Collin County, Texas Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Collin County, Texas?

Short-term rental regulations in Collin County, Texas vary by city. While there are no county-wide ordinances, many cities within Collin County have enacted their own rules and requirements for operating short-term rentals. These regulations are often found in zoning codes, planning codes, city ordinances, and real estate forums.

Starting a Short-Term Rental Business in Collin County

To start a short-term rental business in Collin County, you'll first need to research the specific regulations in the city where your property is located. Some key considerations:

• Registration and Permits: Many cities, such as Frisco and Allen, require STR owners to register their properties and obtain annual permits. Fees vary by city.
• Taxes: STR owners are generally required to collect and remit hotel occupancy taxes. For example, McKinney has a 7% hotel occupancy tax.
• Zoning Restrictions: Some cities limit the number or location of STRs. McKinney caps STRs at 25% of units in a neighborhood.
• Safety Requirements: Cities may have specific safety measures STRs must follow, such as providing fire extinguishers and smoke alarms.

While Texas does not require a state-level STR permit, you'll still need to register your business with the state and obtain a sales tax permit if renting out tangible property. It's also important to choose an appropriate business structure (sole proprietorship, LLC, etc.) and obtain an EIN from the IRS.

Recent developments show a trend towards stricter STR regulations in Collin County. In April 2024, Plano passed an ordinance banning new STRs in most residential areas, only grandfathering in existing ones. The city council cited complaints about noise, parking issues, and even criminal activity at problem STRs as reasons for the ban.

Overall, carefully review the STR ordinances and processes in your specific city before starting a short-term rental business in Collin County. Consulting with local officials and joining real estate investing groups can provide further guidance on navigating the regulatory landscape. With proper planning and compliance, STRs can still be a viable business opportunity in many parts of the county.

Short-Term Rental Licensing Requirements in Collin County

While there are no county-wide short-term rental licensing requirements in Collin County, many cities within the county have their own registration and permitting processes. Here's a breakdown of the requirements in several major Collin County cities, based on their official websites:

Allen

1. Annual permit required
2. Register and apply through the Short-Term Rental Registration Portal
3. Permit fees not specified on website
4. Renting without a permit violates city ordinance and is subject to enforcement

Frisco

1. Annual permit required, $300 fee per property
2. Register through Avenu Insights online service
3. Once approved, permit number must be included in all advertisements and booking sites
4. Unregistered STRs subject to fines, penalties, and potential future registration bans

McKinney

1. STRs capped at 25% of units in a neighborhood
2. 7% hotel occupancy tax must be collected and remitted
3. Specific registration process and fees not provided

Plano

1. As of May 2024, new STRs are banned in most residential areas
2. Existing STRs must register with the city by August 1, 2024, and pay a fee (amount not specified)
3. Prior to the ban, a temporary moratorium on new STRs was in effect from May 2023 to May 2024

The STR registration process typically involves providing contact information, compliance with safety measures, and agreeing to collect and remit applicable hotel occupancy taxes. Processing times are not clearly stated but appear to range from a couple weeks to a month or more.

Failing to properly register an STR can result in fines, penalties, and in some cases like Frisco, being prohibited from registering the property as an STR in the future. To avoid issues, owners should carefully review their city's specific ordinances and ensure they follow all requirements before listing or renting out their property on a short-term basis.

As regulations can change frequently, it's best to contact the permitting department of your city for the most up-to-date information on short-term rental licensing requirements, fees, and processes. Joining local real estate investing groups can also provide insights into navigating the evolving regulatory landscape around STRs in Collin County.

Required Documents for Collin County Short-Term Rentals

The specific documents required to register a short-term rental vary by city within Collin County. However, based on the ordinances and websites of major cities like Frisco and Plano, here are some commonly required documents:

1. Proof of Property Ownership: Documents such as a bill of sale, warranty deed, property tax statement, or screenshot from the county assessor's office proving you own the property. Required to verify you have the legal right to operate an STR at the address.
2. Liability Insurance: Proof of at least $1 million in liability coverage for the property. Protects both the owner and guests in case of accidents or injuries.
3. Contact Information Form: Includes name, address, phone, and email for the owner, property manager, and any other designated contacts who can quickly respond to issues. Allows the city to reach responsible parties if needed.
4. Property Information: Details like the address, number of bedrooms/bathrooms, maximum occupancy, parking spaces, etc. Helps the city track and monitor STRs.
5. Floor Plan: Shows the layout of the property, including room types, emergency evacuation routes, and locations of safety equipment like fire extinguishers and smoke detectors. Ensures the STR meets safety standards.
6. Interior & Exterior Photos: Pictures of the areas of the property that guests can access. Documents the condition and amenities of the STR for the city's records.
7. STR Rules: The rules you set for your property, such as the maximum number of guests, noise policies, parking restrictions, etc. Informs the city how you'll maintain neighborhood compatibility.
8. Proof STRs are Allowed: Evidence that your property is eligible to operate as an STR, such as an HOA approval letter or a statement that the property is not bound by any private rules prohibiting STRs. Confirms you have the right to use the property as an STR.
9. Listing Sites: A list of all the websites where you plan to advertise your STR, such as Airbnb and Vrbo. Allows the city to check that your online listings comply with their regulations.

These documents are typically submitted through the city's online STR registration portal, along with the required application and fees. The specific requirements and process can vary, so always check your city's official STR ordinance and website for the most accurate and up-to-date information. Consulting with local officials can also provide clarity on the documents needed for your particular property.

Collin County Short-Term Rental Taxes

While there is no county-wide hotel occupancy tax in Collin County, many cities within the county levy their own taxes on short-term rentals. Here are the tax rates and requirements for some major cities:

McKinney

1. 7% hotel occupancy tax
2. Remitted monthly to the City of McKinney Financial Services Department
3. Due on the 20th day of the month following each reporting period
4. Failure to pay on time results in 5% penalty, plus interest

Frisco

1. Specific tax rate not provided
2. STRs required to collect and remit hotel occupancy taxes monthly
3. Taxes submitted through a process provided by the Financial Services Department

In addition to any city hotel occupancy taxes, STRs in Texas are subject to the 6% state hotel occupancy tax. This must be remitted separately to the state.

STRs may also need to collect and remit sales taxes. The minimum combined 2024 sales tax rate for Collin County is 8.25%, which includes the 6.25% Texas state sales tax rate and the 2% Collin County sales tax rate.

Potential Deductions and Write-Offs

STR owners may be able to deduct certain expenses related to operating their rental business on their taxes. Some common deductions include:

1. Mortgage interest
2. Property taxes
3. Insurance
4. Utilities
5. Cleaning and maintenance costs
6. Supplies
7. Repairs
8. Depreciation on the rental property
9. Fees paid to rental platforms like Airbnb or Vrbo

Owners should keep detailed records and receipts for all STR-related expenses. Consulting with a tax professional can help identify and maximize any eligible deductions based on your specific circumstances.

It's important to note that tax requirements and deductions can vary based on how the STR is structured (sole proprietorship, LLC, etc.), how often it's rented, and whether it's also used for personal purposes. Carefully tracking income and expenses, and staying up-to-date on local tax ordinances, is key to ensuring compliance and minimizing your tax liability as an STR owner in Collin County.

Texas Wide Short-Term Rental Rules

At the state level, Texas has minimal regulations specifically targeting short-term rentals. The state defines an STR as a residential property rented out for less than 30 consecutive days. Beyond this basic definition, Texas leaves most of the regulation and oversight of STRs to local city and county governments.

However, there are a few state-wide requirements that impact Collin County STR hosts:

• Hotel Occupancy Tax: The state of Texas imposes a 6% Hotel Occupancy Tax (HOT) on all rentals of 30 days or less. Airbnb and Vrbo automatically collect and remit this tax on behalf of hosts for bookings made through their platforms. For non-Airbnb/Vrbo bookings, hosts are responsible for collecting and paying the state HOT.
• Sales Tax Permit: STR owners must obtain a sales tax permit from the Texas Comptroller's Office in order to collect and remit the required state hotel occupancy taxes.
• Property Tax: STRs are subject to property taxes just like traditional residential properties. The taxable value may be higher if the property is not the owner's primary residence.
• Homeowners Associations (HOAs): If the STR property is located within an HOA, hosts must comply with any HOA rules or restrictions regarding short-term rentals, which can be more stringent than city or county regulations.

While Texas does not have a state-wide registration or licensing process for STRs, many major cities and counties, including those within Collin County, have implemented their own local ordinances governing short-term rentals. These can include zoning restrictions, permitting requirements, occupancy limits, parking rules, and noise regulations.

For example, the City of Plano in Collin County recently passed an ordinance in May 2024 that significantly restricts new STRs, limiting them almost entirely to multifamily complexes and nonresidential zoning districts. Existing STRs must register with the city by August 1, 2024, to be grandfathered in.

Other cities within Collin County may have their own unique STR regulations that hosts must navigate and comply with to avoid fines or legal issues. It's critical for Collin County STR owners to research and understand the specific rules in their city, in addition to any state-level requirements.

The regulatory landscape for short-term rentals in Texas continues to evolve as local governments grapple with how to best oversee this growing industry. While the state provides a relatively flexible framework, the onus is on individual hosts to ensure they are operating in compliance with all applicable state and local laws to protect their investment and run a successful STR business.

Does Collin County Strictly Enforce STR Rules?

Based on discussions in real estate investing forums like BiggerPockets and on Reddit, Collin County and its cities are becoming increasingly strict in enforcing short-term rental regulations. The general consensus is that Collin County is not particularly Airbnb-friendly compared to other areas.

One BiggerPockets user noted the challenges of finding STR loopholes to avoid permitting in cities that are cracking down, like requiring stays to average longer than 7 days. They speculated that cities are closely monitoring Airbnb listings for any rentals under 30 days to identify non-compliant properties.

On the Dallas subreddit, users expressed strong support for the city council's June 2023 vote to ban STRs in most residential neighborhoods. Commenters shared issues with "party houses" and out-of-state investors buying up homes for Airbnb, indicating a lack of local support for STRs. The new Dallas rules were seen as a "huge victory for actual homebuyers."

While some hosts may still attempt to operate STRs despite the rules, the strict new regulations and permitting requirements in cities like Dallas, Frisco, and Plano make it increasingly difficult. Failure to comply can result in fines, penalties, and bans on future registrations.

The rapid rise in property taxes in Collin County also makes it challenging for STRs to be profitable compared to long-term rentals. One Bigger Pockets thread noted that even with the hot Dallas-area market, cash flow is very tight for STRs once the huge property tax increases are factored in.

Overall, real estate investors paint a picture of Collin County cities taking a hard stance against short-term rentals, especially in single-family neighborhoods. The county is prioritizing concerns around housing affordability, neighborhood preservation, and quality of life for residents over STR businesses. Hosts operating without proper registration and permitting are likely to face enforcement action as cities strengthen their STR ordinances. Collin County is not a very Airbnb-friendly environment currently.

How to Start a Short-Term Rental Business in Collin County

Starting a short-term rental business in Collin County requires careful planning and compliance with local regulations. Here's a step-by-step guide to get you started:

• Research Local Regulations: Thoroughly review the STR ordinances in your specific city, as rules vary widely across Collin County. Determine if your property is eligible for STR use and what permits or licenses are required. Consult with local officials for guidance.
• Register Your Business: Choose an appropriate business structure (sole proprietorship, LLC, etc.) and register your STR with the state of Texas. Obtain an Employer Identification Number (EIN) from the IRS for tax purposes.
• Obtain Necessary Permits: Apply for any required STR permits or licenses through your city's designated process, which may include submitting documents like proof of ownership, liability insurance, and property details. Pay applicable fees and ensure your registration remains active.
• Prepare Your Property: Ensure your STR meets all safety requirements, such as smoke detectors, fire extinguishers, and emergency evacuation routes. Furnish and equip the property to provide a comfortable and inviting experience for guests.
• Set House Rules:Establish clear house rules for your STR, including maximum occupancy, noise levels, parking, and pet policies. Communicate these rules to guests and include them in your listing description.
• Create a Listing: Take high-quality photos of your property and write a compelling description highlighting its unique features and amenities. List your STR on popular platforms like Airbnb and Vrbo, making sure to include all required information like your permit number.
• Manage Bookings and Guests: Respond promptly to booking inquiries and guest questions. Use a reliable system for managing reservations, check-ins, and check-outs. Consider hiring a reputable property management company if you need assistance.
• Collect and Remit Taxes: Set up processes to collect and remit all applicable taxes, including state and local hotel occupancy taxes and sales taxes. Maintain accurate records of all transactions for tax purposes.
• Maintain the Property: Regularly clean and maintain your STR to ensure a high-quality experience for guests. Address any maintenance issues promptly and provide basic amenities like linens and toiletries.
• Monitor and Adapt to Regulations: Stay informed about any changes to STR regulations in your city and adapt your business practices as needed to remain compliant. Join local host groups or industry associations to stay updated on best practices and advocacy efforts.

Some additional tips for success:

• Focus on providing exceptional customer service to earn positive reviews and repeat bookings.
• Optimize your pricing based on demand, seasonality, and local events.
• Invest in professional photography to make your listing stand out.
• Screen guests carefully and have a clear cancellation policy to protect your property.
• Consider offering unique amenities or experiences to differentiate your STR.

Starting an STR business in Collin County can be challenging given the evolving regulatory landscape, but with proper planning and compliance, it can still be a rewarding venture. Prioritize guest satisfaction, maintain open communication with local officials, and stay adaptable to position your STR for long-term success.

Who to Contact in Collin County about Short-Term Rental Regulations and Zoning?

For questions about short-term rental regulations and zoning in Collin County, your first point of contact should be the specific city where your property is located, as rules vary widely across the county. However, here are some key contacts and resources for major cities in Collin County:

Frisco

• STR Registration: Register properties through the Avenu Insights online portal at https://www.harmari.com/client/reg-portal/register/frisco
• Customer Service for Registration: Call 1-877-352-3277, ext. 5 (Monday-Friday, 9am-5pm CT)
• Complaints about Nuisance STRs: Submit online or call 1-800-695-4348

Allen

• STR Permits: Register or renew permits through the Short-Term Rental Registration Portal at https://cityofallen.munirevs.com/log-in
• Questions: Contact City of Allen Permitting staff at permits@cityofallen.org or 214-509-4130

McKinney

For general city inquiries: Call 972-547-7500 or use the contact form at https://www.mckinneytexas.org/1568/Contact-Us

Plano

• Questions about the new STR ordinance: Email STRquestions@plano.gov
• For general city inquiries: Call 972-941-7000 or use the contact directory at https://www.plano.gov/directory.aspx

For county-level questions, you can try contacting:

• Collin County Engineering Department: 972-548-3727 or dredwine@co.collin.tx.us
• Collin County Development Services: 972-548-5585 or https://www.collincountytx.gov/Services/Engineering/Development-Services

In addition to official city and county resources, connecting with other local hosts through online groups and forums can provide valuable insights and support:

• Bigger Pockets Forum: https://www.biggerpockets.com/forums/530-short-term-vacation-rental-discussions - Not specific to Collin County but has helpful general STR discussions
• Airbnb Community Center: https://community.withairbnb.com/t5/Hosting/ct-p/hosting - Official forum for Airbnb hosts to connect and share advice

Remember that regulations are subject to change, so it's important to stay in close contact with your city and regularly check for any ordinance updates that may impact your STR business. Joining local real estate investing groups and attending city council meetings can also help you stay informed and advocate for fair STR policies in Collin County.

What Do Airbnb Hosts in Collin County on Reddit and Bigger Pockets Think about Local Regulations?

Discussions on real estate investing forums like BiggerPockets and Reddit provide insights into how Airbnb hosts in Collin County are navigating the evolving regulatory landscape. Here are some key takeaways:

Concerns about Strict Enforcement

In a BiggerPockets thread about short-term rental loopholes, one user noted the challenges of avoiding permitting in cities that are cracking down, like requiring stays to average longer than 7 days. They speculated that cities are closely monitoring Airbnb listings under 30 days to identify non-compliant properties. This suggests hosts are worried about the increasing difficulty of operating STRs without proper registration.

Impact of Dallas Ban on Surrounding Areas

After the Dallas City Council voted in June 2023 to ban STRs in most residential neighborhoods, BiggerPockets users discussed the potential spillover effect on surrounding cities like Plano. One Plano resident noted that 3 out of 32 houses on their block were already full-time Airbnbs, even in a "boring" area, and wondered if the Dallas restrictions would push more STR activity into the suburbs.

Frustrations with Nuisance Properties

On the Dallas subreddit, users expressed strong support for the STR ban, sharing issues with "party houses" and out-of-state investors buying up homes for Airbnb. One commenter shared how an Airbnb party in their residential neighborhood resulted in stray gunshots hitting a neighbor's house, leading them to back the restrictions. These sentiments suggest waning community tolerance for poorly managed STRs.

Concerns about Changing Regulations

In a general BiggerPockets thread about what happens when local regulations change, hosts discussed the risks of having an established STR business in an area that suddenly becomes less Airbnb-friendly. While no Collin County-specific examples were given, it highlights the anxieties hosts face about potentially losing their investment if unable to adapt to new rules.

Challenges of Rising Costs

Although not directly related to regulations, Collin County hosts on Reddit have also expressed concerns about the impact of skyrocketing home prices and property taxes on STR profitability. In a thread about Collin County's affordability, one user noted that the high costs are making them consider selling their STR and moving somewhere with lower taxes and more attractive amenities.

Overall, the experiences shared by Airbnb hosts in Collin County paint a picture of an increasingly restrictive and expensive environment for short-term rentals. As cities enact stricter ordinances and enforcement, hosts are grappling with how to comply with complex rules, mitigate nuisance issues, and still turn a profit in a high-cost market. The discussions underscore the importance for hosts to stay informed, adapt their business models, and work proactively with local officials to find a sustainable path forward for STRs in the community.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.