Berkeley’s Empty Homes Tax: What Rental Property Owners Need to Know

Berkeley’s Empty Homes Tax (Measure M) took effect January 1, 2024. It imposes a steep tax on residential rental units that are vacant for more than 182 days in a calendar year, unless the unit qualifies for a specific exemption or exclusion period.

The tax is not based solely on how the unit is registered. The City may also investigate complaints or use public records to determine whether a unit is in use. If a unit is found to be vacant without a qualifying exemption, the financial penalties are significant.

What Triggers the Tax

A unit may be subject to the Empty Homes Tax if:

• It is a residential rental unit, and

• It is vacant more than 182 days in a calendar year, and

• It is not lawfully exempt or excluded from the tax

Vacancy days do not need to be consecutive. The City uses Rent Board registration data, building permit records, Rental Housing Safety Program filings, and reports from the public to identify potentially vacant units. Site visits may be conducted.

Even if a unit is not registered as "Not Available for Rent" (NAR), it can still be taxed if it appears to be unused.

Who Is Exempt

These exemptions remove a unit or property from the tax altogether:

Owner-Occupied Properties (up to 4 units):
Natural persons or trusts are exempt if they live on the property as their primary residence, the property contains four or fewer residential units (including ADUs and JADUs), and they own no other residential property in Berkeley.

501(c)(3) Nonprofits:
Organizations exempt from income taxation under the IRS code may also qualify.

Properly Registered Units in Use:
Units correctly registered as Owner Occupied, Owner Use, or Occupied Rent-Free are not considered vacant. These units must be actively used and properly updated with the Rent Board.

How Much Is the Tax?

Example: Four unrented units in a multi-unit property could cost $24,000 in year one and $48,000 in year two.

Vacancy Exclusion Periods

The following periods of time do not count toward the 182-day vacancy threshold. If a unit qualifies under one or more of these categories, the owner must submit a Vacancy Exclusion Period Claim Form along with documentation:

1. Building Permit Application Period
   Begins when a permit application is submitted for repair or rehab and ends when it is approved or denied (up to 1 year).

2. Rehabilitation Period
   Covers up to 2 years after a permit is issued for major repair or construction.

3. Disaster Period
   Applies if the unit became uninhabitable due to fire, flood, or catastrophe, unless caused by the owner’s negligence.

4. Owner Death Period
   Protects units left empty following the death of the sole occupant-owner, for up to 2 years or the duration of probate.

5. Homeowners’ Exemption Period
   Covers units used as the owner's principal residence with a valid California homeowners’ exemption.

6. Owner In Care Period
   Applies if the former resident is in long-term medical or supportive care.

7. Lease Period
   Covers time during which the unit is under a bonafide lease to a tenant (not family or short-term guests).

What About Units Being Renovated or Marketed?

If a unit is under renovation:

• You must pull building permits before claiming a vacancy exclusion.

• Cosmetic work without permits does not qualify.

• The permitted work must render the unit uninhabitable to be exempt.

If a unit is being advertised but sits vacant for over 182 days, it will be taxed unless documentation shows continuous rental efforts or another exclusion applies.

Compliance Tips

• Register each unit correctly with the Rent Board

• Update occupancy status immediately when it changes

• File exemption or exclusion claims within 30 days of notice

• Pull permits early and document all renovation work

• Be responsive to City outreach or inspection requests

If You Receive a Notice

• You will have 30 days to file a claim

• If denied, the Finance Department will issue a tax bill

• Bills must be paid within 30 days or face a 10% penalty plus 1% monthly interest

• An appeal process will be available once finalized

Questions?

Empty Homes Tax Program
📞 (510) 981-7368 ext. 5
📧 emptyhomes@berkeleyca.gov

Rent Board Registration Unit
📞 (510) 981-7368 ext. 2
📧 RentRegistry@berkeleyca.gov

Billing Questions (Finance Dept.)
📞 (510) 981-7200
📧 finance@berkeleyca.gov