Regulations

Keeping up with Short Term Rental regulations in The City of Austin, Texas can be a bit daunting for property owners. Below, you'll find information on the types of STRs permitted in The City of 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.

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• Types of Short-Term Rentals (STRs)

  Within the city limits of Austin, Texas, there are three types of Short Term Rentals. Each type of STR has its own annual application and rules.

  1. Type 1 STR

     An owner occupied principal residential unit that is rented for less than 30 consecutive days.

  2. Type 2 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 3 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.

• The City of Austin STR Regulation History

  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.

  2023

  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.

• The City of Austin STR Licensing Requirements

  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:
     • Type 1 licenses - 6 – 8 weeks
     • Type 2 licenses - 6 – 8 weeks
     • Type 3 licenses - 12 – 14 weeks
  6. A STR License is required to advertise or promote a STR property.
  7. A STR may not:
     • Be used by more than 10 ten related adults (or 6 unrelated adults) at one time, unless a stricter limit applies.
     • 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.
     • Host an outside assembly of more than six adults between 7:00 a.m. and 10:00 p.m.
     • Use or allow the use of sound equipment that produces sound in excess of 75 decibels at the property line between 10 a.m. and 10 p.m.

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• 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:
     • STATE: Texas State hotel occupancy tax rate is 6% of the lodging cost of the STR.
     • 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.

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• 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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• STR Regulations in Cities Surrounding The City of Austin

  There are many cities that surround The City of Austin that have varying STR regulations. These include, but not limited to, the following:

  1. Bee Caves: The City of Bee Cave does not have STR ordinances in the city code. Owners need to comply with the Texas short term rental laws. The city has a low hotel occupancy tax rate significantly lower than other Texas cities.
  2. Cedar Park: Requires all STRs in Cedar Park to collect a city hotel occupancy tax of 7% percent of the rental price for properties with stays less than 30 days.

  3. Dripping Springs: Dripping Springs STR regulations require hosts to obtain a permit and pay a hotel occupancy tax. The City of Dripping Springs has a 7 % Hotel Occupancy Tax Rate forSTRs located in the City Limits and the Extraterritorial Jurisdiction. Reservation services like AirBnB or VRBO DO NOT remit hotel occupancy taxes to the City of Dripping Springs on behalf of their property owners. Property owners/managers should make sure to charge and collect the appropriate hotel tax and remit it to the City of Dripping Springs.
  4. Lakeway: The City of Lakeway only allows 25 STR licenses. There is a 2+ year waiting list.
  5. Rollingwood: Rollingwood does not allow STRs.
  6. Round Rock: Property owners must obtain a STR permit, pay applicable taxes, and follow certain safety and noise restrictions. Hosts must also provide contact information to guests and respond promptly to any issues.
  7. Spicewood: STR regulations in Spicewood are managed by Travis County, which requires hosts to obtain a permit and pay hotel occupancy taxes. Additionally, there are noise and parking regulations that hosts must adhere to.
  8. The City of Sun Valley: STRs are allowed within the Single-family Residential Districts of the City of Sunset Valley. Registrations are effective for two (2) years, and are approved administratively.
  9. The Hills: STRs are allowed in The Hills, but have strict HOA guidelines that must be followed.
  10. Village of Volente: Short Term Rentals are not a permitted use of property in the Village of Volente. To qualify, a Conditional Use Permit for an STR must be obtained first, which includes a P&Z public hearing, as well as a Council Meeting public hearing. Neighbors within 500 feet of your property are required to be notified in advance. This process of submitting the appropriate application and fees does not guarantee approval to operating an STR. If a Conditional Use Permit is approved, a Short Term Rental License will be issued which will need to be renewed annually.
  11. Westlake Hills: To obtain a STR permit, a property owner must own a primary residence in Westlake Hills. If a property owner owns two homes in Westlake Hills, they can get a permit for the property they don’t live in. A guesthouse can not be used as a short term rental.

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