo-Rivera’s office says this has the potential to bring in as much as $51 million. But here’s the really big question: Will there be easy workarounds?

Not necessarily. 

One way people might seek to avoid the tax is by registering their empty second home as a vacation rental, but that is a limited option — and it’s also not free. 

Vacation rentals are capped at one percent of the city’s housing stock — and several thousand licenses have already been issued. As of Wednesday, there were only 964 available short-term rental licenses left, according to a city webpage.

There are more than 5,000 empty second homes, according to Elo-Rivera’s office. We previously created a map of them, which you can find here.

Rich folks may already be starting to play musical chairs for those 964 licenses. 

But even if someone successfully tried that workaround, they would still have to add to the city’s coffers. Vacation rental homes pay an annual license fee of $1,129. 

There will likely be other workarounds, as yet undiscovered. For a home to be exempt from the tax, someone must live in it 183 days per year. According to the new proposal, that person could be a family member of the owner. 

“We are working closely with the city attorney and office of the city treasurer on enforcement and implementation of the proposal,” Molly Weber, Elo-Rivera’s chief of staff, wrote in a text message.