VaultSTRThe rules at a glance
License required
Yes - License to Operate (LTO) from Austin Development Services before listing.
Type 1 (Owner-occupied)
Available in most residential zones. Owner must permanently reside on-property as primary residence.
Type 2 (Non-owner-occupied)
Not issued in single-family residential zones (SF-1 through SF-6). Allowed only in multi-family (MF) and commercial zones.
Max stay
30 consecutive days.
License term
Annual renewal required.
Taxes
6% state hotel tax + 6% state sales tax + 2% Austin/Travis County local sales tax (combined approximately 14% of nightly revenue).
Type 1 licenses (owner-occupied)
The owner must permanently reside at the property as a primary residence. This is the viable path for house-hackers in Austin's residential zones. Type 1 licenses are available broadly across single-family and multi-family zones.
Type 2 licenses (non-owner-occupied investment)
Austin no longer issues Type 2 licenses in single-family residential zones (SF-1 through SF-6). New Type 2 licenses exist only in multi-family (MF) and commercial zones. This means a pure investment property in an Austin residential neighborhood cannot be rented short-term. A listing claiming a Type 2 license in an SF zone is either grandfathered (and may not survive sale) or misrepresented. Verify the zone and license status with Austin Development Services before your client writes an offer.
Taxes
Austin STRs owe 6% state hotel tax, 6% state sales tax, and 2% Austin/Travis County local sales tax, combining to approximately 14% of gross nightly revenue. Airbnb and VRBO collect and remit state taxes. Local sales tax is often remitted by the host. Confirm platform tax remittance coverage before modeling the full tax stack. Verify the current local rates with City of Austin Development Services before publishing deal analyses.
What this means for your client's underwrite
Austin is a zoning-binary market. The same house earns strong STR returns in an MF or commercial zone and zero STR revenue in an SF zone a few blocks away. Three checks before the pro forma:
- Confirm the zoning district. SF-1 through SF-6 zones block Type 2 licenses. MF and commercial zones allow them.
- Verify the license type. Type 1 (owner-occupied only) is available everywhere. Type 2 (investment) is restricted to MF and commercial zones.
- Model the full tax stack: 6% state hotel + 6% state sales + 2% local sales = approximately 14%.
The VaultSTR Pro Forma flags license status by jurisdiction as part of every Austin deal analysis.
Sources
- City of Austin Development Services: License to Operate application and requirements
- Austin City Code Chapter 25-2, Subchapter E (Short-Term Rental Licensing)
- City of Austin GIS parcel viewer for zoning verification
This is general information, not legal advice. Verify current rules with Austin Development Services before advising a client.
Austin STR questions
Can an investor buy a house in Austin and run it as an Airbnb?
Only if the property sits in a multi-family or commercial zone that allows Type 2 licenses. Single-family residential zones (SF-1 through SF-6) do not receive new Type 2 licenses for investment STRs.
What if I live in the property myself?
A Type 1 owner-occupied license is available in nearly any zone, as long as you permanently reside there as your primary residence.
How long does an LTO license last?
One year. Renewal is required annually.
What happens if someone operates without a license?
Austin Development Services enforces through fines and can bar future license eligibility. Unlicensed revenue also cannot be used credibly with DSCR lenders.
Underwrite an Austin deal the right way.
The VaultSTR Pro Forma flags license status and zoning restrictions, and builds the full Austin tax stack into every deal analysis before your client writes the offer.
Free to use. No credit card required.