Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Texas tax professional before filing.
Texas · USA · Short-term rental taxes
Texas STR hosts owe no state income tax but must collect and remit the 6% state Hotel Occupancy Tax (HOT) plus any applicable local HOT, while reporting net rental income on their federal return.
Deductions
Ordinary and necessary expenses allocable to your rental activity reduce your federal taxable income — Texas has no state income tax to deduct against.
If you also use the property personally, expenses must be allocated between rental and personal days using the IRS mixed-use rules (IRC §280A). Keep detailed logs of rental vs. personal nights.
Filing Calendar
Texas HOT has its own state filing calendar; federal income-tax deadlines follow the standard IRS calendar.
Texas HOT filers who file and pay on time receive a 1% discount on the tax due. Late filers face a $50 penalty plus 5–10% of tax owed.
Texas Comptroller of Public Accounts — Hotel Occupancy Tax (comptroller.texas.gov/taxes/hotel)
Federal Tax Treatment
Because Texas has no state income tax, the key tax-treatment question is federal: does the IRS treat your STR as a passive rental (Schedule E) or an active business (Schedule C)?
Standard treatment for most STR hosts
No income ceiling; passive loss rules apply ($25,000 allowance phases out above $100,000 AGI)
Applies when you provide substantial services
No ceiling; subject to self-employment tax (15.3% on net profit up to Social Security wage base)
Depreciation
Depreciation lets you deduct the cost of your rental property and improvements over time — one of the most valuable federal deductions for STR hosts.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building | 27.5 years (straight-line) | Land is not depreciable; allocate purchase price between land and structure. |
| Appliances & furniture | 5 years (MACRS) | Refrigerators, washers, dryers, furniture. Bonus depreciation may allow faster write-off. |
| Carpeting & flooring | 5 years (MACRS) | Treated as personal property if separately identified via cost segregation. |
| Land improvements (fencing, landscaping) | 15 years (MACRS) | Driveways, sidewalks, fencing outside the building. |
A cost segregation study can reclassify components from 27.5-year to 5- or 15-year property, accelerating deductions. Consult a tax professional before undertaking one.
When you sell, depreciation previously claimed is recaptured and taxed at up to 25% (unrecaptured Section 1250 gain) at the federal level.
Hotel Occupancy Tax (HOT)
Every STR booking in Texas is subject to the state HOT plus any local HOT imposed by the city, county, or special district where the property sits.
The Texas Comptroller administers the state HOT. Local HOT is separately administered by each local taxing authority. The example below shows a typical combined rate for a major Texas city.
Up to ~17% combined (varies by city)
Texas Comptroller of Public Accounts — Hotel Occupancy Tax rates (comptroller.texas.gov/taxes/hotel)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking | Airbnb collects and remits state + local HOT in most Texas cities on the host's behalf | HOT does not flow through your bank account; verify Airbnb's coverage for your specific city and keep platform tax statements |
| Vrbo booking | Vrbo collects and remits state + local HOT in most Texas jurisdictions | Same as Airbnb — confirm coverage; Vrbo provides annual tax summaries |
| Direct booking (your own website) | Host collects from guest and remits directly to Texas Comptroller (state HOT) and local authority (local HOT) | You must register with the Comptroller, file returns monthly or quarterly, and keep remittance records |
State HOT applies to rooms costing $15 or more per day. Local HOT applies to rooms costing $2 or more per day. Always verify the current local rate with your city or county — rates change.
Platforms
Major platforms automate HOT collection in Texas, but income reporting to the IRS depends on whether you meet federal thresholds.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Issues Form 1099-K if gross transactions exceed $20,000 and 200+ transactions (2025 threshold); 1099-MISC for bonuses ≥$600 | Yes — collects and remits state + local HOT in most Texas cities | Annual earnings summary available in host dashboard by January 31 |
| Vrbo / HomeAway | Issues Form 1099-K at same federal thresholds as Airbnb | Yes — collects and remits state + local HOT in most Texas jurisdictions | Annual tax summary available in owner dashboard |
| Direct / Other OTAs | No automatic IRS reporting; host must self-report all income | No — host is responsible for collecting and remitting HOT | No platform summary; maintain your own records |
The IRS 1099-K threshold applies per platform. If you split bookings across Airbnb, Vrbo, and direct channels, you may fall below the reporting threshold on each platform individually — but all income is still taxable and must be reported on your federal return regardless of whether you receive a 1099.
DAC7 is a European Union reporting directive and does not apply to Texas or US-based STR hosts. US platforms report to the IRS under domestic rules (Form 1099-K).
IRS — About Form 1099-K (irs.gov); Airbnb Help Center — US tax documents (airbnb.com/help/article/414)
Example for a Texas STR earning $40,000/year in gross rents. For illustration only — not tax advice.
Record-Keeping
Good records protect you if the IRS or Texas Comptroller questions your returns — and help you claim every deduction you're entitled to.
| Keep | How long | Why |
|---|---|---|
| Booking records (dates, guest names, nightly rate) | At least 4 years | Substantiates rental income and days rented vs. personal use for IRS and HOT audits |
| HOT remittance confirmations and Comptroller filings | At least 4 years | Texas Comptroller can audit HOT returns; proof of timely payment avoids penalties |
| Receipts for all deductible expenses (repairs, cleaning, supplies) | At least 3 years from filing date (7 years if income underreported by >25%) | IRS standard audit window is 3 years; longer if substantial underreporting |
| Depreciation schedules and property purchase documents | Permanently (or at least 3 years after you sell the property) | Needed to calculate depreciation recapture on sale and verify cost basis |
| Platform 1099-K / tax summary statements | At least 3 years | Cross-reference with your reported income; IRS receives copies from platforms |
Texas has no state income tax return, but the Comptroller can audit HOT filings. Keep HOT records separate from your federal income tax records for easy retrieval.
Estimator
Plug in your bookings and costs to see your likely taxable position.
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
This page is for educational purposes only and does not constitute tax or legal advice. Tax laws change; verify all rates, thresholds, and deadlines with the Texas Comptroller and a qualified tax professional before filing.
Questions
Property & Short-Term Rental Tax specialists
Mr. Props tracks your STR income, expenses and remittances all year, so your Texas filing is ready to file instead of reconstructed in a panic.
Monthly tactics on STR tax, pricing and operations — written for operators, not accountants.
No spam. Unsubscribe anytime.
