Austin has over 11,000 active listings for vacation homes, otherwise known as short-term rentals. At the same time, there are only around 2,201 active short-term rental licenses.
There's a disconnect between the demand for these buildings and the knowledge about how to run them legally. A lack of knowledge is not a defense in court. Preparation keeps you compliant while running a better rental.
Read on to learn three essential legal considerations for vacation rentals.
1. Licensure
Getting licensed is one of the most important vacation rental regulations, and so is getting the right type.
Type 1 STR is for owner-occupied properties. Type 2 STR properties aren't part of a multi-family unit and aren't owner-occupied. Type 3 STR is for properties that are part of multi-family units or condos.
Complete the application in person, by mail, or online. Pay all fees, including the:
- $687 licensing fee
- $45 notification fee
- $1.80 DSD technology fee
Provide proof of identity and property insurance. Then, complete the Certificate of Occupancy. It confirms that all systems are up to code, such as:
- Plumbing
- Electricity
- Emergency exits
- Smoke alarms
- Carbon monoxide detectors
Your license will be valid for 12 months, then you can apply for renewal.
2. Zoning, Occupancy, and Neighborhood Considerations
Austin's zoning restrictions regulate how many short-term rentals can operate in a certain district. The maximum for non-commercial districts is 3% and 25% for commercial zoning districts.
Certain districts may get even stricter by only allowing four adults per zone. The requirements may also forbid specific properties, such as:
- Single-family homes
- Duplexes
- Multifamily residences
- Accessory buildings
Short-term rental laws regulate how many people can be in a short-term rental. It's often based on the number of bedrooms and the property's size. The standard is no more than six unrelated adults or 10 related guests.
Vacation property management rules give the owners responsibilities to their community. They must work to prevent disturbances and maintain positive relationships. Set tenant agreement guidelines and important information for such as:
- Enforcing quiet hours from 10 pm to 7 am
- Posting other rental rules
- Posting contact information
- Addressing complaints in a manageable amount of time
Fostering a community goes beyond legal tips for landlords. Try getting local tour guides to introduce guests to the area.
3. Taxes
Paying proper taxes is one of the most complicated legal considerations for vacation rentals. It's a balancing act of trying to give what you're obligated to without giving too much.
All vacation rental owners must apply a Hotel Occupancy Tax to their guests. The mandated rate is 6% of rent. That goes up to 11% when including state taxes.
Not all income earned from a short-term rental property is taxable. It only applies to items such as:
- Regular booking rates
- Pet fees
- Cleaning fees
- Laundry services
Any expenses linked to early departure or childcare are exempt.
Taxes are due quarterly. Failing to report them could lead to major penalties or audits.
Who Can Guide Me Through All the Legal Considerations for Vacation Rentals?
There are many unique legal considerations for vacation rentals, but the most important are licensure, zoning and neighborhood considerations, and taxes.
PMI ATX Properties is the premiere choice for short-term rental property management in Austin, Texas. We have over 25 years of experience growing and evolving businesses.
We use innovative technology to provide consistently excellent service. Contact us to see how we can increase the value of your investment today.
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