What happens when you combine over 300 varieties of roses with historic attractions, art, and culture? An opportunity to earn passive income from a growing tourism industry, that's what.
Tyler presents excellent opportunities for investors wanting to earn rental income from people's fascination with the Rose Capital of America, but only if you play by the rules.
Keep reading for an overview of the legal considerations for vacation rentals in Tyler, Texas.
Texas Laws for Short-Term Rentals
Texas has few statewide short-term rental regulations. Instead, each city may impose legislation according to local preferences. This has caused conflict between residents and short-term rental hosts.
In June 2023, Dallas banned Airbnb rentals in single-family residential neighborhoods. In Houston, the city council is considering the impact of short-term rentals.
In Grapevine, investment property owners are suing the city over the ban on short-term rentals.
The City of Tyler currently has few regulations for short-term rentals. So, the city is a good choice for investment property owners wanting to explore this income stream.
Most complaints against short-term rentals revolve around 'party house' rentals. Visitors to Tyler focus more on enjoying the beauty of the area.
Registering Your Short-Term Rental Business
Texas law defines a vacation property as any residential unit or dwelling rented temporarily for less than 30 consecutive days at a time.
The state does not mandate that you register your investment property as a vacation property, but you must register with the Texas Comptroller's Office and pay taxes on your earnings.
Some cities in Texas have registration requirements for short-term rentals, but Tyler has no such regulations.
If you hire a property manager to take care of your vacation home, they may need a license. Any Tyler property manager who accepts rent on behalf of the vacation rental owner must have a broker's license.
Legal Considerations for Vacation Rentals and Taxes
In Texas, short-term rental property owners must pay two kinds of taxes on their earnings. These are:
State Hotel Occupancy Tax
The state HOT amounts to 6% of any fees charged to vacationers. These include rental fees, cleaning fees, cancellation fees, pet fees, and laundry fees.
You do not pay taxes on income from late departure fees or childcare.
Local Lodging Tax
Cities, counties, and certain districts may impose an extra tax amounting to 6% of the cost of the room for rental stays. These cities collect the applicable taxes.
In Tyler, owners of short-term rental properties do not pay additional taxes on their short-term rental earnings.
Embrace Tyler's Short-Term Rental Market
Provided local laws don't change, Tyler remains an excellent choice for those who want to maximize short-term rentals. So, if you own a second home or are considering buying an investment property, it's worth considering this option.
PMI Tyler has the resources to ensure you benefit from this decision. We stay up-to-date with all the legal considerations for vacation rentals, so you don't need to keep track of them.
Get in touch to discover what it's like to work with a winning team of rental property managers in Tyler, TX.