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

Starting a Short-Term Rental Business in Denton County

Denton County, Texas has specific regulations for short-term rentals like those listed on Airbnb and VRBO. The City of Denton defines a short-term rental as any residential property rented out for less than 30 days.

As of February 1, 2020, all STR operators in Denton are required to apply for a Short-Term Rental Registration with the city. The registration costs $100, is valid for one year, and requires hosts to meet certain minimum standards outlined in the Denton Development Code.

However, a recent presentation to the Denton Development Code Review Committee revealed that the vast majority of STRs in the city are currently unregistered. City staff estimates there are 200-250 STRs operating without proper registration, with only 8 currently paying the required 7% hotel occupancy tax.

The city is now considering amendments to the 2019 development code regarding STRs. Proposed changes include:

• Clarifying code language around maximum occupancy, parking requirements, and party restrictions
• Prohibiting RVs and travel trailers from being used as STRs
• Implementing additional enforcement and inspection procedures
• Determining if apartments and individual bedrooms should be allowed as STRs

A recent federal court ruling also found Denton's requirement that STR registrants live on the property as their primary residence to be unconstitutional. This opens up the possibility for out-of-state owners to operate STRs in Denton going forward.

The city is holding in-person and virtual town hall meetings in August 2023 to get community input on the current STR regulations and draft amendments before finalizing the changes. STR owners and neighbors will have the opportunity to weigh in.

In summary, while Denton allows short-term rentals, the city has struggled with compliance and is now working to strengthen its registration process and operating standards. Prospective STR hosts should carefully review the city's requirements, stay up-to-date on any code changes, and ensure their property is properly registered and remitting hotel taxes. With clearer regulations, STRs can be a viable business opportunity in this growing Texas county.

Short-Term Rental Licensing Requirements in Denton County

To legally operate a short-term rental in Denton County, property owners must obtain a Short-Term Rental Registration from the City of Denton. The registration process opened on February 1, 2020, and is handled by the Development Services department.

To apply for an STR registration, owners must submit the following to Development Services:

1. Completed Short-Term Rental Registration Application
2. Proof of property ownership or signed acknowledgment from the property owner
3. Proof of property insurance
4. Parking plan showing on-site parking spaces
5. Floorplan of the STR unit
6. 24/7 local contact number for guest issues
7. Proof of payment for the $100 annual registration fee

Incomplete applications will not be accepted. The typical processing time is not specified, but the city recommends applying well in advance of when you plan to begin renting.

Once approved, the STR registration is valid for one year. The city will send notification letters to all properties within 100 feet of the registered STR with the owner's 24/7 contact information.

In addition to the $100 registration fee, STR operators must collect and remit a 7% Hotel Occupancy Tax to the city each month. Failure to register an STR or pay hotel taxes can result in fines starting at $500 per violation.

STRs must also comply with the city's operating standards at all times, including:

1. Maximum occupancy limits
2. Parking restrictions (all guest vehicles must park on-site)
3. Noise and nuisance rules
4. Safety requirements like smoke alarms and fire extinguishers
5. Posting the STR registration certificate and owner contact info inside the unit

Violations are subject to citations and fines. Three or more citations in a 12 month period can lead to revocation of the STR registration.

For more information or help with the registration process, contact City of Denton Development Services:

1. Address: 401 N. Elm St, Denton, TX 76201
2. Phone: (940) 349-8600
3. Hours: Monday to Friday, 8:00 am to 5:00 pm

Required Documents for Denton County Short-Term Rentals

To register a short-term rental property in Denton County, owners must submit the following documents to the City of Denton's Development Services department:

1. Completed Short-Term Rental Registration Application: This form collects key information about the property owner, 24/7 local contact, and the rental unit itself. It also requires the owner to certify they will follow all STR regulations.
2. Proof of Property Ownership: Acceptable documentation includes a property deed, current property tax statement, or utility bill in the owner's name for that address. If the applicant is not the owner, they must submit signed acknowledgment from the actual property owner.
3. Two Forms of Proof of Primary Residence: STR operators must prove the rental is their primary residence by providing two documents such as a driver's license, vehicle registration, voter registration, property tax documents, or utility bill showing that address.
4. Sketch Floor Plan: A floor plan of the STR unit must be provided, showing the dimensions and layout of each room. This helps verify bedroom count and occupancy limits.
5. Parking Plan/Site Survey: This visual shows all available on-site parking spaces for the property. On-street and alley parking cannot be included. The number of cars permitted is limited by the garage/driveway capacity or bedroom count, whichever is less.
6. Informational Brochure: STR operators must create a brochure for guests with the owner's 24/7 contact info, a local contact number, neighborhood rules (noise, parking, trash), and emergency information. A copy of this brochure must be submitted with the application.
7. Proof of Insurance: Documentation showing the rental property is properly insured must be provided.

These documents help the city verify the identity of STR operators, set and enforce occupancy/parking limits, ensure the property is safe for guests, and facilitate communication between the city, owners, and renters. Failure to provide all required information and documents will result in the application being rejected.

Denton County Short-Term Rental Taxes

Short-term rental operators in Denton County are subject to various taxes, including hotel occupancy taxes at both the city and county levels. Understanding these tax obligations is crucial for running a compliant and profitable rental business.

City of Denton Hotel Occupancy Tax

The City of Denton imposes a 7% local hotel occupancy tax on all short-term rentals, defined as properties rented for less than 30 consecutive days. This tax is calculated based on the rental's taxable revenue, which is the gross revenue minus any applicable exemptions.

STR operators must file a monthly tax report and submit payments to the City of Denton's Customer Service department by the 20th of the following month. For example, taxes for March revenue are due by April 20th. Late payments may incur penalties and interest.

Denton County Hotel Occupancy Tax

In addition to the city tax, Denton County charges a 2% hotel occupancy tax on short-term rentals as of October 1, 2023. This tax applies to all STRs in the county that are not located on contiguous property in more than one county.

Like the city tax, the county hotel occupancy tax is due monthly and must be reported using the county's online tax reporting software, iGov. Payments are due on the 20th day of the month following the end of each quarter for operators owing less than $500 per month or $1,500 per quarter. All others must file monthly.

Failure to file reports or pay taxes on time can result in penalties of 5-10% of the tax amount due, plus interest at a rate of 10% per year beginning 60 days after the original due date.

Possible Tax Deductions for Short-Term Rentals

While short-term rental operators must pay various taxes, they may also be eligible for certain tax deductions that can help offset their tax liability. Some possible deductions for STRs in Texas include:

1. Property taxes (partial deduction based on rental vs. personal use)
2. Mortgage interest (partial deduction based on rental vs. personal use)
3. Depreciation of the rental property
4. Maintenance, cleaning, and repair costs
5. Supplies and amenities provided to guests
6. Insurance premiums for the rental property
7. Advertising and marketing expenses
8. Utilities paid by the owner
9. Fees charged by rental platforms like Airbnb or VRBO

To claim these deductions, STR operators should keep detailed records of all rental-related income and expenses, and consult with a tax professional to ensure compliance with all applicable laws and regulations.

By understanding the local hotel occupancy taxes and taking advantage of available deductions, Denton County short-term rental owners can optimize their tax strategy and maximize the profitability of their rental business.

Texas Wide Short-Term Rental Rules

While Denton County has its own specific short-term rental regulations, there are also some state-wide rules in Texas that all STR hosts, including those in Denton County, must follow.

The state of Texas defines a short-term rental as any residential property rented out for less than 30 consecutive days. At the state level, Texas has fairly minimal regulations on short-term rentals, allowing city and county governments significant leeway in determining their own laws.

However, there are a few key state-wide requirements:

1. Hotel Occupancy Taxes: Hosts of Texas short-term rentals are subject to the state hotel occupancy tax of 6% for stays under 30 consecutive days. This is in addition to any local lodging taxes imposed by cities or counties. Hosts must register with the Texas Comptroller's Office to receive a hotel tax ID number and legally collect and remit these taxes.
2. Tax Exemptions: Certain guests, such as government officials, foreign diplomats, and some non-profit entities may be exempt from paying the state hotel occupancy tax. Hosts need to be aware of these exemptions.
3. Rental Platforms & Taxes: Short-term rental platforms like Airbnb and Vrbo collect and remit the state hotel occupancy tax on behalf of their Texas hosts. However, if a host lists their property on multiple sites, they may still be responsible for collecting taxes on any bookings made outside of Airbnb/Vrbo.
4. Property Taxes: STR properties in Texas are still subject to property taxes. Hosts may qualify for certain property tax deductions related to renting, such as writing off a portion of mortgage interest, insurance, utilities, and repairs.
5. Homeowners Associations: If a rental property is located within a development with a Homeowners Association (HOA), hosts must comply with any HOA rules regarding short-term rentals. Some HOAs prohibit or restrict STRs.

Beyond these state-wide regulations, the majority of short-term rental rules in Texas are determined at the local city and county levels. Denton County, for example, requires all STR operators to register with the city, pay an annual permit fee, and meet various health and safety standards.

As a Denton County STR host, it's critical to understand and follow both the Texas state-wide rules and the Denton County-specific ordinances to operate legally and avoid fines or penalties. Consulting with local officials and joining host forums can help navigate the regulatory landscape.

Does Denton County Strictly Enforce STR Rules?

Based on discussions in real estate forums like BiggerPockets and Reddit, Denton County appears to be less Airbnb-friendly compared to some other major cities in Texas. The county has implemented a number of regulations on short-term rentals in recent years, including requiring all operators to register with the city, pay an annual permit fee, and meet various health and safety standards.

However, enforcement of these rules seems to be lacking. A recent presentation to the Denton Development Code Review Committee revealed that the vast majority of STRs in the county are currently unregistered. City staff estimate there are 200-250 STRs operating without proper permits, with only 8 currently paying the required 7% hotel occupancy tax.

This suggests that while Denton County has put STR regulations on the books, they are not being strictly enforced in practice. Many hosts seem to be flying under the radar and operating their rentals without going through the proper registration channels or paying lodging taxes.

That said, Denton County is actively working to strengthen its STR ordinances and crack down on illegal operators. Proposed amendments to the development code include clarifying occupancy limits, parking requirements, and party restrictions, as well as implementing additional inspection procedures and determining if apartments/individual rooms can be used as STRs.

Compared to major cities like Austin and Houston which have taken a more hands-off approach, Denton County is less Airbnb-friendly overall. Places like Fredericksburg and Marfa are much more welcoming of vacation rentals and have thriving STR markets.

So in summary, while enforcement has been lax to date, Denton County is not turning a blind eye to short-term rentals. Efforts are underway to tighten regulations and require all hosts to register and pay taxes. Investors should not assume they can operate under the radar here indefinitely without facing potential fines or legal issues. The STR landscape is likely to become more challenging in Denton County in the years ahead as the county government tries to get a handle on the growing vacation rental industry.

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

Starting a short-term rental business in Denton County can be a profitable venture, but it requires careful planning and adherence to local regulations. Here's a step-by-step guide to help you get started:

1. Research local regulations: Familiarize yourself with Denton County's short-term rental ordinances, zoning laws, and any other applicable regulations. Understand the registration process, fees, taxes, and operating standards you'll need to comply with. Review the City of Denton's Short-Term Rental Information Packet for detailed requirements and application instructions.
2. Determine your target market: Identify the type of guests you want to attract, such as families, business travelers, or tourists. Consider your property's location, amenities, and unique selling points to determine your ideal guest profile. Research popular events, attractions, and seasonal trends in Denton County to better understand potential demand for your rental.
3. Prepare your property: Ensure your property meets all local safety and habitability standards. Make any necessary repairs, upgrades, or renovations to create an inviting space for guests. Consider hiring a professional photographer to showcase your property's best features. Focus on providing popular amenities like fast Wi-Fi, comfortable furnishings, and well-equipped kitchens to attract more bookings.
4. Obtain necessary permits and licenses: Apply for a Short-Term Rental Registration with the City of Denton, which costs $100 and is valid for one year. Gather all required documents, such as proof of ownership, site plans, floor plans, and parking plans. Submit a complete application to avoid delays in the approval process. Incomplete applications will not be accepted by Development Services staff.
5. Create a compelling listing: Craft an attractive and informative listing on popular vacation rental platforms like Airbnb and Vrbo. Use high-quality photos, detailed descriptions, and competitive pricing to stand out from other listings. Highlight your property's unique features, local attractions, and guest amenities in your listing description to appeal to your target market.
6. Establish cleaning and maintenance procedures: Develop a thorough cleaning checklist and schedule to ensure your property is always guest-ready. Consider hiring a professional cleaning service or property manager to handle turnovers and maintenance. Use the time between bookings to conduct regular property inspections and address any wear and tear or maintenance issues promptly.
7. Manage bookings and guest communication: Respond promptly to guest inquiries, booking requests, and any issues that arise during their stay. Maintain a high level of communication and professionalism to earn positive reviews and repeat business. Use vacation rental software or a property management service to streamline booking management, guest communication, and other administrative tasks.
8. Comply with ongoing regulations: Stay up-to-date with any changes to Denton County's short-term rental regulations, and ensure ongoing compliance with registration, tax collection, and operating standards. Set reminders to renew your Short-Term Rental Registration annually and to file monthly Hotel Occupancy Tax reports.

By following these steps and prioritizing guest satisfaction, you can establish a successful short-term rental business in Denton County. Remember to stay informed about local regulations, adapt to market trends, and continually improve your property and services to attract more bookings and positive reviews.

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

If you have questions or concerns about short-term rental regulations and zoning in Denton County, the following contacts and resources can help:

City of Denton Development Services

The Development Services department handles the registration process for short-term rentals in Denton and enforces the city's STR ordinances. You can reach them at:

1. Address: 401 N. Elm St, Denton, TX 76201
2. Phone: (940) 349-8600
3. Email: building@cityofdenton.com
4. Hours: Monday to Friday, 8:00 am to 5:00 pm

Development Services has also published a Short-Term Rental Information Packet and Requirements and Regulations document on the city website. These provide detailed guidance on the STR registration process, fees, operating standards, and more.

Denton County Development Services

For questions related to short-term rentals in unincorporated areas of Denton County, contact the county's Development Services office at:

• Phone: (940) 349-2990
• Website: https://www.dentoncounty.gov/674/Forms-Documents

The county website has a Forms & Documents section that may include additional resources on land use and zoning regulations that impact short-term rentals.

Local Forums and Community Groups

To stay up-to-date on local discussions around short-term rental policies, Denton hosts may want to join some online forums and community groups, such as:

Discuss Denton - Short-Term Rentals: https://www.discussdenton.com/short-term-rentals

This page shares information on the city's proposed changes to STR regulations and upcoming town hall meetings.

Denton County Real Estate Investing Group on BiggerPockets: https://www.biggerpockets.com/forums/521-denton-county

Real estate investors discuss local trends and regulations impacting short-term rentals.

Denton, TX Airbnb Hosts Forum on Facebook: https://www.facebook.com/groups/dentonairbnb/

A community group for Denton hosts to network and share tips.

By staying engaged with these city and county contacts, as well as plugged into relevant online groups, short-term rental operators can ensure they understand and comply with all local regulations. Reaching out proactively is the best way to get answers to any zoning or permitting questions.

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

Based on discussions in local real estate forums, short-term rental hosts in Denton County have mixed feelings about the current and proposed regulations:

Reddit - r/Denton

In a recent thread titled "The City of Denton is looking to amend short-term rental rules", hosts debated the need for differentiated regulations. Some argued there should be a distinction between owner-occupied properties occasionally rented out vs. investor-owned properties rented full-time. Others felt the free market should sort it out without government intervention.

One commenter shared anecdotally: "I live in Denton and have two friends being kicked out of their apartments in order to turn them into Air B&B's. Worst part is that it's downtown and by a local music venue, so the location is prime but the noise complaints are going to roll in."

BiggerPockets Forum

In a post on the BiggerPockets forum titled "Looking to buy a rental property in Denton, TX", an investor asked if Denton is a good market for long-term rentals, given the new restrictions on short-term rentals in Dallas.

Respondents suggested looking at nearby areas like Johnson County where there are still good deals on properties needing rehab. They noted the DFW market in general is becoming more challenging for cash flow on single-family homes.

Another BiggerPockets user started a thread called "Newbie in Denton, TX" to connect with other local investors. While not directly discussing regulations, the post suggests an appetite among new investors to get into the Denton market, both for long-term and short-term rentals.

Overall, the sentiment among Denton County hosts seems to be one of uncertainty as they wait to see how strictly the new regulations will be enforced and if the proposed amendments will be adopted. Some worry the rules will make it harder for "regular people" to earn extra income, while others argue they are needed to preserve neighborhood character and housing affordability. As the city continues to gather community input, host opinions are likely to evolve.

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.