San Diego $5,000 Per Bedroom Vacation Home Tax: June 2026 Ballot

Breaking Down the $5,000 Per Bedroom Tax Proposal

The Vacation Home Operation Tax to Preserve Housing targets a specific segment of San Diego's housing stock: properties not claimed as primary residences and homes rented short-term on platforms like Airbnb and Vrbo. According to city analysis, the tax would apply to approximately 10,600 properties—roughly 2% of all homes in San Diego—and could generate between $100 million to $135 million annually for the city's general fund.

Tax Structure and Financial Impact

The tax structure is straightforward but financially significant. Property owners would pay $5,000 annually for each bedroom in their vacation home or short-term rental:

• 3-bedroom Ocean Beach cottage: $15,000 annual tax
• 4-bedroom Mission Beach vacation rental: $20,000 annual tax
• 6-bedroom La Jolla luxury property: $30,000 annual tax

Geographic Concentration

According to the San Diego Union-Tribune, 45% of the second homes potentially affected by the new tax are located in downtown, La Jolla, Pacific Beach, or Mission Beach—precisely the coastal areas where vacation rental activity and property values are highest.

These neighborhoods already face short-term rental license caps. Mission Beach is limited to 30% of housing stock (approximately 1,100 STRs), while the citywide cap restricts whole-home rentals to around 5,400 units. Now they confront an additional financial pressure point that threatens to fundamentally alter the economics of vacation property ownership.

Exemptions Provide Limited Relief

Properties used as primary residences by San Diego residents are exempt. Long-term rentals with 12-month or longer leases are also excluded from the tax. Properties rented for fewer than 20 days annually or operated as hosted rentals where owners remain on-premises during guest stays would also avoid the tax.

However, Councilmember Elo-Rivera's proposal does not specify how much time owners of second homes would need to spend living in the property or renting it to long-term tenants to qualify for exemptions, leaving significant uncertainty for property owners attempting to calculate their exposure.

Timeline to the June 2026 Ballot: Why Property Owners Are Running Out of Time

The legislative timeline creates genuine urgency for vacation property owners. The Rules Committee's October 22, 2025 vote marked the first formal approval of the tax framework. The committee is expected to revisit the proposal in January or February 2026 for a second vote. If approved again, the measure would proceed to the full City Council for final approval, which must occur before the March 6, 2026 deadline for measures to appear on the June ballot.

Simple Majority Required

As a general tax destined for the city's general fund, the measure requires only a simple majority (50% plus one vote) to pass—a significantly lower threshold than special taxes requiring two-thirds approval. Given the support from affordable housing advocates, labor unions, and progressive council members, the measure has a credible path to voter approval.

The Math Problem for Traditional Sales

This timeline compression creates a mathematical problem for property owners considering traditional sales. According to data from Compass San Diego Housing Market, most homes in the San Diego area are going under contract in 43-49 days as of late 2025.

The closing period adds another 30-34 days for conventional mortgages, with FHA loans extending 38-45 days due to additional property standards and underwriting requirements. According to the Scott Cheng Team, standard mortgage closings in San Diego average 41 days from accepted offer to closing.

Combining these timelines, traditional sales require 74-94 days from listing to closing—a window that extends well past the June ballot date for properties listed in April or later. Even properties listed in February face significant risk of incomplete closings before June, particularly if inspections reveal repair needs or financing faces delays.

Post-Ballot Market Complications

If the measure passes in June, implementation could begin within months. Property owners who waited will then face a buyer market where purchasers demand discounts to offset the new tax burden. A $20,000 annual tax on a 4-bedroom property represents a 5% reduction in net operating income on a property generating $400,000 in annual gross revenue. Buyers will adjust their offers accordingly, potentially erasing tens of thousands in property value overnight.

Financial Impact Analysis: The True Cost of the Vacation Home Tax

To understand the financial pressure this tax creates, consider the economics across different property types in San Diego's coastal markets:

Existing Tax and Fee Burden

These calculations don't exist in isolation. San Diego short-term rental operators already navigate complex tax obligations. As of May 1, 2025, the city implemented tiered Transient Occupancy Tax (TOT) rates of 11.75%, 12.75%, and 13.75% based on proximity to the San Diego Convention Center, according to Avalara MyLodgeTax.

Operators also pay annual licensing fees ranging from $100 (for properties rented fewer than 20 days annually) to $1,000 (for whole-home rentals exceeding 20 days per year). Property insurance, maintenance, cleaning, platform commissions (typically 3% to Airbnb/Vrbo), and property management fees (often 25-30% of gross revenue) further compress margins.

Adding a $5,000-per-bedroom tax to this existing cost structure fundamentally alters the investment thesis. For many operators, particularly those with mortgages or properties in less-premium locations, the tax may eliminate profitability entirely.

The 10-Year Perspective

The 10-year perspective is particularly sobering. A $20,000 annual tax compounds to $200,000 over a decade—often representing 20-30% of the property's current value for non-luxury vacation rentals. Property owners evaluating whether to sell now or absorb the tax must consider not just the annual cash flow impact, but the cumulative wealth erosion over their anticipated holding period.

Geographic Concentration: Coastal Neighborhoods Face Highest Impact

The vacation home tax doesn't distribute evenly across San Diego. Coastal neighborhoods with high concentrations of vacation rentals and second homes face disproportionate impact:

Mission Beach

Mission Beach operates under a neighborhood-specific short-term rental cap of 30% of housing stock, translating to approximately 1,100 licensed STRs. These beachfront properties, many purchased specifically for vacation rental income, face the full $5,000-per-bedroom assessment. With typical Mission Beach vacation rentals ranging from 3-5 bedrooms, annual tax bills of $15,000-$25,000 will directly impact this community.

Pacific Beach

Pacific Beach shares Mission Beach's coastal appeal and vacation rental concentration. The neighborhood's proximity to Crystal Pier, Garnet Avenue nightlife, and beach access makes it a vacation rental hotspot. Properties within two blocks of the sand command premium nightly rates during peak summer months, when rates often double compared to winter periods. The vacation home tax threatens to compress these profit margins significantly.

La Jolla

La Jolla presents the highest absolute property values and largest homes. According to Luxury SoCal Realty, the median price in La Jolla reached $2.6 million in 2026, with properties averaging just 21.5 days on market. Many La Jolla vacation rentals feature 4-6 bedrooms, creating $20,000-$30,000 annual tax exposure.

Ocean Beach and Point Loma

Ocean Beach attracts a different vacation rental demographic with its bohemian culture and dog-friendly beach. Smaller properties and lower nightly rates mean Ocean Beach operators run tighter margins. A $15,000-$20,000 annual tax may force many operators to exit the short-term rental market entirely and convert to long-term rentals.

Point Loma's harbor views and proximity to Liberty Station appeal to military families and tourists seeking quieter beach areas. The vacation home tax will impact this market significantly.

Market Glut Risk

This geographic concentration means specific neighborhoods will see clusters of properties entering the market if the ballot measure gains momentum. Mission Beach and Pacific Beach, in particular, could experience a glut of vacation property listings in the months before June 2026, potentially depressing sale prices through oversupply just as tax fears reduce buyer demand.

Why Cash Buyers Offer the Only Guaranteed Pre-Ballot Exit

The timeline mathematics make cash buyers not just an option, but the only reliable path to guaranteed closings before the June 2026 ballot.

Traditional Timeline vs. Cash Timeline

Traditional mortgage-financed purchases:

• Conventional loans: 30-34 days to close
• FHA loans: 38-45 days to close
• Days on market before offer: 43-49 days
• Total timeline: 74-94 days from listing to closing

Cash sales timeline:

• Most cash sales close in 7 to 21 days
• Some buyers can close in less than a week with clear title
• No contingencies for financing, appraisals, or repairs
• Total certainty of closing before June ballot

Real-World Delays Are Common

The traditional timelines assume no complications—a best-case scenario rarely achieved in practice. Real-world delays are common:

• Inspection contingencies may reveal repair needs requiring negotiation
• Appraisals may come in below purchase price, triggering renegotiation
• Underwriters may request additional documentation, extending processing times
• Title issues may surface requiring resolution

Any of these routine complications can add 7-21 days to closing timelines. A property owner listing in March 2026 with a traditional buyer faces meaningful risk of incomplete closing by June. A buyer's financing could fall through in May, forcing the seller back to market with insufficient time for a second transaction.

Cash Eliminates Uncertainty

According to HomeLight's analysis, cash buyers eliminate these variables entirely. The closing process reduces to title search, escrow setup, and document signing. A property owner accepting a cash offer in April 2026 can close in early-to-mid April, removing all ballot risk.

Evaluating the Cash Discount

Cash buyers typically offer 5-15% below market value in exchange for speed, certainty, and as-is purchases requiring no repairs. For a $1.2 million Mission Beach vacation rental, a cash offer might range from $1.02 million to $1.14 million—representing $60,000 to $180,000 in potential discount.

However, this discount must be evaluated against the alternatives. Waiting for a full-price financed offer risks ballot passage, which could immediately depress property values by $50,000-$150,000 as buyers adjust for the new tax burden. The cumulative tax itself—$20,000 annually for a 4-bedroom property—totals $200,000 over a decade.

Even accepting a 10% cash discount ($120,000 on a $1.2 million property) provides better economics than absorbing two years of the tax, plus the likely value depreciation once the tax passes.

Frequently Asked Questions About the San Diego Vacation Home Tax

Making the Decision: Sell Now or Absorb the Tax

Property owners facing the June 2026 ballot must evaluate three core scenarios:

The decision matrix weighs financial outcomes against lifestyle factors and risk tolerance. For out-of-state investors who purchased purely for vacation rental income, Scenario 1 (cash sale now) often provides the best economics when accounting for cumulative tax exposure, value depreciation risk, and elimination of ongoing management complexity.

Ultimately, the decision comes down to a simple question: Is the potential upside of holding the property worth the financial risk of a $15,000-$30,000 annual tax bill and potential value depreciation if the measure passes? For the majority of vacation property investors, particularly those in the 10,600 properties directly affected, the answer increasingly appears to be no—making the pre-ballot exit window via cash buyers the most economically rational path forward.

Conclusion: The Deadline Is Approaching

The San Diego Vacation Home Operation Tax represents more than a policy debate—it's a financial deadline that requires immediate action from 10,600 property owners. With the Rules Committee approval already secured on October 22, 2025, and the full City Council vote scheduled for March 6, 2026, the June ballot placement carries high probability.

For vacation property owners in Mission Beach, Pacific Beach, La Jolla, and other coastal neighborhoods, the decision window has effectively already closed for traditional sale pathways. Only cash buyers can guarantee closings before the June vote, eliminating the risk of sudden $15,000-$30,000 annual tax assessments and the value depreciation that will follow ballot passage.

Property owners who wait past February 2026 face increasingly limited options—traditional buyers will demand discounts to offset tax uncertainty, and post-ballot sales will occur in a depressed market where buyers adjust for the tax burden. The mathematics are unforgiving: a 4-bedroom property facing $20,000 in annual taxes accumulates $200,000 in payments over a decade, often representing 20-30% of current property value.

Against this backdrop, accepting a 5-15% cash buyer discount today provides superior economics to absorbing two years of tax payments plus value depreciation. The ballot deadline is approaching—secure your exit while time remains.