California Vacancy Tax: What Property Owners Need to Know

California has no statewide vacancy tax — but several cities do, and the list is growing. San Francisco and Oakland have both enacted local laws that impose annual fees on properties left empty beyond a set threshold. If you own real estate in California, here's what actually applies to you and what it means at tax time.

What Is a Vacancy Tax?

A vacancy tax is a local annual levy on residential or commercial properties that sit unoccupied above a minimum number of days per year. The stated policy goal is to discourage owners from holding units off the market while housing demand stays high.

This is different from a standard California property tax, which applies to all real property based on assessed value. A vacancy tax is a separate, additional charge that only triggers if your property crosses the vacancy threshold. The two can — and in some cities, do — run concurrently.

Which California Cities Currently Have a Vacancy Tax?

As of 2025, two California cities are actively administering vacancy taxes:

San Francisco passed Proposition M in November 2022. The Empty Homes Tax applies to residential units in buildings with three or more units that are vacant more than 182 days in a calendar year. Annual tax rates:

$2,500 per unit (under 1,000 sq ft)
$3,500 per unit (1,000–2,000 sq ft)
$5,000 per unit (over 2,000 sq ft)

Oakland enacted its Vacant Property Tax (Measure W) in 2018. Properties left vacant more than 50 days per year owe:

$3,000 annually for residential properties with 1–3 units
$6,000 annually for properties with 4+ units or commercial property

Other California cities have discussed similar measures. What applies in one city does not automatically extend anywhere else in the state — there is no California vacancy tax law that binds all municipalities.

Are There Exemptions?

Both cities include meaningful exemption categories. Generally, properties may qualify if they are:

Actively undergoing permitted construction or major renovation
Recently purchased, within a qualifying window (typically one to two years depending on the city)
Subject to a court order, probate, or conservatorship that prevents occupancy
Vacant due to an active foreclosure proceeding
Damaged by a declared natural disaster or qualifying hardship

Exemptions are not automatic. Owners typically must apply through the local tax authority, submit documentation, and reapply each year the condition continues. Missing the filing window is the most common — and most avoidable — reason owners end up owing the full tax.

If you received a vacancy tax bill you believe is wrong or an exemption application was denied, that is the kind of problem worth reviewing with a tax professional, similar to how you'd approach a notice from the IRS or FTB.

Is a Vacancy Tax Payment Deductible on Federal Taxes?

For rental and investment property owners, a local vacancy tax is generally deductible as an ordinary and necessary business expense — reported on Schedule E alongside other rental expenses. The fact that the property was vacant during the year does not automatically disqualify the deduction, as long as the property was held with intent to produce rental income.

Understanding the full picture for California landlords requires looking at landlord deductions across both federal and state returns. California's treatment doesn't always mirror federal rules, and the deduction strategy for a property in San Francisco may look different from one in Los Angeles County.

For personally held properties — a second home not used as a rental — the vacancy tax may fall under itemized deductions on Schedule A, subject to the $10,000 SALT cap. If you're already at that limit (as many California property owners are), the payment may provide no additional federal tax benefit. Tax planning before filing is where this gets sorted out efficiently, rather than after the fact.

Investment property owners who want to review their full real estate tax position — depreciation, vacancy expenses, rental income, and local levies — can get that picture built during a free consultation.

What Does This Mean for Los Angeles Area Property Owners?

As of 2025, there is no vacancy tax in Los Angeles City or Los Angeles County. Measure ULA, which LA voters passed in 2022, is a transfer tax on high-value property sales — a completely different mechanism than a vacancy levy. Understanding how property assessments work in Los Angeles County is a separate question from any vacancy fee.

Los Angeles has discussed vacancy tax proposals, and the policy environment around housing supply means that could change. Owners of investment properties in the Antelope Valley, the Glendale area, Burbank, or elsewhere in the county should confirm their local municipal code annually — local ordinances move faster than most owners track. The current answer is no vacancy tax, but it is worth having a system to verify that each year.

What Should Property Owners Do Right Now?

If your property is in San Francisco or Oakland, confirm whether it crosses the vacancy day threshold for the calendar year, document occupancy and rental activity, and file for any applicable exemptions before the local deadline. Both cities publish their filing schedules; a late or missing declaration typically results in the full tax plus penalties.

If your property is elsewhere in California, the immediate step is confirming your local ordinances and setting an annual reminder to check again. This policy area is moving fast enough that a clean answer today can change by next filing season.

Regardless of city, rental property owners benefit from clean books. You cannot substantiate a deduction without records, and residential rental properties generate enough complexity — depreciation, vacancy periods, repairs versus improvements — that monthly bookkeeping is one of the higher-leverage things an investor can do. If you want help thinking through the tax side of a property you're holding vacant, book a free consultation and we can look at your specific situation.

Frequently Asked Questions

Is there a statewide California vacancy tax?

No. California has no statewide vacancy tax. Individual cities — currently San Francisco and Oakland — have passed their own local laws. Other municipalities have discussed similar measures, but no statewide law requires all California property owners to pay a vacancy tax.

Is a vacancy tax deductible on my federal return?

It depends on how the property is held. For rental and investment properties, vacancy taxes are generally deductible as a business expense on Schedule E. For personal-use properties, the payment may fall under the $10,000 SALT cap on Schedule A, providing no additional deduction if you are already at the limit. A tax professional can confirm the correct treatment for your specific property and filing situation.

What happens if I don't file a vacancy tax declaration?

Both San Francisco and Oakland can assess the full tax plus penalties and interest for unfiled declarations. Unpaid amounts can result in liens against the property. Filing — even when you believe you qualify for an exemption — is typically required; an exemption application is a separate step from the declaration itself.

My property was vacant due to renovations. Do I still owe the tax?

Active permitted construction is a common exemption category in both cities, but you generally must apply for it with supporting documentation. Simply being vacant for renovation is not sufficient — the exemption must be claimed through the proper local channel, and it typically must be renewed each year the renovation continues.

Does Los Angeles have a vacancy tax?

Not as of 2025. Measure ULA, which Los Angeles voters passed in 2022, is a transfer tax on high-value real estate sales — not a vacancy tax. Los Angeles has discussed vacancy tax proposals, but none has been enacted at the city or county level at this time.

This article is general information, not tax advice for your specific situation. Tax laws and local ordinances change — confirm current rules with your local tax authority and consult a qualified tax professional before making compliance or filing decisions.

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