Thinking about buying a South Austin home for short stays? Here’s the reality check: in Austin, the license comes first, not the listing. If you want predictable returns and peace of mind, you need to understand how the city regulates short‑term rentals and what it takes to stay compliant. In this guide, you’ll learn the licensing basics, 2025 rule changes, fees, timelines, taxes, and a step‑by‑step checklist tailored to South Austin neighborhoods. Let’s dive in.

What counts as an STR in Austin

Short‑term rentals are residential stays of fewer than 30 consecutive days. In Austin’s full‑purpose jurisdiction, you must secure an STR operating license before you advertise or host. Operating without a license can trigger inspections, fines, and removal from platforms. You can review the city’s program overview and applications on the City of Austin’s Short‑Term Rental page for the most current details and forms.

• City resource: Austin Short‑Term Rental program

License types you must choose from

Austin groups STRs into three types, each with different rules and eligibility.

Type 1: Owner‑occupied

You live in the home as your principal residence and rent part or all of it for short stays. This is typical home‑sharing.

Type 2: Non‑owner‑occupied single‑family/duplex

You do not live in the property. These are entire‑unit rentals in single‑family or duplex homes. Confirm eligibility and current issuance practices before you buy.

Type 3: Multifamily or condo units

Applies to properties in apartment or condo buildings. These licenses can be subject to density caps within the building.

2025 rule changes to note

Austin updated its STR rules in 2025. Key items:

• Platform tax collection began April 1, 2025 for bookings processed by platforms that take payment.
• Many code changes took effect Oct 1, 2025, including two‑year license terms, permission for tenant operators with landlord consent, per‑owner proximity limits, and local‑contact residency rules.
• Additional platform obligations, like listing fields and delisting unlicensed properties, phase in by July 1, 2026.

Check the city’s STR page for any timeline refinements.

Fees, timing, and paperwork

Here’s what to expect during licensing.

• Fees (published by the city, confirm current amounts):
  • Initial license: $836.30
  • Renewal: $385.30
  • Fees are non‑refundable. Extra fees can apply if you operated without a license.
• Typical processing timelines:
  • Type 1 and Type 2: about 4–6 weeks to issue; 2–3 weeks to renew.
  • Type 3: about 8–10 weeks to issue; 3–4 weeks to renew.
• How to apply:
  • Determine your STR Type, then submit via Austin Finance Online, by mail, or in person.
  • Provide identity and ownership or authorization documents. If you’re not the owner, you must have the owner’s permission.
  • Licenses are non‑transferable. A sale usually requires a new license application.

Reference: City of Austin STR program

Taxes: what you and platforms owe

Two layers of hotel occupancy tax (HOT) apply to STRs.

• State HOT: Texas levies a 6% state hotel occupancy tax. Marketplace platforms often remit state HOT for bookings they process, but you should understand your filing obligations.
  • Source: Texas Comptroller overview
• City HOT (Austin): Austin requires registration, quarterly reporting, and remittance. As of April 1, 2025, platforms that take payment must collect and remit Austin HOT for those bookings. You still need to register, file quarterly reports, and remain responsible for direct bookings or any channel that does not remit.
  • City resource: Austin Hotel Occupancy Taxes

Compliance realities in South Austin

South Austin’s beloved neighborhoods like SoCo, Travis Heights, Zilker, Bouldin, and South Lamar attract visitors, but they’re also sensitive to noise, parking, and trash. The city requires a local contact who lives in the Austin metro area and expects quick responses to issues. You must post a guest info packet on‑site with local contact info, trash schedules, and house rules.

Austin’s updated code increases enforcement tools. Advertising an unlicensed listing is prohibited. Repeated violations can lead to mitigation plans, fines up to $500 per day, suspension, or revocation. The city is also working with platforms to identify and remove unlicensed listings, and local reporting has highlighted the gap between total listings and licensed properties.

• Code/enforcement background: Planning Commission backup
• Market and licensing gap coverage: KXAN reporting

Step‑by‑step checklist for South Austin investors

Use this as your pre‑purchase and pre‑listing roadmap.

1. Confirm jurisdiction and zoning for your specific address within the City of Austin’s full‑purpose area.
2. Review deed restrictions and HOA CC&Rs; if you’re a tenant operator, obtain written landlord permission.
3. Choose your STR Type (1, 2, or 3) and confirm eligibility, especially for Type 2 and Type 3.
4. Create your Austin Finance Online account and submit the STR application. Budget the initial fee of about $836.
5. Register for HOT reporting and understand which platforms will collect and remit on your behalf. Keep quarterly records.
6. Designate a qualified local contact in the Austin metro area who can respond promptly.
7. Prepare the guest information packet and required postings: local contact, trash, parking, and noise rules.
8. Secure appropriate STR or commercial liability insurance and keep documentation ready if requested.
9. Implement noise, parking, and trash controls. Set house rules, quiet hours, and a parking plan before your first booking.
10. Monitor your platform listings to ensure your license information displays correctly, and respond quickly to any complaints.

Helpful references:

• Austin STR program
• Austin Hotel Occupancy Taxes
• HOA considerations: Legal overview on STRs in HOAs
• Insurance primer: STR insurance considerations

Financial planning snapshot

Plan both up‑front and recurring costs into your underwriting.

• Up‑front costs: purchase price, city STR initial fee (about $836.30), local contact setup, any code‑related improvements, insurance upgrades, and initial cleaning and marketing.
• Recurring costs: quarterly HOT reporting, two‑year license renewals when due, cleaning and maintenance, utilities, management fees, and a reserve for potential fines or remediation work.

Reference: City of Austin STR program

Where STRs tend to perform in South Austin

Visitor demand often concentrates around walkable corridors and major venues like SoCo and Zilker, but performance varies by block and season. Competition and neighborhood expectations can shift occupancy and nightly rates over time, so rely on hyper‑local comps rather than citywide averages. Market summaries and local reporting also suggest a mismatch between licensed supply and total listings, which may change as enforcement increases.

• Market context summary: Austin STR market snapshots

Avoid the Dallas mix‑up

Dallas follows a different code and legal path than Austin. If your target is South Austin, use Austin’s rules, not Dallas guidance. If you’re evaluating a Dallas property, research the City of Dallas program and recent court activity separately.

• Dallas background coverage: Axios Dallas overview

Ready to run the numbers the right way?

If you’re weighing a South Austin purchase for STR use, the best move is to confirm licensing feasibility before you write an offer. We can help you source the right property, pressure‑test the plan against city rules and HOA constraints, and negotiate terms that protect your timeline. Start a conversation with Harlan Realty Group.

FAQs

How does Austin define a short‑term rental?

• A short‑term rental is a residential stay of fewer than 30 consecutive days within the City of Austin, which requires an operating license before advertising or hosting.

What license types exist for Austin STRs?

• Austin offers Type 1 (owner‑occupied), Type 2 (non‑owner‑occupied single‑family/duplex), and Type 3 (multifamily/condo) licenses, each with different rules and limits.

How long does the Austin STR license take to get?

• Typical initial processing is about 4–6 weeks for Type 1 and Type 2, and 8–10 weeks for Type 3, assuming your application is complete.

What are the current Austin STR fees?

• The city lists about $836.30 for a new license and $385.30 for renewal; fees are non‑refundable and can change, so confirm on the city’s site.

Do platforms pay my Austin hotel taxes for me?

• For bookings where the platform processes payment, platforms began collecting and remitting Austin HOT on April 1, 2025, but you still must register and file quarterly reports and handle any direct bookings.

Can an HOA block my South Austin STR plan?

• Yes. Many HOAs restrict or prohibit short‑term rentals under recorded covenants, and those private rules apply in addition to city requirements.

What happens if neighbors file complaints about my STR?

• Verified repeat issues can lead to mitigation orders, daily fines up to $500 per violation, and potential license suspension or revocation.