Every short-term rental in San Diego needs a city STRO license, and whole-home licenses are capped and awarded by lottery. The municipal code defines short-term residential occupancy as renting a dwelling unit for less than one month, and states that "a license is required for all short-term residential occupancy." One license per host, one operated unit per host, citywide. Whole-home licenses outside Mission Beach (Tier 3) are capped at 1% of the city's housing stock; Mission Beach gets its own 30% cap (Tier 4). Operating without a license has been unlawful since May 1, 2023.
The four tiers, and which one you actually need
According to San Diego Municipal Code section 510.0104 (sandiego.gov), the license type follows two questions: are you renting the whole home or sharing it, and for more or fewer than 20 days a year? Fees below are the city treasurer's schedule effective March 1, 2025; every license runs two years and none are refundable.
Tier 1: Part-time
Home share or whole home, 20 days or less per year
The low-volume license: rent your place during Comic-Con, stay under 20 aggregate days, no cap and no lottery.
- Aggregate total of 20 days or less per calendar year (SDMC 510.0104(b))
- Two-year license, renewable
Tier 2: Home share
Renting part of your own home, more than 20 days per year
The house-hacking license. The host has to actually live there: the code requires occupying the home as your primary residence at least 275 days of the year it is shared.
- Host occupancy at least 275 days per calendar year (SDMC 510.0104(c)(3))
- Primary residence means where you live at least six months of the year (SDMC 510.0102)
Tier 3: Whole home, citywide
Whole-home rental outside Mission Beach, more than 20 days per year
The capped one. Licenses "shall not exceed 1 percent of the total housing units in the City of San Diego," excluding Mission Beach, based on SANDAG housing estimates.
- Lottery when demand exceeds the cap (SDMC 510.0106(c))
- Two-consecutive-night minimum stay (SDMC 510.0104(d)(2))
- Must be used at least 90 days per year, with quarterly reports (SDMC 510.0107(c))
Tier 4: Mission Beach
Whole-home rental inside the Mission Beach planning area
Mission Beach's rental history earned it a separate, far larger allowance: up to 30% of the neighborhood's housing units, with its own lottery when oversubscribed.
- Cap: 30% of Mission Beach housing units (SDMC 510.0104(e)(4))
- Same two-night minimum and 90-day use requirement as Tier 3
Sources: San Diego Municipal Code Ch. 5, Art. 10, Div. 1 (adopted by O-21305, amended by O-21464) and the city treasurer's STRO program page, both retrieved August 2026.
The one-license rule
Two sentences in section 510.0104(a) do more portfolio damage than the caps: "A host may only hold one license at a time," and "A host may not operate more than one dwelling unit for short-term residential occupancy at a time within the City of San Diego." A multi-unit operator cannot stack licenses under one name; each unit needs its own host of record. Licenses are also expressly non-transferable (510.0106(e)), so a license does not convey when a property sells.
How the lottery works
When Tier 3 or Tier 4 applications exceed the caps, section 510.0106(c) says issuance "shall be on a lottery basis if sufficient demand exists." The Tier 3 lottery is not one citywide draw: section 510.0104(d)(5) allocates licenses "to each Community Planning Area in proportion to the Community Planning Area's percentage of the overall Tier Three License applicant pool," so a Pacific Beach applicant competes against Pacific Beach demand, not against the whole city. Applying requires a Transient Occupancy Tax certificate number and proof the Rental Unit Business Tax is paid (510.0105(b)), and a host whose license was revoked is barred from reapplying for 12 months.
Winning is not the end of the compliance clock. Tier 3 and 4 hosts must "use the license a minimum of 90 days each year during the term of the license and submit quarterly reports" (510.0107(c)). The city designed the cap to go to homes that actually operate, not to be banked.
The operating rules that generate citations
Section 510.0107 is where enforcement actually happens day to day. The recurring obligations:
The tax side
The license rides on top of San Diego's lodging taxes. According to the city treasurer's Transient Occupancy Tax page (sandiego.gov), rates effective May 1, 2025 are zone-based: 11.75% in Tax Zone 1, 12.75% in Zone 2, and 13.75% in Zone 3, up from the flat 10.5% that applied through April 30, 2025. The tax applies to anyone renting "for less than one month," the same threshold that triggers the STRO license, and operators collect and remit it under SDMC Chapter III, Article 5. Lodging businesses with 70 or more rooms also carry a 2% Tourism Marketing District assessment, which most STRO hosts will not hit.
For an operator modeling a San Diego unit, the fixed compliance stack is modest ($1,170 in city fees over two years for a Tier 3 license) but the structural constraints are not: the cap, the lottery, the one-license rule, and the 90-day floor shape what a portfolio here can look like more than the fees do. The pattern matches what we found compiling non-compliance costs across cities: modern STR ordinances price the permit low and put the teeth in caps, advertising surveillance, and revocation.
Quick FAQ
Do I need a license to run a short-term rental in San Diego?
Yes. SDMC 510.0104(a) requires a license for all short-term residential occupancy, meaning any rental of a dwelling unit for less than one month. Operating without one has been unlawful since May 1, 2023. One license per host, one operated unit per host.
How many whole-home licenses does San Diego allow?
Tier 3 licenses are capped at 1% of the city's total housing units (excluding Mission Beach), per SANDAG estimates. Mission Beach's Tier 4 cap is 30% of its housing units. Oversubscribed tiers go to a lottery allocated by community planning area.
What does the license cost?
Per the city treasurer, effective March 1, 2025: Tier 1 is $33 plus $193; Tier 2 is $33 plus $284; Tiers 3 and 4 are $41 plus $1,129. All fees are non-refundable and licenses last two years.
Can I lose a Tier 3 license by not using it?
Yes. SDMC 510.0107(c) requires Tier 3 and 4 licenses to be used at least 90 days per year with quarterly reports. Licenses are non-transferable, and a third operating violation within 12 months can bring revocation.
Sources
Sources are named at the publisher level with their root domain, rather than linked or titled; every figure is verifiable at the named source. Municipal code sections are cited precisely because legal claims are not credible without them; every section quoted was read in the city's published code on August 31, 2026.
- San Diego Municipal Code, Chapter 5, Article 10, Division 1 (Short-Term Residential Occupancy), City of San Diego, 2022 editionsandiego.gov
- Short-Term Residential Occupancy program and Transient Occupancy Tax pages, Office of the City Treasurer, City of San Diego, 2026sandiego.gov