Many of our Canadian clients ask us if they can rent their second homes in Palm Springs, as they’re wanting to use rental income to offset the fixed expenses of owning a winter vacation home here. The simple answer to that is, YES, they can! A large number of Canadians rent their Palm Springs homes as vacation properties here, offsetting a substantial part of their annual fixed costs. If you, as a Canadian, do decide to rent your Palm Springs property, you’ll need to learn how to manage your Palm Springs rental property remotely, and how to report rental income in the US.
Since many Canadians and other Foreign Nationals do rent their Palm Springs properties, a number of small property management companies have sprung up to provide these services. For those who want and are willing to pay for professional rental management services, there are companies that will provide turnkey services, managing the entire rental process. The fee for such services is usually pretty expensive, usually 25-35% of gross income from the rentals. But then again, you do nothing except get a check at the end of the month. If you are more of a hands-on person, Palm Springs has various concierge-like services that, for a fee, will provide preparation and then cleanup services on an as-needed basis and you manage the rest. I can help you find whatever level of services you may need.
Many of my clients manage their rental properties themselves and have found that the process of marketing their properties is pretty easy. Although there are several Web sites that connect potential seasonal vacation renters to property owners, the VRBO site (Vacation Rentals by Owner) seems to be the most popular one in use here in Palm Springs. VRBO was founded in 1995 by vacation rental owners who self-manage their own second homes. They provide an online forum for homeowners to advertise their vacation properties which makes it easy for travelers to search for single-family homes and condominiums throughout the Palm Springs area. You can check them out at VRBO.
When you receive US rental income, you will be required to report it, both to the US Federal and California State tax authorities. In the US, depreciation on property used for rental is an allowable expense to claim on your taxes; there are tax schedules used to calculate your allowed depreciation here. For details on the impact, if any, on your Canadian taxes in owning US income property, it’s best to consult your Canadian tax authority. If you wish more information on US taxes for Canadians, I can put you in touch with local experts in the field.
In the city of Palm Springs, you are required to have a Transient Occupancy Permit to become an operator of a rental property. The one-time registration fee is $25.00. All operators of a “transient rental” property, which they define as “less than 28 consecutive days”, are required to collect a Transient Occupancy Tax (TOT) from each guest and submit it to the city of Palm Springs Treasurer. This bed tax is 11.25% of the rental rate. For more details, go to Bed Tax.
If you are a Canadian looking to purchase your Palm Springs winter retreat, consider taking advantage of our seasonal rental market as one way of having your property partially pay for itself. For more helpful information on buying and owning property in Palm Springs, go to our BUYER GUIDE FOR CANADIANS .