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ResourcesseparatorLegal for Real Estate Investors

Texas Airbnb and Short Term Rental Regulations (2024 Update)

Key takeaways

Texas Airbnb and Short Term Rental Regulations (2024 Update)

Texas has minimal state-level regulations for short term rentals, allowing city governments to determine their own laws and regulations. This makes it a favorable location for investing in vacation rentals, such as those offered through Airbnb. Texas is one of the top markets for vacation rental investments in the US, due to its strong economy, excellent educational institutions, outdoor activities, and good weather.

In addition to the high demand for vacation rentals, the state also offers affordable property prices and a favorable business environment. However, it's important to understand the state and city-level laws and regulations before buying a property for use as a short term rental in Texas.

If you're interested in turning your property into a short-term rental, but you're not sure if it's legal under Airbnb regulations, Awning can help. As a nationwide property management company, we are well-versed in the laws and regulations surrounding short-term rentals. Contact an Awning agent today and let us help you determine if your property qualifies. Call or text 415-941-5206

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Texas’s Definition of a Short Term Rental

Generally speaking, within the State of Texas and its cities, a short term rental is defined as the renting out of a residential dwelling unit or an accessory building on a temporary basis for a period of less than 30 consecutive days. This is also referred to as a vacation rental.

This definition is widely accepted by the cities within Texas as well.

The Texas definition of short term rentals is very similar to the definitions used by other states such as Florida and California. However, Texas does not impose any state-level regulations and limitations. By comparison, Florida requires all vacation rentals to be registered, and California restricts the maximum transient occupancy to 180 calendar days in a year for non-owner occupied properties.

Starting a Short Term Rental Business in Texas

There are no specific Texas short term rental laws that stipulate the process of starting an Airbnb business there. Each city is free to introduce its own rules in an attempt to control the vacation rental industry and ensure that it develops in a responsible way.

The only requirement at the state level is to register with the Texas Comptroller’s Office. This is needed in order to be able to start collecting a state hotel occupancy tax. After an Airbnb host registers with the Office, they receive a hotel tax permit and instructions on how to file their taxes.

Short Term Rental Licensing Requirement in Texas

Running a vacation rental business in Texas does not require getting a license at the state level. However, many major cities have specific licensing requirements. As an investor, you have to check the license requirements in your market before listing your property on a short term rental platform like Airbnb, VRBO, or Booking.com.

License Renewals for Short Term Rentals in Texas

Since state-level licenses are not required by the Texas short term rental laws, there are no expiry dates and renewal dates that investors need to consider. With regards to city-level vacation rental licenses, in most cases they are valid for a year, after which a host needs to renew their license in order to continue running their Texas vacation rental legally.

Required Documents for Texas Short Term Rentals

The documents that are needed to submit a short term license application vary from one city to another in the Texas real estate market. Airbnb hosts have to check the specific requirements in their location to ensure compliance with the local rules and regulations.

Texas Short Term Rental Taxes

Owners of short term rental properties in Texas are expected to file and pay two types of taxes:

  • State hotel occupancy tax: Collected by the Texas Comptroller Office.
  • Local lodging tax: Collected by the local tax authorities.

The State of Texas imposes a 6% (0.06) state hotel occupancy tax for stays of 29 consecutive calendar days or less. This tax needs to be filed and paid monthly or quarterly. The frequency and the due dates are determined when you register with the Texas Comptroller Office. In both cases the due date is the 20th of the month after the end of the filing period.

Some counties and cities charge additional local hotel occupancy taxes which are managed by the local taxing authorities. The rates vary but are generally within a 7%-limit. Local tax authorities have their own due dates for filing and paying charges.

As an investor, you should be familiar with the types of revenue and fees that are taxable according to the Texas short term rental laws. Pet fees, cleaning fees, cancellation fees, cleaning fees, and laundry fees are taxable, while early or late departure fees and child care fees are not taxable.

In order to pay the hotel occupancy tax, a vacation rental owner needs to register with the Texas Comptroller Office. This means completing Form AP-102, Hotel Occupancy Tax Questionnaire and sending it to the Comptroller's local field office. In Texas you do not need to form an LLC to register with the tax authorities.

If, on the other hand, you list your property on vacation rental platforms that collect state hotel occupancy taxes on behalf of the host, you do not need an account with the Texas Comptroller Office and you do not need to file taxes. As of May 1st, 2017 Airbnb has been collecting and remitting this tax on short term rentals booked through the Airbnb platform. Similarly, HomeAway - now Vrbo - started doing the same as of April 1st, 2019.

When you rent out your property on any of these websites, the tax will be automatically deducted by the listing platform and paid on your behalf. This makes managing a short term rental property in Texas much easier and more efficient. However, if you list your property on multiple platforms and some of them do not offer this service, you still need to obtain a hotel tax permit and file your taxes for reservations made through these other platforms.

Importantly, if your guests fall within any of the following categories, they are exempt from paying hotel occupancy tax:

  • The U.S. government and its employees traveling on official business
  • Foreign diplomats possessing a tax exemption card issued by the U.S. Department of State
  • Some Texas state officials with special hotel tax exemption cards
  • Certain non-profit entities and their employees traveling on official business

In addition to being familiar with the Texas short term rental taxes, a smart investor needs to study the county- and city-level taxes as well in order to run their business legally.

For more information on the matter, you can check the Texas Comptroller Office website.

Statewide Short Term Rental Rules in Texas

There are no statewide short term rental rules and regulations that Texas hosts need to comply with. The state has largely left it up to local county and city authorities to impose laws that regulate the vacation rental industry.

To familiarize yourself with the specific laws in your market, you should consult the local authority’s website.

Short Term Rental Rules By Texas City

The decision of the State of Texas to keep short term rentals generally unregulated is in an effort to not suppress the further development of this industry which is an important contributor to the local economy. Being the fourth most visited state in the United States, Texas benefits a lot from the tourism sector in general and the vacation rental business in specific.

Nevertheless, the state does not prevent the introduction of short term rental regulations at the local level in order to give counties and cities the right to protect their communities from some of the negative effects of short term visitors.

While in theory state rules prevail over county and city rules, in the case of Texas the state Airbnb regulations are so vague that the city-level laws rule this industry.

1. Austin, Texas Short Term Rental Laws

Owners of vacation rental properties in Austin need to obtain an operating license. This applies to all properties including rooms and guest houses that are rented out for less than 30 consecutive days at a time.

The Austin short term rental laws categorize such properties into three types:

  • Type 1 - Owner-Occupied Single-Family Home, Duplex, Multifamily: This is an owner-occupied property or a property associated with an owner-occupied principal residence. This can include the rental of an entire dwelling unit or only a part of the unit, including a minimum sleeping room. If the latter, renting is limited to a single party of individuals, and the owner is generally present during the rental.
  • Type 2 - Non Owner-Occupied Single-Family Home or Duplex: This is a property which is not owner-occupied and which is not associated with an owner-occupied principal residence. This includes the renting of an entire dwelling unit which is a single-family home or a duplex. Based on the existing rules in Austin, a Type 2 short term rental cannot be located on a lot that is within 1,000 feet from a lot where another Type 2 short term rental is located.
  • Type 3 - Non Owner-Occupied Multifamily: This is a non-owner occupied property which is part of a multifamily use property such as an apartment or a condo and can include the rental of the entire dwelling unit. To obtain a license, the owner needs to provide documentation on the total number of buildings on the property and the number of units per building while complying with applicable geographical caps.

When applying for a license to run any of the three types of Austin vacation rentals, the owner must provide ownership documentation that matches the deed recorded with the Travis County Clerk’s Office or the Williamson County Clerk’s Office.

Operating license applications can be submitted online or by mail to the Austin Code Department at the City of Austin. The following documents are required:

  • An application for a STR operating license.
  • A non-refundable fee of $643 including a $591 application fee, a $50 notification fee, and a $2 technology fee.
  • Proof of property insurance.
  • Proof of payment of City of Austin Hotel Occupancy Tax, if applicable, or a copy of the zero report filed in case of no renters this quarter.
  • Certificate of Occupancy from the Development Services Department.
  • Driver’s license.
  • Notarized authorization from the owner in case of third party agents managing the property.

Importantly, a license is valid for a year and needs to be renewed before it expires.

The documents needed to renew an operating license for an Austin short term rental include:

  • A non-refundable fee of $355.
  • Proof of current property insurance.
  • Proof of payment of City of Austin Hotel Occupancy Tax, if applicable, or a copy of the zero report filed in case of no renters this quarter.

Airbnb investors need to know that processing Austin short term rental applications takes 8-10 weeks due to staffing shortages. Thus, they should apply early to be able to rent out their property legally when ready.

Advertising an unlicensed short term rental can result in a fine of $2,000 per day.

The City of Austin imposes further requirements to assure the safety of vacation rentals. In specific, the maximum occupancy of a short term rental is ten adults at a time or six unrelated adults.

There are further requirements related to outdoor assemblies, noise, sound equipment, and loud music.

More information on licensing can be obtained by emailing strlicensing@austintexas.gov.

2. Dallas, Texas Short Term Rental Laws

Currently there are no specific Dallas short term rental laws, except for tax purposes. However, debates within the city’s legislative authorities have been heated for a few years now. This means that Airbnb hosts should check the Dallas City Hall’s website for any latest updates before buying a property to rent out on a short term basis.

Similar to the Texas short term rental laws, the Dallas City Code defines a STR as a hotel for hotel occupancy tax purposes. Vacation rentals in Dallas need to have a registration form on file with the City before beginning to report and pay taxes. In case of change of ownership, an updated or new registration form has to be submitted.

The registration process can be completed online, via regular mail to the Special Collections Unit, or in person at the City Hall.

The hotel occupancy tax due to the City of Dallas has to be paid on a monthly basis. Paying within the due date can result in a 1% discount, while late payments are subject to penalty.

Houston, Texas Short Term Rental Laws

The City of Houston has not enacted Airbnb-specific ordinance yet. Nevertheless, short term rentals in this Texas city are affected by the Multiple Dwelling Law.

According to this law, multifamily rental properties are categorized as:

  • Hosted Rentals: Hosted rentals can be rented out for a limited amount of time as a vacation rental, but the host has to be available on the property throughout the stay of the guests. Meanwhile, guests have to have access to all parts of the rental property throughout their stay. 
  • Unhosted Rentals: This refers to rentals where the host is not present on the property throughout  the stay of the guests. Unhosted rentals of less than 30 days are not allowed in Class A Dwellings.

Houston imposes a 7% hotel occupancy tax on short term rentals. Taxes are reported and paid quarterly. They must be received or postmarked by the last day of the month after the end of the relevant quarter. 

3. Fort Worth, Texas Short Term Rental Laws

Fort Worth has some of the most limiting short term rentals laws in Texas. In 2018, Fort Worth passed an ordinance which defined short term rentals as stays of less than 30 days. In addition, while it allowed such rentals in mixed-used and industrial zones, it banned vacation rentals in areas zoned as residential.

These restrictive measures have become the reason for many Airbnb hosts to operate illegally in residential zones. Since the city code does not require short term rentals to be registered, it is up to hosts to pay the 9% hotel occupancy tax voluntarily.

Realizing this reality, in June 2022, the city hired a company to complete initial short term rental identification work within 60 days. Afterwards, Fort Worth might consider changes in legislation upon reviewing the collected data and conducting consultations with local associations, residents, and property managers. These changes might include potential zoning options for vacation rentals operating illegally in residential-zoned districts.

4. Galveston, Texas Short Term Rental Laws

Galveston has ordinances which make short term rentals legal but regulated. According to Galveston Airbnb laws, a short term rental is defined as a dwelling unit that is used for overnight lodging accommodations offered to guests for compensation for no longer than 30 days.

To run a legal Galveston Airbnb business, you need to register your short term rental with the Park Board of Trustees. The registration can be completed online and does not require more than a few minutes. New registrations require a fee of $50.

The Park Board provides an online system to report and pay taxes on a monthly or quarterly basis. Vacation rentals which generate $500 in taxes per month or $1,500 per quarter can report quarterly. The rest have to file their taxes monthly. Importantly, a report has to be submitted even if a property did not generate any revenue over a reporting period. Otherwise, the host faces a fine of $25.

The Galveston hotel occupancy tax rate is equivalent to 9% charges on gross revenue which includes the nightly rental rate, cleaning fee, pet fee, smoking fee, damages, and others.

When listing a property on platforms like Airbnb and Vrbo which remit the state hotel occupancy tax, city taxes are also collected and remitted by them.

Overall, Galveston is one of the most Airbnb friendly cities in the Texas short term rental market.

5. San Antonio, Texas Short Term Rental Laws

San Antonio is yet another Texas city where both owner-occupied and non-owned occupied short term rentals are legal and relatively unrestricted.

The San Antonio, Texas short term rentals laws define an STR as a residential dwelling unit, apartment, condo, or accessory dwelling where sleeping areas are being rented out to overnight guests for a period between 12 hours and 30 consecutive days.

Furthermore, the City of San Antonio categorizes two types of vacation rentals:

  • Type 1 where the property is a primary residence and the owner or operator resides on it. Type 1 short term rentals do not meet any density limitations.
  • Type 2 where neither the owner nor the operator occupies the property. Type 2 short term rentals face density limitations. In specific, Type 2 STRs can make up only up to 12.5% of the properties on a block face. In the case of multifamily buildings, up to 12.5% of the total number of units can be operated as Type 2 STRs.

Both types of Airbnb rentals require a permit obtained through the Development Services Department (DSD). Applying for a permit requires the following steps:

  • Set up an account with San Antonio’s Finance Department to pay the hotel occupancy tax.
  • Download an application from the DSD website, fill it in, and submit it to the DSD for review.
  • Pay a $100 application fee.

Unlike most other Texas cities where annual permits are needed, short term rental permits in San Antonio are valid for three years. A separate permit is needed for each individual unit. Moreover, permits are not transferable.

Operating an Airbnb business without a permit can result in a minimum fine of $500 per violation per day.

Similar to other Texas markets, San Antonio vacation rental hosts are expected to pay a hotel occupancy tax. The City of San Antonio’s rate is 9% including a 7% general occupancy tax and a 2% fee for the Convention Center expansion. Additionally, a 6% hotel occupancy tax is paid to the State of Texas.

City-level taxes need to be filed on a monthly basis. The due date is by the 20th of the month following the reporting period. Tax forms need to be filed even for months with $0 revenue. Late tax reportings are subject to penalty fees.

With regards to zoning, San Antonio short term rentals are allowed in all residential zoning districts as well as in commercial zoning districts O-1, O-1.5, O-2, NC, C-1, C-2, and D. They are banned from C-3, I-1, and I-2 zoning districts. You can find the zoning district of your property on the San Antonio government website.

More information on the San Antonio Airbnb regulations can be obtained from the DSD by calling (210) 207-1111.

6. South Padre Island, Texas Short Term Rental Laws

The City of South Padre Island has enabled its own ordinance on short term rentals as well. The city defines an STR as a residential dwelling including a single-family residence, apartment, residential condo unit, or other residential real estate improvement where the public can obtain sleeping accommodations in exchange for compensation for a period of less than 30 consecutive days. This definition is fully in line with the Texas short term rental laws.

Owners and operators are required to obtain a short term rental registration from the Convention Center Department before running an Airbnb business in the South Padre Island market. To apply for a registration, the following are needed:

  • The name, address, email, and phone number of the owner or operator.
  • The name, address, email, and 24/7 phone number of the local contact person. The local contact person should be always available to respond in person within one hour to any complaints.
  • The name and address of the property.
  • The number of bedrooms and applicable daytime and overnight occupancy limit of the vacation rental.
  • The property ID number as listed on the Cameron County Appraisal District.
  • A registration fee of $50 per rental unit. The registration fee is waived for rentals that have been properly remitting the hotel occupancy tax.

The short term rental registration process requires the following steps:

  • Apply for a taxpayer account to pay the city taxes through Avenu Insight.
  • Apply for a Texas taxpayer ID to pay the state hotel occupancy tax.
  • Apply for a short term rental permit with Avenu Insight.

In addition to the Texas hotel occupancy tax, South Padre Island Airbnb hosts have to pay a local tax of 11% including an 8.5% city hotel occupancy tax, a 2% city venue tax, and a 0.5% county venue tax.

Permits are valid for one year after issuance or a previous renewal and need to be renewed afterwards to run a vacation rental business.

7. Canyon, Texas Short Term Rental Laws

Short term rentals are legal in Canyon and do not face local restrictions. The only requirement is for owners or operators to complete a hotel and lodging registration. The form requires only some basic information including:

  • Name of the lodging or business
  • Address of the lodging
  • Name of the owner, manager, or contact person
  • Mailing address if different
  • Contact phone number
  • Contact email address

Hosts are required to pay both state and city hotel occupancy taxes. While Airbnb and Vrbo collect and remit state-level taxes on behalf of Texas owners, they do not remit taxes to the city of Canyon.

Thus, vacation rental owners are expected to report and pay city hotel occupancy taxes on their own. The local rate is equivalent to 7%.

Local taxes need to be reported, collected, and remitted by the 15th of the month following the end of the reporting quarter. Failure to report by this due date may result in fines and penalties.

8. Lake Travis, Texas Short Term Rental Laws

There are no short term rental regulations applying to the entire Lake Travis area. Each city may or may not have policies regulating the vacation rental industry there. Airbnb hosts need to familiarize themselves with these policies and assure compliance.

Following are the Airbnb laws by city:

Bee Cave, Texas

The City of Bee Cave does not have short term rental ordinances in the city code. Owners need to comply with the Texas short term rental laws. The local rate is equivalent to 1.93%, which is significantly below the rates prevailing in other Texas cities.

Lakeway, Texas

The City of Lakeway has enacted legislation on short term rentals. These are defined as the rental of a residential dwelling for a period between one day and 27 consecutive days. Renting out on a short term basis in Lakeway requires a special-use permit. The application can be found on the Lakeway government website.

Applying for a special-use permit requires a $250 fee. First-time permits are granted for one year and can then be renewed for two years. Moreover, vacation rentals need to be at least 1,000 feet from one another.

The local hotel occupancy tax equals 7% and is collected on a quarterly basis.

Rollingwood, Texas

The City of Rollingwood prohibits short term rentals altogether. Trespassers can be punished with a fine of up to $2,000 per day.

West Lake Hills, Texas

In the City of West Lake Hills short term rentals are allowed for residents who want to use their homestead residence or another residence. A special-use permit is required.

To apply for the permit, vacation rental owners need to provide:

  • A complete application
  • Proof of ownership for homestead
  • Proof of current septic license or proof of connection to the City’s wastewater system
  • Certification that the home is not violating any state or local legislation
  • A $250 application fee

Initial permits are valid for one year. Afterwards, they can be renewed for two years.

9. Corpus Christi, Texas Short Term Rental Laws

In June 2022 the Corpus Christi City Council approved a new short term rental ordinance. The newly adopted ordinance amends the Unified Development Code (UDC) by allowing short term rentals with restrictions in single-family residential districts citywide but not in single-family residential districts within the Padre/Mustang Island Area Development Plan area. Meanwhile, renting out on a short term basis is allowed in multifamily and commercial zoned areas of the Padre/Mustang Island and Flour Bluff areas.

An STR refers to any renting out of an entire or a portion of a residential dwelling for more than 12 hours and less than 30 consecutive days, in line with the statewide Texas short term rental laws.

There are two types of Corpus Christi short term rentals:

  • Type 1 - Owner/Operator Occupied STR: This is a STR which functions as the primary residence of the owner/operator. Type 1 STRs are allowed throughout the city without facing any limitations except for Padre/Mustang Island.
  • Type 2 - Non-Owner/Operator Occupied STR: This is a STR which does not constitute the primary residence of the owner/operator. Type 2 STRs are limited to 15% of the block face and are awarded on a first come, first served basis. They are not allowed on Padre/Mustang Island.

All short term rental owners and operators within the city limits need to apply for a registration permit. Applications can be submitted online on the Corpus Christi government website.

To apply for a registration, Corpus Christi Airbnb hosts need to provide:

  • Names, addresses, email addresses, and phone numbers of all owners, operators, and agents.
  • A sketch of the floor plan identifying sleeping areas, proposed maximum number of guests, evacuation routes, and fire extinguisher locations.
  • The name, address, and 24-hour phone number of the contact person.
  • A sworn, self-certification by the owner that the rental has met and will continue to meet all necessary standards and requirements such as insurance coverage and annual fire extinguisher inspection.
  • A permit fee of $250 per year.

Short term rental registration permits are valid for one calendar year in the Corpus Christi market. They need to be renewed every January to operate a vacation rental business legally.

For general questions on the registration process, you can email STRregistration@cctexas.com.

For technical questions and help with the registration permit application, you can email support@munirevs.com or call 888-751-1911.

Similar to the rest of the State of Texas, Corpus Christi hosts are required to pay a city hotel occupancy rate which is equivalent to 9% of taxable revenue. Taxes are reported and filed monthly. The due date is by the last day of the month following the reporting period. Early payments are encouraged by a 1% discount, while late payments are penalized.

When listing on Airbnb or Vrbo, the owner is not responsible for paying the city-level tax themselves as these platforms collect the tax from travelers and remit it to the city. Nevertheless, owners and operators need to file a zero dollar tax form on a monthly basis.

Takeaway

With Texas being one of the most popular travel destinations in the US, local Airbnb hosts have seen major success. The fact that the state does not apply restrictions on vacation rentals has contributed majorly to the spread of the Airbnb industry. Nevertheless, individual cities have varying local rules and regulations. Smart investors need to study both the statewide Texas short term rental laws as well as those at the local level to make a good investment decision.

If you're interested in turning your property into a short-term rental, but you're not sure if it's legal under Airbnb regulations, Awning can help. As a nationwide property management company, we are well-versed in the laws and regulations surrounding short-term rentals. Contact an Awning agent today and let us help you determine if your property qualifies. Call or text 415-223-2830.

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