San Jose has one of the highest sales tax in the state at 9.25% when compared to most cities in Santa Clara County at 9% and the average in California at 7.75%.

Now, there’s a new tax that has to be paid by all landlords who own rentals. Beginning on July 1, 2017, the city of San Jose will charge a Business Tax of $195 per year for up to 2 properties that are rentals. If you have more than 2 then you pay an additional tax. Each property owner must register with the city’s business tax department and then pay the annual tax.

There are few exemptions to the tax but they are tough to qualify for them. Exemptions include: non-profits that own the property rental; veterans; teachers who teach at the residence; state licensed day care business with 14 or fewer children; seniors age 65 or older that make no more than $6,800 from the business; small business owners that have a household income of less than $48,240; or a business that generates annual gross receipts of less than $24,120.

Again, there are exemptions, but they are difficult to qualify for. If you have a condo or house that you rent out in the city of San Jose, then most likely you are required to pay the new tax. According to a city representative, we are in a transition period from the time that Measure G was approved in November of 2016, to the implementation date of July 1, 2017. If you have any questions regarding the business tax for rental property, please call the city of San Jose at (408) 535-7055.