The state of Texas hosts some of the top vacation rental spots nationwide. Before deciding to buy an investment property to rent on Airbnb, however, you need to be familiar with Texas short term rental laws.
While there are no statewide regulations on this type of business, many cities like Austin and Houstin have introduced their own rules. In some cases, they significantly restrict vacation rental operations and even prohibit non-owner occupied STRs. In other cases, Texas Airbnbs are relatively unlimited.
In this post, we'll cover what you should know about Texas short term rental laws, laws by city, different taxes and documents to expect, and more. However, always check with an attorney or your city government, as these can and do change over time.
Need more help? To assess the performance of a specific address in Texas, submit your property to one of the best Airbnb management companies operating in the state.
Texas's definition of a short term rental
Texas does not have a statewide definition of short term rentals. Each Texas city has its own definition, which generally refers to residential dwelling units or parts of dwelling units that are rented out on a temporary basis for periods of less than 30 consecutive days. These definitions exclude hotels, motels, and bed and breakfast homes and inns. Meanwhile, STRs can include single family homes, duplexes, triplexes, quadruplexes, and multifamily units.
How to start a short term rental business in Texas
There are no state-level requirements and procedures for starting an Airbnb business in Texas. The process is determined by city authorities. Hosts need to familiarize themselves and ensure compliance with all Texas short term rental laws before renting out an Airbnb in the state.
To launch a vacation rental business in most Texas cities start by reviewing your:
- Local business license and tax licenses: Some Texas cities require STR operators to apply for a business license. All Texas Airbnb hosts need to pay hotel occupancy tax (HOT), which means they need to be properly registered and prepared to start reporting taxes.
- Local short term rental licenses, permits, or registration: Most local authorities require short term rental operators to hold a valid license, permit, or registration which is typically valid for one year. To apply, you'll need to submit information about the property, the owner, the operator, the agent, and the local contact person.
- Zoning district regulations: Some cities in Texas limit vacation rentals to certain zoning districts, usually outside residential areas. Owners need to comply with relevant restrictions to avoid fines.
- Local contact person: In general, Texas short term rental properties need to have a local contact person who is available to respond to emergencies 24/7.
- Maximum occupancy limits: Some locations restrict the maximum number of overnight guests to two persons per bedroom plus two additional persons per property.
- Minimum code of conduct: Local authorities require owners and operators to comply with health and safety regulations related to building codes, maximum occupancy, parking spaces, level of noise, and others.
- Insurance: In the majority of Texas markets, Airbnb rentals need to have valid short term rental insurance covering general liability.
- Fee payments: Applications for and renewals of licenses, permits, and registrations often require a fee of up to a few hundred dollars.
- Required paperwork: When applying for a license, permit, or registration, Texas Airbnb owners and operators need to submit a few documents. These include information about the owner, operator, and local agent, sketch of floor plans, sketch of parking spaces, and certification of compliance with applicable regulations, among others.
Finally, before launching a vacation rental business in Texas, investors need to research and carefully review county and city short term rental laws and regulations, which are usually available on local government websites. We've listed some of the most common ones by city later in this post.
However, since the Airbnb market is very dynamic, continue checking for potential updates to existing ordinances even after starting operations. It's a good idea to consult with a local legal expert in case anything seems unclear. In addition, investors can work with one of the top Airbnb management companies in Texas to meet all legal requirements and earn passive income from their property.
Short term rental licensing requirements in Texas
Texas authorities do not require Airbnb properties to be licensed or permitted at the state level. Meanwhile, the majority of Texas cities have enacted their own short term rental regulations according to which (typically annual) STR licenses, permits, or registrations are needed. Moreover, owners need to pay a hotel occupancy tax.
Applications for licensing can be submitted by owners or operators. The most commonly requested documentation includes information about the owner, operator, and local contact, property information, proof of insurance, compliance certification, and fee payment. Inspections are not usually required, but authorities retain the right to request an inspection at any point to ensure compliance with standards and regulations.
License renewals for short term rentals in Texas
Short term rental licenses, permits, and registrations in most cities in Texas are valid for 1 year, with some exceptions. They need to be renewed prior to the expiration date. This necessitates the payment of a renewal fee which does not exceed a few hundred dollars.
Required documents for Texas short term rentals
When applying for a STR license, permit, or registration to local authorities, Texas Airbnb hosts will need to submit a number of different documents.
The most frequently needed documentation and information to start a Texas short term rental business include:
- Personal ID
- Federal EIN
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Proof of ownership
- Proof of primary residence
- Sworn self certification for compliance with applicable standards and regulations
- Proof of payment of fees
Necessary documents are different in each location, so owners need to check out local short term rental rules before applying.
Texas short term rental taxes
In Texas, short term rental property owners typically need to pay the following taxes:
- Hotel occupancy tax (HOT): This tax is paid on all rentals of less than 30 consecutive days. There is a state, county, and city rate, and the total rate can reach up to about 20%.
- Rental income tax: This is paid at applicable federal and local income tax rates.
- Property tax: State and municipal property taxes have to be covered.
While taxes can amount to a significant portion of Airbnb income for Texas hosts, you can deduct multiple business operating expenses to lower your taxable income and reduce taxes.
Eligible deductibles include:
- Property depreciation (perform a short term rental cost segregation study to optimize tax benefits)
- Mortgage interest
- Mortgage insurance premium (MIP)
- Property tax
- Airbnb insurance
- Furniture, appliances, and electronics expenditure
- Airbnb property manager fees
- Cleaning fees
- Marketing and advertising expenses
- Accounting, legal, and other professional fees
- Maintenance expenses
- Home office and business travel costs
Texas vacation rental owners need to be familiar with and pay all taxes, but they can take advantage of available deductibles to reduce amounts due.
Statewide short term rental rules in Texas
Texas does not impose any state short term rental regulations. Nevertheless, Airbnb operators need to comply with local and city rules.
Most Texas local authorities require STRs to:
- Have a valid license, permit, or registration
- Comply with zoning regulations
- Comply with minimum standards of conduct
- Follow maximum occupancy limits
- Follow parking regulations
- Provide working life safety equipment
- Avoid excessive noise
- Pay a hotel occupancy tax
Violations of these or any other rules can lead to the revoking of licenses and the imposing of hefty fines.
Short term rental laws by Texas city
The State of Texas does not regulate short term rentals, but it also doesn't restrict the rights of local authorities to introduce their own Airbnb rules. Many Texas cities have imposed short term rental laws in order to ensure the safety of local residents and the stability of the local housing market.
Following are the vacation rental regulations in the best Texas cities for Airbnb rental properties.
1. Dallas, TX short term rental laws
The city of Dallas defines a short term rental as a full or partial rentable unit with one or more kitchens, one or more bathrooms, and/or one or more bedrooms that is rented to occupants for fewer than 30 consecutive days or one month, whichever is less.
Currently, there are no active Dallas short term rental laws, which means that owners can operate vacation rentals in an unlimited manner. The only requirement is to pay a hotel occupancy tax. In Dallas, the city hotel occupancy tax rate is 9%.
In June 2023, the City developed two new ordinances to govern short term rentals, but their enforcement was prohibited on December 6, 2023. Until now, they remain inactive. Nevertheless, investors thinking of buying a Dallas Airbnb property should periodically check the local government website as these ordinances introduce significant limitations to STR operators in the city.
In general, Dallas could be a great place to invest in Airbnb due to the lack of regulations and restrictions, but investors need to make sure this doesn't change before they buy a property.
2. Houston, TX short term rental laws
Like Dallas, the city of Houston does not have laws that regulate the short term rental industry. As long as Airbnb properties comply with zoning and building code requirements, they can operate without obtaining any licenses or permits.
However, it's important to note that local authorities are currently discussing a potential new Houston short term rental ordinance to introduce licensing requirements as well as other restrictions to protect the local community and housing market. Thus, investors interested in the Houston Airbnb market need to keep an eye for new legislation.
Meanwhile, Houston has a total hotel occupancy tax dedicated to the arts of 17%.
All in all, Houston is a good place to invest in Airbnb at the moment as there are no restrictions on operations.
3. Austin, TX short term rental laws
The city of Austin defines short term rentals as residences rented out for less than 30 consecutive days, and they are governed by Article 4 of the City Code of Ordinances.
Austin short term rental regulations distinguish between three different types of STRs that are regulated differently:
- Short Term Rental Type 1: This STR is owner-occupied or associated with an owner-occupied principal residential unit. In general, the rental cannot include the entire dwelling unit unless a partial unit includes at least the exclusive use of a sleeping room and shared use of a full bathroom, the owner is present during the rental, only one rental unit is rented at a time, and the rental is limited to a single party at a time. Dwelling units in a duplex or two-unit residentials and secondary apartments cannot be operated as STR Type 1.
- Short Term Rental Type 2: This STR is not part of multifamily residential use, is not owner-occupied, and is not associated with an owner-occupied principal residential unit. Such a rental cannot include the entire dwelling building and cannot include a dwelling unit in a duplex or two-unit residential or secondary apartment. Moreover, STR Type 2 cannot be located on a lot that is within 1,000 feet of another lot hosting an STR Type 2.
- Short Term Rental Type 3: This STR is part of a multifamily residential use and cannot include the rental of less than an entire dwelling unit.
All three types of Austin short term rentals need a short term rental use license which requires:
- Certification by the property owner or the property manager that the the property is not subject to outstanding City Code or state law violations
- Property owner's name, address, and phone number
- Local contact's name, address, and phone number
- Short term rental use street address
- Proof of property insurance
- Proof of payment of hotel occupancy taxes
- Application fee
Licenses are valid for one year and need to be renewed in a timely manner by paying a renewal fee and submitting necessary documentation. Austin Airbnb hosts and property managers need to comply with the following requirements:
- Meet occupancy limits
- Restrict the level of noise
- Follow parking restrictions
- Have a trash collection schedule
- Follow water restrictions
- Comply with burn bans
- Provide renters with a copy of the information package posted in the common area of each STR unit included in the license
Austin collects a hotel occupancy tax of 11%.
By enforcing these regulations, Austin seeks to balance the growing demand for short-term rentals with the needs of local residents, ensuring that the city's unique neighborhoods remain vibrant and livable while also supporting responsible Airbnb hosting. For potential investors, the question remains: is it worth it to invest in Austin? With its thriving tourism, tech industry, and population growth, Austin is a strong market, but consider the city’s regulations carefully to ensure long-term profitability and compliance.
4. San Antonio, TX short term rental laws
In the city of San Antonio, a short term rental is defined as a property that rents out all or a portion of a residential dwelling unit, apartment, condominium, or accessory dwelling for a period of less than 30 consecutive days to a particular tenant. This is done in Chapter 35 of the City Unified Development Code. This definition excludes hotels, extended stay hotels, motels, corporate apartments, and bed and breakfasts.
There are two types of San Antonio STRs:
- Short Term Rental Type 1: This STR is occupied by either the owner or an operator who resides on site. This includes single individual units that are not part of a multi-family buildings which are not owner occupied but are located on the same land parcel as the owner-occupied unit of common ownership. It also covers single individual units in a multi-unit building which is not owner occupied but is located on the same land parcel as an owner-occupied unit of common ownership. Type 1 can include the rental of less than an entire dwelling unit as long as the sleeping area has at least a shared use of a full bathroom.
- Short Term Rental Type 2: This STR is either not occupied by the owner or an operator or the owner or operator does not occupy another dwelling unit on the same property. In residential zoning districts, STRs Type 2 should be limited to no more than 12.5% of the total number of single family, duplex, triplex, or quadruplex units on the block face. In all zoning districts, STRs Type 2 in multi-family buildings (5+ units) are limited to 1 within buildings with 5-7 units and 12.5% of the total number of units on the same land lot or parcel within buildings with 8+ units. Type 2 cannot include the rental of less than an entire dwelling unit.
San Antonio Airbnb properties are regulated by Ordinance 2024-06-13-0433, which requires a short term rental permit in order to operate. Applications can be submitted in writing or electronically and require the following:
- List of all owners, operators, and agents including names, addresses, phone numbers, and emails
- Sketch or narrative describing the location of parking spaces
- Sketch of the floor plan identifying sleeping areas, proposed maximum number of guests, evacuation routes, and fire extinguisher locations
- Contact person's name, address, and 24/7 phone number
- Sworn self certification that the owner has met and will continue to comply with all standards and requirements
- $130 application fee
San Antonio short term rental permits are valid for three years. The renewal fee is $130 for Type 1 and $450 for Type 2. Permits are non-transferable.
Owners and operators need to meet strict requirements regarding:
- Maximum occupancy
- Parking
- Insurance covering personal liability injury of guests
- Conforming with all applicable city-adopted codes, regulations, and ordinances
- Fire extinguishers
- Smoke and carbon monoxide detectors
- Operable emergency escapes and rescue openings
- Evacuation plan posted in each unit or permitted sleeping area
- Informing guests of all relevant city codes and occupants' liability
- Prohibition of excessive noise and other disturbance outside the short term rental
- Requested inspections
The San Antonio city HOT is equivalent to 9%. Taxes need to be reported on a monthly basis even when there are no rental activities.
To conclude, San Antonio short term rental rules are conducive to operating both owner-occupied and non-owner occupied Airbnbs without any significant restrictions.
5. Fort Worth, TX short term rental laws
The City of Fort Worth's definition of short term rentals covers residential dwelling units, apartments, condominiums, and accessory dwellings available for rent for guest lodging for a period of up to 29 days. This excludes hotels, motels, bed and breakfast homes, bed and breakfast inns, and rentals of less than 30 days upon the sale of a dwelling unit when the tenancy is by the former owner. STRs are regulated by Ordinance 26005-02-2023.
To operate legally, owners need to have a valid short term rental registration. The application requires:
- Short term rental physical address
- Owner's name, address, phone number, email, and authenticated signature
- Operator's, agent's, and designated local responsible party's name, address, phone number, and email
- Certifications to ensure compliance with regulations
- $150 registration fee
Registrations are valid for one year, and the annual renewal fee is $100. Fort Worth short term rental registrations are non-transferable.
In terms of zoning districts, Fort Worth short term rentals are allowed in all mixed-use and most form-based, commercial, and industrial zoning districts, while they are prohibited in residential districts including A-#, AR, B, R1, R2, CR, C, D, and UR.
Fort Worth Airbnb properties and their operators need to comply with the following requirements:
- Maximum occupancy not exceeding two persons per bedroom plus two additional persons for no more than a total of 12 persons including children
- Renting to only one group at a time
- Maximum amount of motor vehicles limited to the number of available off-street parking spaces
- Minimum stay of one night
- Not advertising, promoting, or allowing special events on the premises
- Notice of instructions (host rules) provided to occupants
- Copy of the registration posted inside the front entrance(s)
- Assigned registration number used in all advertising of the STR
The Fort Worth hotel occupancy tax rate is 9%.
While Fort Worth short term rental laws allow non-owner occupied vacation rentals, they are restricted to non-residential zoning districts, which limits the potential for investors.
6. Galveston, TX short term rental laws
The City of Galveston defines a short term rental as the use of a residential dwelling unit or accessory building on a temporary or transient basis, for any period of less than 30 consecutive days. Galveston STRs are regulated by Ordinance No. 15-012.
Operating an Airbnb business in Galveston requires short term rental registration. To apply, the owner or operator needs to submit:
- Owner's or operator's name, address, phone number, and email
- Local contact person's name, address, 24/7 phone number, and email
- Short term rental unit's address
- Number of bedrooms and applicable overnight and daytime occupancy limit
- $50 registration fee ($250 for new rental properties and properties going from a management company to independent management)
Each individual property needs to be registered separately and have a registration number. Registrations are non-transferable.
Owners, agents, and representatives need to provide a brochure or alternative publication to renters with information about the minimum standards of conduct.
Vacation rentals are allowed in all zoning districts on the island except R-0.
Violations are subject to penalties of up to $2,000.
In Galveston, the city hotel occupancy tax is 9%. Taxes need to be reported on a monthly basis. They can be reported quarterly in case the property does not generate more than $500 per month and $1,500 per quarter.
In conclusion, Galveston short term rental regulations allow investors to operate one or more non-owned occupied vacation rentals in the city.
7. Corpus Christi, TX short term rental laws
The City of Corpus Christi definition of short term rentals includes properties that rent all or a portion of a residential dwelling unit for a period between 12 hours and 30 days. This excludes hotels and bed and breakfast homes.
Corpus Christi defines two types of STRs:
- Type 1 or Owner/Operator Occupied STR: This STR is the primary residence of the owner/operator. Type 1 STRs are allowed throughout Corpus Christi except Padre/Mustang Island.
- Type 2 or Non-Owner/Operator Occupied STR: This STR is not 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, except in Padre/Mustang Island, where they are prohibited.
All Corpus Christi Airbnb properties need to have a short term rental permit, applying for which requires:
- List of all owners, operators, and agents including names, addresses, phone numbers, and emails
- Sketch of the floor plan identifying sleeping areas, proposed maximum number of guests, evacuation routes, and fire extinguisher locations
- Contact person's name, address, and 24/7 phone number
- Sworn self certification that the owner has met and will continue to comply with all standards and requirements
- $250 permit fee
Corpus Christi short term rental permits are valid for one calendar year and need to be renewed every January.
It's worth noting that Corpus Christi authorities have been discussing changes to the existing short term rental ordinance, so interested investors need to watch out for potential edits.
The Corpus Christi City HOT is 9%.
Generally speaking, Corpus Christi could be a good place to invest in a vacation rental as long as investors make sure that the STR density has not been exceeded in their location. Further, investors should be aware of major hurricane-related events in Corpus Christi, and ensure they have appropriate insurance in place.
Bottom line
In the absence of statewide regulations, Texas short term rental laws vary from one city to another markedly. While locations like Dallas and Houston do not currently regulate vacation rentals, other markets like Austin prohibit non-owner occupied Airbnbs, with cities such as San Antonio, Fort Worth, Galveston, and Corpus Christi being in between.
Despite varying city regulations, Texas remains an attractive state for Airbnb investments due to its booming tourism industry, diverse markets, and relatively lenient short-term rental laws in many areas.
