Houston, Texas Airbnb and Short-Term Rental Laws

Texas has become one of the top markets in the U.S. for short-term rentals (STRs), thanks largely to its minimal state-level regulations. Unlike some states that impose strict requirements on STRs, Texas allows individual cities to set their own rules. This flexibility makes it an attractive destination for Airbnb investors looking to maximize returns on vacation rental properties. 

Houston, in particular, stands out in Texas’s STR market. As one of the largest and most diverse cities in the state, Houston offers a range of opportunities for investors, from its bustling urban neighborhoods to quieter suburban settings. However, Houston has its own unique short-term rental regulations that investors need to be aware of.

Avoiding running into issues with an Airbnb in Houston can be very time consuming. The best way to understand if a property is going to perform is to connect with Surge Airbnb Management - Texas. The local Texas Airbnb experts. 

Texas's Definition of a Short-Term Rental

In Texas, a short-term rental (STR) is defined as the renting out of a residential dwelling for less than 30 consecutive days. This is a standard definition used across many states, including Florida and California, making it straightforward for property owners familiar with the vacation rental industry.

What sets Texas apart is its approach to regulating these rentals. Unlike some states that enforce strict state-level rules, Texas does not impose any overarching regulations on STRs. Instead, it allows individual cities to set their own guidelines. This means that while the state's definition of an STR is clear, the actual rules you need to follow can vary widely depending on the city where your property is located. 

Houston, Texas Short-Term Rental Laws

Houston’s approach to short-term rentals (STRs) is currently more flexible than many other cities in Texas, but there are still key regulations that hosts need to understand. While the city does not have a specific ordinance targeted solely at Airbnb or other short-term rental platforms, properties used for STRs, particularly multifamily units, fall under several existing regulations. 

Here’s what you need to know about operating an STR in Houston:

1. Licensing and Registration

At present, Houston does not require a specific license for short-term rental properties, such as Airbnbs. However, STRs in multifamily properties, like apartment buildings, are subject to the Multiple Dwelling Law. This law differentiates STRs into two categories:

• Hosted Rentals: These are properties where the host is present during the guest's stay. Hosted rentals can be legally rented out for short-term periods, provided that the host remains available on-site throughout the guests' visit. This setup is more straightforward for hosts who live in the property and rent out individual rooms.
• Unhosted Rentals: These refer to properties where the host is not present during the stay. Under Houston’s current laws, unhosted rentals of less than 30 days are not permitted in Class A dwellings. This restriction mainly impacts property owners who want to rent out their entire home or apartment unit without residing there.

2. Hotel Occupancy Tax

In addition to adhering to the above rules, Houston imposes a 7% hotel occupancy tax on short-term rentals. This local tax is in addition to the state hotel occupancy tax of 6%, making the total tax rate 13% on STR income for hosts in Houston. Here’s what you need to know about managing these taxes:

• Reporting and Payment: The 7% local tax must be reported and paid quarterly. The due date for filing these taxes is the last day of the month following the end of each quarter. For example, if your quarter ends in March, the tax payment is due by April 30th.
• Registration with Texas Comptroller's Office: To legally collect the state hotel occupancy tax, you must register with the Texas Comptroller's Office. This registration will provide you with a hotel tax permit and guidelines on how to file and pay the state taxes. Platforms like Airbnb often automatically collect and remit these taxes on your behalf, but you should verify this with each platform you use.

Houston Short-Term Rental Taxes

Hosts in Houston need to account for a total 13% occupancy tax on their short-term rental income (6% state tax + 7% local tax). While rental platforms like Airbnb and Vrbo handle much of the tax collection, hosts should remain aware of their responsibilities, especially when dealing with direct bookings or exempt guests.

Here’s a breakdown of the taxes you need to be aware of:

• State Hotel Occupancy Tax: Texas imposes a 6% state hotel occupancy tax on short-term rental income for stays of less than 30 consecutive days. To comply with this requirement, hosts must register with the Texas Comptroller's Office. Upon registration, hosts will receive a hotel tax permit along with instructions on how to file and remit the taxes.
• Local Hotel Occupancy Tax: In addition to the state tax, Houston has a 7% local hotel occupancy tax that applies to all short-term rentals in the city. The local tax must be reported and paid quarterly, with payment due on the last day of the month following the end of each quarter. For example, if the quarter ends in March, the tax is due by April 30th. Failure to report and pay on time can result in penalties.
• Tax Collection and Simplification by Rental Platforms: Platforms like Airbnb and Vrbo often simplify the process by automatically collecting and remitting these taxes on behalf of hosts. This automation reduces the administrative burden on property owners, but it is important to verify that the platform you use includes both the state and local taxes in their automatic collections. If you manage bookings outside of these platforms, such as direct bookings or using platforms that do not offer automatic tax collection, you are responsible for collecting, reporting, and remitting both the state and local hotel occupancy taxes.
• Tax Exemptions: Certain guests are exempt from paying hotel occupancy taxes. These exemptions include U.S. government employees traveling on official business, foreign diplomats with a tax exemption card issued by the U.S. Department of State, Texas state officials who possess special hotel tax exemption cards, and nonprofit entities and their employees when traveling on official business.

To ensure compliance, it’s vital to request and document proof of exemption from guests who claim they are not subject to the occupancy taxes. Proper documentation will protect you in case of an audit by state or local authorities.

Houston's Short-Term Rental Law Updates

Navigating the evolving landscape of short-term rental (STR) regulations in Houston requires staying informed and proactive. 

Here are some key strategies to ensure you’re always up-to-date with the latest laws and requirements:

1. Regularly Check Official Houston Websites

• Houston City Council Website: The Houston City Council regularly reviews and updates city regulations, including those related to short-term rentals. By visiting their official website, you can access the latest ordinances, meeting minutes, and public announcements. Staying tuned to these updates can help you anticipate changes and adapt your business practices accordingly.
• Local Authority Websites: Check the websites of local departments such as the Houston Planning and Development Department and the Houston Housing and Community Development Department for any new zoning laws, building codes, or licensing requirements that might impact STRs.
• Texas Comptroller's Office: Visit the Texas Comptroller's website for updates on state hotel occupancy taxes and filing requirements. This ensures you’re compliant with state-level tax obligations and aware of any changes in tax rates or filing deadlines.

2. Consult with Property Management Experts

• Contact Property Management Companies: Engaging with a reputable property management company, like Surge, can be incredibly helpful in staying compliant with Houston’s STR regulations. These companies have a team of experts who monitor local laws, handle tax filings, and ensure your property meets all city and state requirements. Their services can also provide guidance on obtaining necessary licenses, permits, and maintaining compliance with occupancy and safety regulations.
• Legal and Real Estate Professionals: Consult with local real estate attorneys or real estate agents specializing in short-term rentals. They can provide insights into current regulations and help you navigate any legal complexities that arise.

Starting a Short-Term Rental Business in Houston

If you’re planning to start a short-term rental (STR) business in Houston, it’s crucial to understand the city’s specific regulations, as Houston’s approach to STRs differs from other Texas cities. While Texas doesn’t enforce strict statewide laws for starting an STR, Houston has local rules that hosts must follow to operate legally and efficiently.

1. Local Regulations and Requirements

Houston currently does not have an Airbnb-specific ordinance, but STRs in the city fall under several existing laws. Notably, the city categorizes short-term rentals as "residential dwelling units rented for fewer than 30 consecutive days." While Houston does not explicitly require a specific STR license, properties used for short-term rentals are affected by zoning laws. For example, the Multiple Dwelling Law impacts STR operations in multifamily properties, dictating whether a rental can be “hosted” (where the host is present during the stay) or “unhosted” (where the host is not present). Unhosted rentals are typically not allowed in certain types of Class A dwellings for stays shorter than 30 days, especially in areas zoned for residential use.

2. State Tax Requirements

Despite the lack of specific STR licensing in Houston, all hosts are required to comply with statewide tax obligations. As an STR owner in Houston, you must register with the Texas Comptroller's Office to collect and remit the state hotel occupancy tax. This statewide tax is 6% of the rental income for stays of less than 30 consecutive days. After registering, you’ll receive a hotel tax permit, which outlines the procedures for filing and paying these taxes, typically on a monthly or quarterly basis.

3. Houston Hotel Occupancy Tax

In addition to the state hotel occupancy tax, Houston imposes its own local hotel occupancy tax on short-term rentals. The city’s tax rate is 7%, which must be reported and paid quarterly. Taxes are due by the last day of the month following the end of each quarter. If you list your property on a platform like Airbnb, the platform may collect these local taxes on your behalf, simplifying the process. However, if you use other platforms or manage bookings independently, you are responsible for collecting, reporting, and remitting these local taxes to the city.

4. Compliance with Zoning and Other Regulations

While Houston currently has a more relaxed regulatory environment compared to other Texas cities like Austin or Fort Worth, it’s essential to stay informed about zoning laws, neighborhood guidelines, and potential changes in STR regulations. Some neighborhoods in Houston may have specific homeowners' association (HOA) rules or deed restrictions that limit or prohibit short-term rentals. Therefore, before starting an STR in Houston, you should check the zoning regulations for your property and consult with your local HOA if applicable.

Conclusion

Houston offers a promising market for Airbnb and short-term rental (STR) investments, thanks to its relatively lenient regulations and diverse property opportunities. However, the key to a successful STR operation in Houston is a thorough understanding of both state and city-specific laws. While Texas does not impose strict statewide regulations, Houston’s zoning rules, tax obligations, and potential changes in local ordinances require careful attention.

Compliance with state and local tax requirements, including the 6% state hotel occupancy tax and the additional 7% local tax, is vital to avoid penalties and keep your business running smoothly. Additionally, property owners must stay vigilant about Houston’s zoning and building codes, especially for non hosted rentals, to ensure they meet all legal obligations.