If you own or plan to operate a short-term rental (STR) in Austin, staying compliant with city regulations is essential to avoid fines, legal issues, or losing your rental license. Here’s what you need to know:
- Licensing: All STRs require an annual license. Fees are $779.14 for new applications and $437 for renewals. Applications must include proof of insurance, a Certificate of Occupancy, and additional documents.
- Zoning: Properties must meet zoning rules. Type 2 STRs face stricter zoning and density caps, especially in multi-unit buildings.
- Safety Standards: Properties must pass safety inspections and meet fire safety requirements, including smoke alarms and fire extinguishers.
- Guest Rules: Occupancy limits depend on the number of bedrooms. Noise restrictions apply, and STRs must be spaced at least 1,000 feet apart.
- Taxes: STR operators must collect an 11% Hotel Occupancy Tax (HOT) and file quarterly reports. Platforms like Airbnb will handle HOT collection starting April 1, 2025, but owners are still responsible for accurate reporting.
Starting October 1, 2025, STR oversight will shift to new regulations under Title 4, emphasizing stricter enforcement. Compliance is crucial to protect your rental business and maintain good standing with the city.
Austin City Council agrees to short-term rental code amendments
Licensing and Registration Requirements
If you’re planning to operate a vacation rental in Austin, you’ll need a valid Short-Term Rental (STR) license. The Development Services Department Code Compliance oversees all licensing, and applications with missing information won’t be processed. Keep in mind that application fees are non-refundable.
Getting Your STR License
The first step is identifying your property’s STR type – Type 1, Type 2, or Type 3 – since each category has specific requirements and timelines. Processing times vary: Type 1 and Type 2 licenses typically take 4–6 weeks, while Type 3 licenses require 8–10 weeks. Applications can be submitted online, in person, or by mail through your Austin Finance Online (AFO) account.
Your application must include key documents such as proof of property insurance, a Certificate of Occupancy, and a copy of your driver’s license. If you’re not the property owner, you’ll also need a notarized Agent Authorization Form. Make sure the details on your driver’s license match your property records to avoid processing delays.
The licensing fee is $779.14. Operating without a license could result in additional fees if you’re issued a violation notice. Additionally, starting April 1, 2025, platforms like Airbnb and VRBO will be required to collect Hotel Occupancy Taxes on behalf of STR owners, which could impact the documentation you’ll need.
Displaying Your License Number
Once you receive your STR license, Austin requires you to include the license number in all rental listings and advertisements. This rule, introduced in the February 2025 ordinance updates, helps the city monitor compliance across platforms. Additionally, you must display both your operating license and the short-term rental information packet in a visible, common area inside the property where guests can easily access them.
Renewing Your License Each Year
STR licenses are valid for one year from the date they’re issued, and you can start the renewal process 60 days before your license expires. The renewal fee is $437, and processing times are 2–3 weeks for Type 1 and Type 2 licenses and 3–4 weeks for Type 3 licenses. You can continue renting your property while your renewal is being processed.
To renew, you’ll need to provide updated proof of insurance and confirm your property details. If your license expires, you have a 30-day grace period to request an extension by emailing STRlicensing@austintexas.gov with current insurance documentation. Be aware that operating with an expired license could lead to penalties, so it’s crucial to keep track of renewal deadlines.
STR licenses are not transferable. If you sell your property, the new owner must apply for their own license to operate it as a short-term rental. After securing your license, ensure your property complies with all zoning and structural requirements as you move forward.
Zoning and Property Rules
Austin’s zoning laws play a key role in determining where short-term rentals (STRs) can operate. Only properties that meet specific criteria are eligible. Changes introduced in February 2025 made STRs an accessory use in all residential zoning districts, but with restrictions tailored to each property type. Before diving into density rules or accessory building regulations, confirming your zoning eligibility is a must.
Checking Zoning Rules
To qualify for STR operation, your property must be in an area zoned for residential or commercial use. While single-family homes, duplexes, and multifamily residences may qualify, you’ll need to verify your zoning status to move forward.
Type 2 STRs face tighter restrictions. These properties are generally limited to specific commercial zones and are subject to caps in some residential condominium buildings. For instance, in certain condo buildings, Type 2 STRs are capped at 3%, meaning only a small number of units can function as vacation rentals.
To ensure you’re in compliance, contact the Austin City Planning Department or Zoning Office. They can confirm whether your property’s zoning allows for your intended type of STR. Zoning regulations can be a significant hurdle, so understanding them upfront is crucial.
Density Limits
Austin enforces strict density limits to prevent neighborhoods from becoming overrun with vacation rentals. These rules are particularly relevant for Type 3 STRs, which are located in multifamily or condominium residential units.
- For properties with three or fewer units, only one STR is allowed within a 1,000-foot radius. This rule applies to duplexes, accessory dwelling units, and multi-unit lots.
- On larger properties with four or more units, STRs are capped at the greater of one unit or 25% of the total units. For example, in a 12-unit building, up to three units could operate as STRs (25% of 12), provided all other regulations are met.
Accessory Building Rules
Accessory buildings like Accessory Dwelling Units (ADUs) and guest houses can be used for STRs, but they come with extra restrictions. ADUs built after October 1, 2015, are limited to 30 days of STR use annually.
When applying for your STR license, you’ll need to submit a Certificate of Occupancy for the ADU. Guest houses must follow the same zoning regulations as ADUs and meet all zoning requirements for STR usage.
ADUs are generally allowed in single-family residential zones but must adhere to specific conditions that vary by location. Before applying for an STR license, ensure your accessory building has the necessary permits and complies with all safety requirements.
These zoning rules lay the foundation for understanding the building codes and safety standards discussed in the next section.
Building Code and Safety Standards
If you’re planning to operate a short-term rental in Austin, adhering to the city’s building codes and safety standards isn’t just a suggestion – it’s a must.
City Safety Inspections
Before you can get a Certificate of Occupancy, which is essential for your rental license, your property must pass a city safety inspection. These inspections ensure that crucial safety features like smoke detectors, carbon monoxide alarms, fire extinguishers, and secure locks meet Austin’s requirements. Once the inspection is complete, double-check that your property complies with all fire safety regulations.
Fire Safety Requirements
Fire safety is non-negotiable for vacation rentals in Austin. Smoke alarms need to be installed in every bedroom, outside sleeping areas, and on each level of the property. Texas Property Code § 92.255 specifically requires this setup for all multi-story homes. For homes built before 2011, battery-powered smoke alarms are acceptable, even if they’re not interconnected. However, you’re responsible for testing these alarms before every guest stay and conducting additional inspections upon guest requests.
Fire extinguishers are equally important. Make sure they are in good working order, properly pressurized, and inspected before each guest arrives. If a fire extinguisher is damaged or used, it’s your responsibility to repair or replace it at your expense. Guests, however, are accountable for any misuse or damage caused during their stay.
Certificate of Occupancy
A valid Certificate of Occupancy is a key piece of your short-term rental license application. If you don’t already have one, you’ll need to get it from the Austin Development Services Department. Without this certificate, your license application will be incomplete and won’t move forward in the process.
Guest Limits and Use Rules
Austin has established specific guidelines to ensure short-term rental (STR) properties comply with licensing and zoning standards. These rules are designed to protect neighborhood harmony and prioritize guest safety. Knowing and following these regulations can help you avoid fines or even the loss of your rental license.
Maximum Guest Numbers
In Austin, occupancy limits are strictly based on the number of bedrooms in a property. For example, a one-bedroom rental can house up to four guests, while a four-bedroom property can accommodate up to 10 guests. These limits are not negotiable and aim to prevent overcrowding while keeping guests safe.
Importantly, Austin’s rules focus on sleeping arrangements rather than the overall size of the property. This means you can’t simply add more guests by utilizing larger living spaces or common areas. To stay compliant, clearly list the maximum occupancy in your property description and ensure you provide enough beds to match the advertised guest count.
Distance Rules Between STRs
Austin also enforces spacing rules for STRs to avoid overconcentration in neighborhoods. If you own or operate multiple STRs, they must be at least 1,000 feet apart. This regulation applies to duplexes, accessory dwelling units (ADUs), and multi-unit lots, although separate rules govern multi-family buildings.
If you’re planning to expand your STR portfolio, it’s essential to check that your properties meet this spacing requirement. Applying for permits early is also crucial, as the regulations in place at the time of your application will determine your compliance obligations.
Noise and Behavior Rules
Beyond occupancy and spacing, Austin has strict rules about guest behavior – particularly regarding noise. As an STR operator, you’re responsible for ensuring your guests follow these rules. The city mandates that all renters receive an information packet outlining noise restrictions under section 25-2-794 of the City Code.
Here’s what you need to know about noise limits:
- Daytime hours (10:00 a.m.–10:00 p.m.): Noise must not exceed 75 decibels.
- Nighttime hours (10:30 p.m.–7:00 a.m.): Noise must not extend beyond property lines.
Many STR owners use noise sensors to monitor sound levels without infringing on guest privacy. These devices can alert you to potential issues, allowing you to address them quickly. Studies show that over 70% of noise complaints are resolved with a simple text message to guests, and proactive noise management can save operators up to $5,000 annually by avoiding fines and property damage.
To further ensure compliance, include a clear no-party policy in your house rules. Define what qualifies as a party and outline penalties for violations. If you use noise monitoring devices, be transparent with guests about their presence. Failing to manage guest behavior effectively can lead to fines or even the loss of your STR license. If violations occur, neighbors can report them by calling Austin 3-1-1.
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Taxes and Record Keeping
Running a short-term rental (STR) in Austin involves more than just hosting guests – it requires careful attention to taxes and thorough recordkeeping. Alongside meeting licensing, zoning, and safety requirements, managing taxes is a key part of staying compliant with local regulations. Austin collects about $7 million annually in taxes from STR operators, and with new platform policies coming into play, this figure is expected to rise significantly. Staying on top of your tax obligations and maintaining accurate records not only ensures compliance but also protects you during potential audits.
Hotel Tax Collection
If you operate an STR in Austin, you’re required to collect and remit the Hotel Occupancy Tax (HOT) on all bookings. This tax is set at 11%, which includes a 9% occupancy tax and an additional 2% venue project tax. On top of this, you’ll also need to collect a 6% state tax, which is paid separately to the state of Texas.
Starting April 1, 2025, platforms like Airbnb and VRBO will handle HOT remittance for bookings made through their services. However, this doesn’t mean you’re off the hook entirely. You’ll still need to file a quarterly report with the City of Austin, detailing the HOT collected by these platforms.
For revenue generated outside of these platforms – such as direct bookings through your own website – you are responsible for collecting and remitting the HOT directly to the city on a quarterly basis. Keeping a clear distinction between platform bookings and direct bookings is essential for accurate reporting.
What qualifies as taxable revenue? It includes charges for reservations, cleaning, pet fees, rollaway beds, refrigerators, and safes. However, certain fees and charges are exempt, such as early or late departure fees, cancellation fees (unless they equal the room rate), and charges for personal services like childcare, internet, or parking.
To manage tax collection, you’ll need to register with both the Texas Comptroller’s Office and the City of Austin. Additionally, setting up an Austin Finance Online (AFO) account will allow you to manage your operating license and file quarterly tax reports. Keep in mind that reports and payments are due on the last day of the month following the end of each quarter.
Accurate tax reporting hinges on strong recordkeeping practices, which we’ll cover next.
Keeping Booking Records
Maintaining detailed records is essential for STR compliance in Austin. You are required to keep copies of all Hotel Occupancy Tax Reports, even if no taxes were collected for a given quarter. Since the city reserves the right to audit your records at any time, having organized documentation is key to safeguarding your business.
You’ll also need to track how much HOT each platform collects on your behalf, making it crucial to separate platform-collected taxes from those you collect independently. When filing with the city, you’ll need to attach a copy of the quarterly Texas Hotel and Motel Tax Report that you submitted to the state. This dual reporting requirement underscores the importance of maintaining thorough records for both state and local filings.
In addition to tax reports, keep comprehensive booking details, including guest information, stay dates, rates charged, and any fees collected. These records are invaluable if the city conducts an audit or if disputes arise with guests or booking platforms.
It’s also important to know which jurisdiction your property falls under, as this affects your tax responsibilities. For example, properties in Austin’s Limited Purpose Jurisdiction (LTD) require a license but are exempt from the City of Austin HOT. Meanwhile, rentals in the Extra Territorial Jurisdiction (ETJ) are not subject to licensing or local HOT.
Missing deadlines for tax filings or payments can result in penalties and interest. If you stop renting your property, notify the Financial Service Department to close your account. Additionally, properties rented for 14 days or fewer during the tax year may qualify for the "Masters Exemption", which exempts this income from taxation.
Lastly, consult with your local appraisal district to understand how operating an STR might impact your property taxes.
Conclusion
Operating a vacation rental in Austin requires careful attention to licensing, zoning, safety, and tax regulations. The city’s annual licensing process, occupancy limits, and mandatory safety checks are key steps for staying compliant. These rules are further reinforced by recent updates aimed at stricter enforcement.
Starting April 1, 2025, Austin will implement a new platform-based tax system. This change brings serious consequences for noncompliance, including hefty fines, legal challenges, and even removal from major booking platforms. The city is also working on advanced technology to identify unlicensed rentals, making enforcement more rigorous than ever.
Recent regulations have shifted some responsibilities to booking platforms, requiring them to collect hotel occupancy taxes and ensure only licensed properties are listed. However, property owners are still accountable for securing the proper licenses and meeting all safety requirements.
With regulations becoming more stringent, compliance isn’t just important – it’s critical. Following the rules protects your investment, preserves your reputation, and ensures your place in Austin’s competitive vacation rental market. The city’s ongoing efforts to enhance oversight aim to balance neighborhood well-being with guest safety.
Whether you’re just getting started with a vacation rental or updating an existing property, staying informed is key. For expert advice, Austin Local Team connects property owners with experienced agents who specialize in navigating short-term rental regulations and local market trends.
FAQs
What are the zoning rules for non-owner-occupied short-term rentals in Austin, and how can I check if my property qualifies?
Type 2 Short-Term Rentals in Austin
In Austin, Type 2 short-term rentals (STRs) are single-family or two-family homes that are rented out entirely and are not owner-occupied. These properties must follow specific zoning rules aimed at ensuring safety, responsible resource use, and harmony with the surrounding environment. Starting October 1, 2025, updated regulations will introduce new requirements for these rentals.
To determine if your property is eligible, you’ll need to verify its location and zoning district. Use the city’s jurisdiction map to pinpoint your property and review the zoning guidelines that apply to your area. Make sure to also consult Austin’s official short-term rental regulations to stay compliant with all current rules.
What changes should I expect when renewing a short-term rental license in Austin starting October 2025?
Updates to Short-Term Rental License Renewals in Austin
Starting October 2025, renewing a short-term rental license in Austin will involve meeting updated requirements under Title 4 of the City Code. These new rules place greater importance on compliance with building codes, permit standards, and revised ordinances. You’ll still have the flexibility to renew your license online, in person, or through the mail.
Another key change to keep in mind is the 11% hotel occupancy tax, which was introduced in April 2025. Property owners should factor this tax into their planning. To avoid delays or issues, carefully review the updated regulations and ensure your property fully complies before submitting your renewal application.
What are the fire safety requirements for vacation rental properties in Austin?
To meet Austin’s fire safety regulations for vacation rentals, your property must have functional smoke detectors and carbon monoxide alarms placed in the right locations. It’s also essential to provide fire extinguishers and maintain unblocked, accessible emergency exit routes.
Keep a record of where safety devices like fire extinguishers and alarms are located, and routinely check that they are in working order. Additionally, you’ll need to secure a short-term rental license from the City of Austin, which requires compliance with their detailed safety guidelines. Prioritizing fire safety not only keeps you within the law but also safeguards your guests and property.
