What is TOT and how do I track it?
TOT stands for Transient Occupancy Tax. It’s a tax that cities and counties charge on short-term lodging, typically stays of 30 days or less. If you rent out a vacation home, run an Airbnb, or operate any kind of short-term rental in San Diego, you’re responsible for collecting this tax from guests and remitting it to the city.
In San Diego, the TOT rate is 10.5% of the rental amount. The city also requires a Tourism Marketing District assessment that varies depending on the zone where your property is located. Before you start renting, you need to register with the City Treasurer’s Office to get a TOT certificate.
How you track TOT depends on how guests book. If you rent exclusively through Airbnb or VRBO, those platforms collect and remit TOT on your behalf for San Diego properties. Your responsibility is mainly documentation and keeping records that show the platform collected the tax. You still need to register with the city.
Direct bookings are different. When guests book through your website, by email, or over the phone, you collect the 10.5% from them directly and remit it to the city yourself. This means calculating the tax on each booking, collecting it at the time of payment, and filing returns on schedule.
In your accounting software, set up a liability account specifically for TOT. When you receive a payment that includes tax, split the transaction. The rental portion goes to income and the tax portion goes to your TOT liability account. A San Diego payroll service that handles bookkeeping can configure this correctly so the reports make sense and you always know what you owe.
Reconcile monthly by adding up the TOT you collected and comparing it to your liability account balance. The number should match what you’ll owe on your next return. Hospitality businesses running multiple properties or mixing platform and direct bookings need especially careful tracking to avoid errors.
San Diego requires monthly filing if your collections exceed a certain threshold, quarterly if you’re smaller. Penalties and interest start immediately after the due date, so staying on schedule matters.
Common mistakes include recording TOT as income instead of a liability, forgetting to collect it on direct bookings, and not reconciling platform-collected TOT with your records. Your Airbnb payout already has TOT removed, so if you record the gross booking amount as income, your books will be wrong. Getting the structure right from the beginning prevents issues at tax time and makes filing TOT returns straightforward.
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