San Diego Hotel Tax: Rates, Exemptions, and Operator Duties

The San Diego hotel tax, formally the Transient Occupancy Tax, is 10.5% of the rent charged for any lodging stay of less than one month within city limits. Hotels and other properties with 70 or more rooms add a 2% Tourism Marketing District assessment on top, bringing the effective rate at larger hotels to 12.5%.¹ The guest pays the tax. The lodging operator is legally responsible for collecting it and sending it to the city.

How the Rate Shows Up on a Bill

The 2% TMD assessment has applied only to properties at the 70-room threshold and above since 2016.² Smaller properties pay the 10.5% TOT and nothing more.

A guest at a large downtown hotel paying $250 per night would see roughly $31.25 in combined TOT and TMD charges. A guest renting a two-bedroom vacation home at the same nightly rate would owe about $26.25 in TOT alone, assuming the property has fewer than 70 rooms.

The tax reaches every type of short stay. Hotels, motels, inns, bed-and-breakfasts, hostels, short-term vacation rentals of houses, condos, individual rooms listed on platforms like Airbnb or VRBO, and RV parks or campgrounds offering spaces for stays under 30 days all fall within it.¹ How the booking happens does not matter. Some online travel companies voluntarily remit a share of the TOT directly to the city, but operators remain responsible for remitting TOT on all rent amounts they receive from the platform.

What Counts as Rent for the Tax

San Diego defines rent broadly. The 10.5% applies to the total amount the guest pays for the right to occupy the room, not just the headline nightly rate. Non-refundable cleaning fees, resort fees, pet fees, early check-in or late check-out charges, no-show fees, cancellation fees, extra-person fees, and even equipment rentals like rollaway beds all count.³ Credit card convenience fees and third-party provider fees passed on to the guest are taxable too.

A fully refundable cleaning deposit is not taxable, but only if the money is actually returned when no damage occurs. The moment a deposit becomes non-refundable or gets forfeited, it turns into rent subject to the tax.¹ Operators cannot shave the taxable base by deducting the value of complimentary services or platform booking fees.³

Who Does Not Have to Pay

The main exemption is for long stays. A guest who occupies a room for one full calendar month or longer is not a transient and owes no TOT. This is measured by calendar months, not a flat 30 days. A guest checking in January 1 and checking out January 31 has not stayed a full calendar month and still owes the tax.¹

Federal and state government employees traveling on official business are also exempt. To claim it, the employee completes an exemption form and shows photo identification along with government credentials. The operator keeps the completed form on file, and a separate form is required for each stay period and each employee.⁴

What Operators Must Do

Any property within San Diego city limits that rents to guests for less than a month needs a Transient Occupancy Registration Certificate from the City Treasurer’s office before collecting a single dollar of tax.¹ Applications go through the city’s online portal, email, or mail, and the operator supplies legal name, business name, property address, and a count of rooms or units available for transient use.

Once registered, the operator becomes a trustee of the tax. Every dollar of TOT collected is held in trust for the city until it is remitted.⁵ The certificate must stay posted in a visible location on the premises.

Returns are monthly. The TOT and any applicable TMD assessment are due to the City Treasurer by the last day of the month following collection. Tax collected during April, for example, is due by May 31.¹ Operators can file electronically or by mail with a timely postmark.

If an operator collects rent but fails to collect the tax from the guest for any reason, the city holds the operator personally liable for the uncollected amount.⁵ Forwarding returns or funds to a corporate headquarters or management company that then fails to remit is no defense. The individual operator on the ground bears the responsibility.

Penalties for Paying Late or Not at All

The penalty structure ramps up fast. A late payment triggers a penalty of 1% of the tax due on the first delinquent day, followed by one-third of 1% for each additional day, including weekends and holidays, up to a maximum penalty of 25% of the tax owed for that reporting period.⁵

A separate structure applies when an audit uncovers a deficiency. The Treasurer invoices the operator for the underpaid amount plus a flat 10% penalty. If the operator does not pay within 14 days of the invoice, an additional daily penalty of one-third of 1% begins accruing on the deficiency, capped so the combined penalty does not exceed 25%.⁵ If the city determines nonpayment was due to fraud, it adds a flat 25% penalty on top.

Beyond money, willful failure to file a return, filing a false return, refusing to remit collected taxes, or refusing to allow an audit is a misdemeanor under the municipal code.⁵ Operators also need to keep rent receipts, guest folios, exemption documents, booking logs, and occupancy and gross receipts records for at least three years, since city auditors can inspect them during normal business hours.⁶ Completing one audit does not waive the city’s right to future audits or to pursue unpaid tax discovered later.

A Separate License for Short-Term Rental Hosts

If you rent a residential property to short-term guests, the TOT is only half the story. Since May 2023, operating a short-term residential occupancy without a city-issued STRO license has been illegal, and the city runs a four-tier license system with its own fees, renewal cycle, and occupancy caps. A host must already have an active TOT registration certificate and a paid-up Rental Unit Business Tax account before applying.⁷ Hotels and motels are not subject to STRO; the licensing regime is a separate obligation layered on top of the hotel tax for residential rentals.

1
City of San Diego Official Website. Transient Occupancy Tax (TOT)/Tourism Marketing District (TMD)
2
San Diego Tourism Marketing District. FAQs
3
City of San Diego. Transient Occupancy Tax (TOT) – Rent Rule
4
City of San Diego. Transient Occupancy Tax (TOT) Exemption Chart
5
City of San Diego. San Diego Municipal Code Chapter 03 Article 5 Division 1 – Transient Occupancy Tax
6
San Diego County Treasurer-Tax Collector. Transient Occupancy Tax Cease of Business
7
City of San Diego Official Website. Short-Term Residential Occupancy (STRO)