Trying to make sense of residential STR regulations in Austin, TX? Here's what I know

[Ryan Leake]

Current status of residential Austin STR regulations:

STRs must continue to be licensed, as the City of Austin will continue to enforce STR regulations[7].

In 2016, the city stopped issuing new non-owner occupied STR licenses - known as Type 2 licenses - for short-term rentals in certain residential areas. The city said there are more than 2,000 authorized short-term rentals in the city. But online listings show there are thousands more out there — which seem to be unauthorized. 

In August 2023, the the United States District Court, Western District of Texas, Austin Division ruled that Type 2 licenses must be made available in the same parts of the city where Type 1 (aka owner-occupied) licenses are available. Additionally, the court found that 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:

Owners of STRs are required to obtain an operating license annually. This law applies to all properties, including rooms and guest houses, that are rented for fewer than 30 consecutive days[1][3]. The license application process can be completed online or by mailing the necessary documents to the Austin Code Department. When advertising your rental, you must include your license number and the occupancy limit for your property. Only 10 related adults or 6 unrelated adults are allowed at a time[6].

Required docs to operate an STR:

To obtain a short-term rental license, you will need to complete a short-term license application and pay a non-refundable fee of $643, inclusive of a $50 notification fee[6]. If the ownership and the short-term rental’s street address have changed, you should submit a new application[8]. The final document you will need is a Certificate of Occupancy or a Certified Inspection[11].

Texas or taxes:

The City of Austin's Hotel Occupancy Tax rate is 11 percent, comprised of a 9 percent occupancy tax and an additional 2 percent venue project tax. Every person required to collect the Hotel Occupancy Tax must file a Report of Hotel Occupancy Tax with the City of Austin Controller’s Office[5]. 

Also a side note, when looking at an STR investment in Austin, factor in the high annual property taxes that can get up around 2% of the appraised value of the house (ie house appraised at $500,000, pay $10k/year in property taxes)

Hope this helps. If you have more in-depth questions or anything else to add to this then feel free to DM me!