Avalara MyLodgeTax > Blog > State and Local News > Dallas bans STRs in residential zones

Dallas bans STRs in residential zones

  • Jul 5, 2023 | Jennifer Sokolowsky

Officials in Dallas, Texas, have banned short-term rentals (STRs) from neighborhoods zoned for single-family homes. The new regulations come after four years of contentious debate over how to balance the short-term rental industry with resident concerns about neighborhood disruption and affordable housing.

STRs located in multifamily, commercial, and mixed-use zones will be allowed, but required to register as a short-term rental with the city. In areas zoned for multifamily use, STRs may operate in buildings with 20 or more units, and STRs may only make up 3% of the units.

Under the new rules, operators must:

  • Include a valid STR registration number in advertisements and listings
  • Designate a local responsible party who can respond to emergencies within one hour
  • Renew registration every year
  • Provide one parking spot for each bedroom in the property
  • Limit the number of guests to 12 people per stay
  • Undergo an inspection of their property to determine if there are any code violations

Violations can result in fines of up to $500. The city can revoke an operator’s registration if a property is the site of three or more citations for violations of the Dallas City Code or state or federal law in a one-year period. These can include violations such as unauthorized parking, litter on the property, excessive noise, disorderly or criminal conduct, or failure to pay hotel occupancy tax.

While the ordinance went into effect immediately, enforcement will begin December 14. A council committee must review the new law by June 2025. The new law could make up to 95% of currently registered STRs illegal.

For several years, Dallas short-term rentals have been required to register with the city for an occupancy tax license, collect city occupancy taxes from guests, report collections, and pay the tax to the city.

As of April, about 1,800 short-term rentals were registered, with another 1,300 operating without registration, according to city officials. Short-term rental data company AirDNA estimates there are more than 5,500 STRs in Dallas.

All STRs in Texas are also subject to state hotel occupancy tax. Operators must register with the Texas Comptroller’s Office, collect taxes, and file state occupancy tax returns. Registration and filing aren’t required if an online short-term rental marketplace such as Airbnb or Vrbo collects all state hotel occupancy taxes for the property.

Airbnb and Vrbo automatically collect the state portion of the tax for bookings on their sites. However, those marketplaces don’t collect city occupancy tax, so Dallas hosts must collect and remit the city tax themselves.

With the latest law, the City Council charged City Manager T.C. Broadnax to work on a deal with short-term rental marketplaces for STR occupancy tax collection in Dallas.

MyLodgeTax can help short-term rental hosts automate and simplify city and state lodging tax compliance, from registration to tax return filing. If you have tax questions related to Dallas vacation rental properties, drop us a line and we’ll get back to you with answers. For more on lodging taxes in Texas, see our state Hotel Occupancy Tax Guide.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.
Avalara logo featuring a globe surrounded by colorful lines and swirls

Learn more about TX lodging tax rules