To rent out your house in California, you need to confirm whether statewide rent-cap and eviction rules apply to you, bring the home up to habitability and security standards, hand the tenant a specific set of written disclosures, write a lease with a legally sized security deposit, screen applicants within state and federal limits, follow fair housing rules from the first ad onward, register the property with your city if it requires it, switch to landlord insurance, and report the rental income to the IRS. Each of those steps has its own trap, and California updates these rules often, so work through them in order before you list.
Check Whether AB 1482 Applies to Your Rental
The California Tenant Protection Act of 2019, known as AB 1482, does two things that reshape how you can run a rental. It caps annual rent increases at 5% plus the local Consumer Price Index change, with a hard ceiling of 10% no matter how high inflation runs.1SF.gov. The California Tenant Protection Act of 2019 (AB 1482) It also requires a legally recognized “just cause” before you can terminate most tenancies, which means you cannot simply decline to renew a lease when it ends.
There is an exemption for single-family homes, but it is conditional. The property cannot be owned by a corporation, a real estate investment trust, or an LLC that has a corporate member. You also have to give the tenant a specific written notice stating the tenancy is exempt from AB 1482’s rent cap and just cause protections.1SF.gov. The California Tenant Protection Act of 2019 (AB 1482) Skip that notice and the exemption does not apply, even if your ownership structure otherwise qualifies. If you have added an accessory dwelling unit on the same lot, the single-family exemption is also lost.
Decide this before you draft the lease, because the exemption language has to be inside it.
Bring the Home Up to Habitability and Safety Standards
California requires every rental unit to be fit for human habitation for the whole tenancy, not just on move-in day. Civil Code Section 1941.1 covers the structural basics: effective weatherproofing in the roof, walls, and windows; working plumbing and gas systems that meet the building codes in force when they were installed; and functional, safe heating, electrical wiring, and lighting.2California Legislative Information. California Code CIV – Section 1941.1
Civil Code Section 1941.3 then adds security hardware. Every main entry door needs a working deadbolt, and all windows must be secure and operable.3California Legislative Information. California Civil Code CIV 1941.3 Smoke alarms go in each bedroom, in the hallway outside sleeping areas, and on every habitable story. Carbon monoxide alarms go outside each sleeping area and on every occupied level.
If the home falls below these standards during the tenancy, the tenant can withhold rent or use the “repair and deduct” remedy and pay for necessary fixes out of their rent. A court can also declare the unit uninhabitable. Fix problems quickly instead of waiting for the tenant to force the issue.
Deliver the Required Written Disclosures
Before the lease is signed, California requires you to give the tenant a stack of written disclosures. Missing any of them can trigger penalties or hand the tenant grounds to void the agreement.
- Mold. Under Health and Safety Code Section 26147, you must disclose any known or suspected mold that exceeds permissible exposure limits or poses a health risk.4California Legislative Information. California Code HSC 26147
- Bedbugs. Civil Code Section 1954.603 requires written information on how to identify bedbugs and the importance of reporting infestations promptly.
- Lead-based paint. For any home built before 1978, federal law requires a lead paint disclosure in the lease along with an EPA-approved pamphlet on lead poisoning prevention.5eCFR. 24 CFR Part 35 Subpart A – Disclosure of Known Lead-Based Paint Hazards Upon Sale or Lease of Residential Property
- Sex offender database. Every lease must include notice that tenants can search the Megan’s Law database at meganslaw.ca.gov.6California Department of Real Estate. Landlords’ and Tenants’ Rights Guide
- Flood zone. If you know the property is in a special flood hazard area or an area of potential flooding, you must disclose that in writing for any lease entered after July 1, 2018.6California Department of Real Estate. Landlords’ and Tenants’ Rights Guide
If the property sits in a high-risk flood zone and you have a federally backed mortgage, you also have to carry flood insurance through the National Flood Insurance Program or an equivalent private policy.7FEMA. Flood Insurance New NFIP policies typically have a 30-day waiting period, so start that process early.
Write the Lease and Set a Legal Security Deposit
A workable lease spells out monthly rent, the due date, who pays for each utility, pet rules, and policies for shared spaces like parking. Standardized templates from the California Association of Realtors or the California Apartment Association cover these fields; fill in every blank, because a missing term invites a dispute a clear lease would have avoided.
Security deposits changed in 2024. Assembly Bill 12, effective July 1, 2024, caps the deposit at one month’s rent for most landlords, whether the unit is furnished or unfurnished.8CalMatters Digital Democracy. AB 12 – Tenancy: Security Deposits A narrower rule applies to small landlords: if you are a natural person, or an LLC whose members are all natural persons, and you own no more than two rental properties totaling four or fewer units, you can collect up to two months’ rent.9SF.gov. Security Deposit Laws Are Changing on July 1, 2024 Someone renting out a single home and no other property typically qualifies.
When the tenancy ends, Civil Code Section 1950.5 gives you 21 days to return the deposit along with an itemized statement of deductions and receipts for anything beyond normal wear and tear. Sloppy records are the fastest route to small claims court.
Before move-in, walk the property with the tenant and complete a written condition checklist noting every scratch, stain, and appliance issue. Both of you sign it. Take timestamped photos of every room. Without that record, a tenant can plausibly claim damage was pre-existing, and judges tend to side with the tenant when neither party has documentation.
Screen Tenants Within State and Federal Limits
California Civil Code Section 1950.6 limits tenant screening fees to your actual cost of pulling credit reports and running background checks. The state adjusts the cap annually with the Consumer Price Index; recent years have put it around $62 per applicant. You have to give every applicant a written, itemized receipt for the fee, and if you pulled a credit report, provide a copy on request.
California also requires you to consider alternative evidence of financial stability for applicants who use government housing assistance, rather than relying only on a traditional credit score. Blanket rules that automatically reject anyone with a prior eviction or nontraditional credit can create fair housing liability, so evaluate applications individually.
If you deny an applicant, charge higher rent, or require a co-signer based on information in a consumer report, federal law requires an adverse action notice. That notice has to include the name, address, and phone number of the credit reporting agency, a statement that the agency did not make the decision, and notice of the applicant’s right to dispute inaccurate information and get a free copy of the report within 60 days.10Federal Trade Commission. Using Consumer Reports: What Landlords Need to Know If a credit score factored in, disclose the score and the key factors that hurt it.
When you are done with an applicant’s consumer report, destroy it securely. Paper gets shredded or burned; electronic files have to be deleted so they cannot be reconstructed.10Federal Trade Commission. Using Consumer Reports: What Landlords Need to Know Dropping an application with a Social Security number into a normal trash can invites both federal enforcement and identity theft liability.
Follow Fair Housing Law From the Ad Onward
Fair housing law applies the moment you post the listing. The federal Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status, or disability.11eCFR. Discriminatory Conduct Under the Fair Housing Act California’s Fair Employment and Housing Act adds categories including sexual orientation, gender identity, marital status, source of income, and veteran status. Source of income catches new landlords off guard the most: you generally cannot refuse an applicant solely because they intend to pay with a Section 8 voucher or another government subsidy.
Fair housing also governs pet policies. If an applicant or tenant has a disability and requests a reasonable accommodation for an assistance animal, including an emotional support animal, you have to consider the request even with a no-pets policy. You cannot charge pet deposit or pet rent for an assistance animal. You can ask for documentation from a licensed healthcare provider confirming the disability-related need, but certificates bought from online registries are not reliable evidence.12HUD. Fact Sheet on HUD’s Assistance Animals Notice Denying a legitimate assistance animal request is one of the most common fair housing complaints filed against individual landlords.
Register With Your City and Switch Your Insurance
Many California cities require you to register the rental or obtain a business license before collecting rent. The process typically runs through an online portal and carries an annual fee that varies widely: Los Angeles charges roughly $38.75 per unit per year, while Santa Ana set its fee at $100 per unit for the 2025–2026 program year.13City of Santa Ana. What Is the Rental Registry Fee? In cities with rent stabilization, keeping registration current is often a prerequisite for filing an eviction. Late renewals bring penalties, and operating without a required permit can mean fines. Rules differ substantially between jurisdictions, so check your city or county housing department before you list.
Your homeowner’s policy almost certainly will not cover claims arising from rental activity. Once a tenant moves in, you need a landlord or dwelling fire policy that covers the structure, liability for tenant and guest injuries, and loss of rental income if a covered event makes the home uninhabitable. If you keep the homeowner’s policy and a tenant’s guest is hurt on the property, the insurer may deny the liability claim because the property is no longer owner-occupied. Requiring tenants to carry their own renter’s insurance in the lease is also a reasonable layer, since it covers their belongings and gives them liability protection that reduces how often they look to you after a loss.
Report the Rental Income
Rental income is taxable and belongs on Schedule E of your Form 1040. Most ordinary operating expenses are deductible, which reduces what you actually owe. Common deductions include mortgage interest, property taxes, insurance premiums, management fees, and the cost of repairs that keep the property working.14Internal Revenue Service. Instructions for Schedule E (Form 1040)
Watch the line between repairs and improvements. Fixing a broken lock or patching drywall is a deductible repair. Replacing a whole roof or installing a new HVAC system is a capital improvement that has to be depreciated over time. Residential rental buildings depreciate over 27.5 years under the general depreciation system, meaning you deduct a fraction of the building’s cost (not the land) each year for nearly three decades.15Internal Revenue Service. Publication 527, Residential Rental Property Keep detailed records from the first month. Reconstructing a year of receipts at tax time is painful, and gaps mean missed deductions.