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Judge blocks enforcement of new Dallas short-term rental law

  • Dec 19, 2023 | Jennifer Sokolowsky

A judge has prohibited Dallas from enforcing its new short-term rental (STR) law until a lawsuit challenging the rules is decided.

The ordinance, which the City Council passed in June after years of debate, bans STRs from neighborhoods zoned for single-family homes. It allows STR operators to do business in multifamily, commercial, and mixed-use zones. Operators must register annually with the city and include a valid STR registration number in advertisements and listings.

The law also requires hosts to:

  • Designate a local responsible party who can respond to emergencies within one hour
  • 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

In areas zoned for multifamily use, STRs may only operate in buildings with 20 or more units and may comprise no more than 5% of the units.

STR operators who break the rules can face fines of up to $500. The city can revoke registration for properties that have three or more citations for violations of the Dallas City Code or state or federal law in a one-year period. Violations include unauthorized parking, litter on the property, excessive noise, disorderly or criminal conduct, or failure to pay hotel occupancy tax. Enforcement of the law was scheduled to begin December 14, 2023.

In October, a group of short-term rental operators sued the city, saying the law contradicts the state constitution. A trial date is set for June 3, 2024.

“The city is considering its options regarding an appeal of the temporary injunction. In the meantime, the city will continue enforcement of its existing ordinances governing minimum property standards, disturbing noises and private nuisances,” City Attorney Tammy Palomino said in a statement.

For several years, Dallas short-term rental operators 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 the city. 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 are required to 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.

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 vacation rental 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.
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