Regulations

Keeping up with Short Term Rental regulations in Austin, Texas can be a bit daunting for property owners. Below, you'll find information on the types of STRs permitted in Austin, the historical context of STR regulation, current licensing requirements, and applicable state and city occupancy taxes. Let PMI ATX Properties simplify compliance and tax management for your vacation rental.

TYPES OF SHORT TERM RENTALS (STRs)

1. Type 1 STR: An owner occupied principal residential unit that is rented for less than 30 consecutive days.
2. Type 1 STR: A non-owner-occupied residential rental of an entire dwelling (not part of a multi-family residential or condominium unit) that is rented for less than 30 consecutive days.
3. Type 1 STR: A residential dwelling that is part of a multi-family or condominium unit that is rented for less than 30 consecutive days. Type 3 operating licenses are governed by density caps.

Each type of STR has its own annual application and rules.

STR REGULATION HISTORY

• In 2016, Austin stopped issuing new non-owner occupied STR licenses (Type 2 STR licenses) for short-term rentals in certain residential areas.
• The city said there were more than 2,000 authorized short-term rentals in Austin. But online listings show there are thousands more out there — which were seemingly unlicensed.
• In August 2023, the the United States District Court, Western District of Texas, Austin Division ruled the following:
• Type 2 licenses must be made available in the same parts of the city where Type 1 (aka owner-occupied) licenses are available.
• Individuals who owned their property prior to the approval of the 2016 ordinance are eligible for a Type 2 license.

STR LICENSING REQUIREMENT IN AUSTIN

1. These STR requirements apply to all properties, including rooms and guest houses, that are rented for fewer than 30 consecutive days.
2. Owners of STRs are required to obtain an operating license annually. If the ownership and/or the STR’s street address have changed, a new application is required.
3. The cost of a new STR license is ~$900 (note: this non-refundable STR application fee is subject to change).
4. Proof of property insurance, Certificate of Occupancy, state-issues identification, and other documents are required as part of a complete STR Application.
5. Once a STR application has been completed and submitted in full along with the application fee, processing times are as follows:
1. Type 1 licenses - 6 – 8 weeks
2. Type 2 licenses - 6 – 8 weeks
3. Type 3 licenses - 12 – 14 weeks
6. A STR License is required to advertise or promote a STR property.
7. A STR may not:
1. Be used by more than 10 ten related adults (or 6 unrelated adults) at one time, unless a stricter limit applies.
2. Host any inside assemblies (wedding, bachelor or bachelorette party, concert, sponsored event, or any similar group activity other than sleeping) between 10:00 p.m. and 7:00 a.m.
3. Host an outside assembly of more than six adults between 7:00 a.m. and 10:00 p.m.

STR STATE & CITY OCCUPANCY TAX RATES

1. The State of Texas and City of Austin STR Occupancy Tax combined is 17% of the lodging cost of an STR located in Austin city limits. This is made up of the following:
1. STATE: Texas State hotel occupancy tax rate is 6% of the lodging cost of the STR.
2. CITY: The City of Austin's Hotel occupancy tax rate is 11%, consisting of a 9% occupancy tax and an additional 2% venue project tax. Note in other neighboring cities, rates may differ.
2. Every STR property owner (or contracted Property Manager) must collect the STR Occupancy Tax and must file a Report of Hotel Occupancy Tax with the City of Austin Controller’s Office as well as the Texas Comptroller’s office.
3. STR Guests usually pay all STR State and City occupancy taxes at the time of the booking.
4. There are some exceptions:
1. Short-term rentals located in Austin's Limited Purpose Jurisdiction (LTD) are not subject to City of Austin STR Occupancy Tax but are required to obtain a license.
2. Short term rentals located in the Extra Territorial Jurisdiction (ETJ) do not need a license or pay local STR Occupancy Tax.

FULL SERVICE STR REGULATIONS & OCCUPANCY TAX MANAGEMENT

PMI ATX Properties offers full-service STR Property Management services that include handling all of STR regulations and associated tax management. This includes the following:

1. Filing for new STR Licenses as well as timely filing annual STR license renewals with the City of Austin and surrounding municipalities. Note renewals can be granted 60 days prior to the STR License expiration date.
2. Ensuring the correct State and City occupancy tax rates are being charged to the guest at the time of booking and deposited into a trust account until the time of payment to the State and local tax authorities.
3. Paying Occupancy taxes to the State and Local municipalities on the associated frequency required by each taxing authority.
4. Providing detailed monthly Property Owner statements that break down all property charges including the correct state and local occupancy taxes charged, collected and ultimately paid to State and City taxing authorities.

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