Here's some detailed info about this from
peterkwanwww.airbnb.com/groups/content/content-214609Peter5 days ago
UPDATE - Notice to File Form 571-R: Apartment House Property Statement
On Monday, March 21, 2016 the San Francisco Office of the Assessor-Recorder (“Assessor”) sent out to registered Short-term Rental Hosts, a Notice to File Form 571-R. Some Hosts have already received this Notice.
Three days ago, I posted a FAQ to help Members understand what this Notice is about and to answer some questions you may have.
Today, I attended a Workshop conducted by the Assessor's office. Although the Workshop focused mainly on Form 571-L (not R), the dozen or so Short-term rental Hosts like myself were able to meet separately with a Principal Property Auditor, who tried to answer our questions concerning Form 571-R.
As a result, I'm updating my previous FAQ (which I will delete to avoid confusion) to include new information, clarifications and corrections.
1. Why am I getting this Notice?
Under CA law, all business property is subject to taxation. As a Short-term rental Host, you are a business. So, the property you buy and use in conducting that business is subject to this tax. If you have taxable business property with a total cost of $100,000 or more, you must file a statement. The Assessor of each
CA County has the responsibility of collecting and enforcing this tax. If you have a SF business license for your short-term rental business, the Assessor is sending you this notice to make sure you are aware of your obligation to file the Form 571-R Statement, which is like a tax return.
2. What is being taxed?
All non-exempt Business Property. Business Property “is any tangible property owned, claimed, used, possessed, managed or controlled in the conduct of a trade or business. This includes all machinery, fixture, office furniture and equipment." Licensed vehicles, business inventory, intangible assets and application software are exempt.
Business property includes real property (i.e. real estate) but homeowner Hosts are already assessed tax on the real estate in the form of your Land or Property Tax. So, for homeowner Hosts, your remaining obligation is to report your Business Personal Property which would includes things like any furniture or beds, TV or appliances or office equipment that you bought for your rental activity. You don't need to report the value of your home under Form 571-R.
3. What is the tax rate?
For 2015, it is 1.1826%. But Form 571-R only needs you to report, not calculate and pay the tax. The Assessor will then calculate the amount of tax owed, if any.
4. How do I work out the value of the Business Property I report?
You should report the purchase price if it was bought in 2015. The good news is that costly items like furniture are only taxed on its depreciated value. So, if you bought it a year or more ago, there is a Schedule for you to report the year purchased and value of the item (say, bed bought in 2011 for $1500) and the Assessor will only assess the depreciated value of that bed in 2015 (the Assessor will calculate that for you).
The other good news is that if the assessed value of your business property is less than $4000, you are exempt from this tax and you will receive a Low Value Exemption Notice. The bad news is that for homeowner Hosts, the real estate value of your home is included to determine whether you are exempt. The bottom line is that the Low Value Exemption is unlikely to apply to homeowner Hosts and only to Tenant Hosts whose assessed business property value is $4000 or less (the real estate value of their rental premises is not assessed because Tenant Hosts don't own the premises).
Lastly, you don’t need to report consumable items like cleaning products if they were bought and consumed last year.
5. What are the deadlines?
The due date is April 1, 2016 but you can file without penalty up to May 7, 2016. However, May 7 falls on a Saturday, so the filing without penalty date is extended to Monday, May 9, 2016.
6. Other things I should know?
6.1 If you are filing Form 571-R for the first time, the most irksome aspect is trying to remember when you bought a big ticket item (bed, TV, sofa etc) and how much you paid for it to complete the Depreciation Schedule. Keep a copy of your 2016 Form so next year all you have to do is to copy over the same items, purchase price and year in the Depreciation Schedule.
6.2 One area that has caused some confusion is Box 6 of Form 517-R. That box states in part: "Do not include, either here or in Schedule A, any unit in which you live." This is confusing because one can only legally conduct short-term rental in ones Primary Residence, so to exclude "any unit in which you live" would exclude all legal short-term rental units. The explanation I received from the Principal Property Auditor is that Form 571-R was not designed specifically for short-term rentals, but rentals generally. So, the caution not to include "any unit in which you live' is simply meant to make sure that the taxpayer does not include assets which is not used for rental purposes. The word "unit" should be read to mean "premises." So, if you are a short-term rental Host and you rent out a spare room in your own home, then exclude the property in your own bedroom - the "unit" (i.e. premises) "in which you live." However, if your listing includes the use of common areas (e.g. bathroom, kitchen, living room), then you need to include and report the property in those rooms since they are used to generate rental income.
6.3 Right now, you can't file Form 571-R online. However, you need to go to the Assessor's eFile Portal, click on "FILE 2016 STATEMENT", log in with the Account Number and PIN provided in the notice mailed to you and then follow the instructions to download the Form. In this way, the downloaded Form will contain the Bar Code associated with your Account.
I will try and arrange a Q&A with an Auditor at the Assessor's Office ASAP so that anyone with questions can attend and hopefully get some answers. Stay tuned.
Please do not rely on the information above and do your own research before taking any action. Here are some ways you can research this topic:
1. Refer to the Business Property Statement Manual prepared by the Assessor. Although this relates to Form 571-L, many of the same principles apply to Form 571-R, which is a Rental version of Form 571-L.
2. Call or email the Assessor’s Office. Phone number and email address are on the cover of the Manual.
Peter.
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tony
tony5 days ago
Thanks again.
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Michael
Michael3 days ago
We have not received the form in mail. Anywhere to download online?
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Peter
Peter3 days ago
Yes, here:
bit.ly/1T8yHjX But you will need an Account number and PIN which are provided in the letter. You may need to contact the Assessor's office directly to get an Account number and PIN.
Sylvie
Sylvie2 days ago
Hello Peter. Thank you for your posting. I read it twice but I am still pretty confused. I guess business English language may have to do with it.
1. Are you saying that this involves just the furniture and not the value of the property?
2. I hope it does not involve the property value! How do you evaluate one room? We already may Property Tax, Income Tax, Airbnb pays TOT - what else is left to be taxed.
3. If this is just about the furniture, I have own the majority of my furniture for 20 years or except a small fridge, a microwave, a small table, some new towels or bedsheets. Is that what I need to declare on form 571-R?
As usual thank you for your invaluable help with these matters.
All the best,
Sylvie
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Peter
Peter21 hours ago
Hi Sylvie. It is a bit confusing. Please don't blame your English. Here's my best attempt to answer your questions. 1. No, if you are a homeowner Host, the property value can be "scheduled" (i.e. taxed) for the purposes of this tax. However, as you mentioned, you are already paying property tax on your home, so this Form 571-R won't ask you to report the property value of your home. However, as a homeowner, you aren't entitled to the Low Value Exemption since your home value will take you over the qualifying limit. 2. You asked " what else is left to be taxed." The answer is the other business property - i.e. things that you bought in order to conduct your short-term rental business. Things like bed, appliances, TV etc. 3. If you have owned your furniture for over 20 years, then the depreciated value is probably low to zero. But you still need to make a best effort attempt to list the furniture in the depreciation Schedule, as are the other items you mentioned. Towels and bed sheets may be considered consumables. So, if you bought them in 2015 and threw them away that year, you don't need to include them.
LayKoon
LayKoon2 days ago
The form can be very confusing to those of us who are not used to all this business language. I keep reading the same lines over and over and still do not understand how to interpret them. Trying to complete and mail in by the deadline (before going away for 3 weeks) but afraid to make a mistake and get slapped with a huge fine. I'm afraid I am one of those people who needs hand-holding, and to have someone go over the form line by line with me as I fill it out. Probably need to go to the assessor's office in person.
In any case, thank you, Peter, for getting answers for us. If there is a workshop for this, I will attend it if I am in town.
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Peter
Peter21 hours ago
Hi LayKoon. I spoke to the Senior Principal Auditor last Friday to request a Q&A for Hosts. I'll follow up and let you know how I go. Stay tuned.
roy and patti
roy and patti2 days ago
Sylvia and LayKoon rest Assured this has nothing to do with the value of your property. I talked to the auditor at the assessors office all they want you to do is to put a price on everything you bought for your guests. If you bought a bed 20 years ago that's fine. Just add everything up and put it in a year you bought it that's pretty much all they want to know
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Sylvie
Sylviea day ago
Thank you. This is actually my room that I rent out every other week. The antique has been in my family for years and I have had my bed for over 15 years. I guess I do not need to put those in, right. In fact the TV is my own as well. I have bought a fridge, a microwave, a table. I have had the chairs through marriage and divorce and in 3 different houses. Would I need to count them?
roy and patti
roy and pattia day ago
Whatever furniture you have that your guests use is considered part of your business so you would have to just add up the total cost. Take a look at the FAQ that came in the mail and will explain most of your questions
LayKoon
LayKoon17 hours ago
Thank you, Roy and Patti. All my furniture came from friends so I will have to ask them when they purchased and what they paid for them or just make a guesstimate.
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