Information for Lessors of Residential Real Estate

The following document provides information for persons engaged in the business activity of a lessor of residential real estate.  It provides information on business registration requirements, small business exemptions and exclusions from the Gross Receipts Tax, and payroll expense attributable to a business. 

Once you have evaluated your business registration requirements for each of your buildings where the business activity of leasing residential real estate occurs, and registered each building that requires a business registration certificate, you must file and remit Gross Receipts Taxes for each separately registered entity, if required.  

Separate Registration and Business Tax Treatment of Individual Buildings Where Leasing Residential Real Estate Units Occurs

For purposes of the Gross Receipts Tax and Business Registration Fee, a lessor of residential real estate is treated as a separate person with respect to each individual building in which it leases residential real estate units. This applies only to leasing residential real estate units within a building, and not to any business activity related to other space, either within the same building or other buildings, which is not residential real estate. The Tax Collector is authorized to determine what constitutes a separate building and the number of units in a building.   Click here for the Ordinance governing lessors of residential real estate.

NOTE: Each registered building will have a separate Business Account Number (BAN) and Personal Identification Number (PIN) for use in entering the online filing system.  This information has been provided in correspondence from our office. 

Registration Exemption for Certain Persons Receiving Rental Income

A person receiving rental income in connection with the operation of a cooperative housing corporation, as defined in Section 216(b) of the Internal Revenue Code of 1986, as amended; one residential structure consisting of fewer than four units; or one residential condominium is not, by reason of that fact alone, required to obtain a business registration certificate.  If the same person engages in other business activities or incurs payroll expense, a business registration certificate may be required. 

Short-Term Residential Hosts  are San Francisco residents who rent out any portion of their residence.  Earning income from a short-term residential rental, regardless of the amount, is considered a business, therefore, you are required to register as a business. 

Exemptions and Exclusions from the Gross Receipts Tax

For purposes of the Gross Receipts Tax, a lessor of residential real estate is a "small business enterprise" and is exempt from paying the Gross Receipts Tax if and only if the lessor leases fewer than 4 units in any individual building (although they may still be required to file a return – see below). "Residential real estate" means real property where the primary use of or right to use the property is for the purpose of dwelling, sleeping or lodging other than as part of the business activity of accommodations.

If you are a lessor of residential real estate, you may exclude from total gross receipts in any tax year 50 percent of the total amount received from the rental of real property to tenants in occupancy at any location in San Francisco that is subject to limits on rent increases pursuant to the Residential Rent Stabilization and Arbitration Ordinance, San Francisco Administrative Code, Chapter 37.1 et seq.