El Paso, Texas Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations El Paso, Texas?

El Paso's short-term rental landscape offers a unique opportunity for property owners looking to enter the vacation rental market. Unlike many major Texas cities, El Paso currently operates with minimal specific regulations targeting Airbnb and VRBO hosts, creating a relatively open environment for those interested in this investment strategy. However, the regulatory landscape is evolving, with city officials actively exploring potential new rules. Let's dive into the current state of short-term rental regulations in El Paso and what prospective hosts need to know.

Starting a Short-Term Rental Business in El Paso, Texas

If you're considering launching a short-term rental business in El Paso, you're entering the market at an interesting time. Currently, El Paso doesn't have an ordinance specifically governing short-term rentals. This means you won't need to navigate a complex permitting process or adhere to STR-specific regulations that exist in other Texas cities.

In Texas, a "short-term rental" is defined as any residential property, "including a single-family dwelling or a unit in a condominium, cooperative, or time-share, that is rented wholly or partly for a fee for a period not longer than 30 consecutive days". This definition applies to properties listed on platforms like Airbnb and VRBO throughout the state, including El Paso.

The good news for prospective hosts is that El Paso doesn't currently require specific permits to start your STR business. The city has taken a relatively hands-off approach compared to other major Texas markets, making it easier to get started. However, it's important to note that all nuisance ordinances that apply to regular residents also apply to short-term rental hosts and their guests.

While local regulations may be minimal, you're still subject to state tax requirements. All short-term rental owners in Texas must collect and remit the state's 6% Hotel Occupancy Tax (HOT). Fortunately, platforms like Airbnb and Vrbo collect and remit this tax on behalf of hosts, simplifying your tax compliance requirements.

The regulatory landscape in El Paso is in flux. The city has been actively exploring the implementation of new rules for the STR industry. In 2022, the El Paso City Council held community meetings to gather feedback on potential regulations. Some provisions being considered include:

• A potential licensing or registration system
• Distance requirements between rental properties (possibly 500 feet)
• Occupancy limits
• Life safety requirements
• A fee structure renewable every three years

The city is taking a measured approach to developing these regulations. In August 2023, rather than immediately implementing new rules, the City Council approved a pilot program to monitor complaints about short-term rentals through the city's 311 number. This program allows residents to report issues such as parking shortages, excessive noise, and trash problems.

The current regulatory environment makes El Paso relatively accessible for new STR hosts compared to other Texas cities with stricter rules. By establishing your business now and operating as a responsible community member, you'll be better positioned to adapt to any future regulatory changes while building a sustainable short-term rental operation in this growing market.

Short-Term Rental Licensing Requirement in El Paso, Texas

El Paso currently stands as an exception among major Texas cities when it comes to short-term rental regulations. Unlike Austin, San Antonio, and Dallas, El Paso does not currently have any licensing or permitting requirements specifically for operating short-term rentals. This creates a relatively open environment for property owners looking to enter the vacation rental market in the area.

Current Licensing Status

At present, hosts can list their properties on platforms like Airbnb and VRBO without obtaining any special permits from the city. This absence of formal licensing requirements has made El Paso an attractive market for those looking to start an STR business with minimal regulatory hurdles. However, this doesn't mean hosts are completely free from obligations.

Tax Registration Requirements

While no city-specific STR license is required, all short-term rental operators in Texas must register to collect and remit the state's 6% Hotel Occupancy Tax. For this, hosts need to:

1. Obtain a Texas Hotel Occupancy Tax Permit through the Texas Online Tax Registration Application or by submitting Form AP-201 by mail
2. For reservations booked through major platforms like Airbnb or Vrbo, these companies typically collect and remit this tax automatically on behalf of hosts
3. For direct bookings, hosts must submit the collected tax themselves by the 20th day of the month following the collection

Proposed Licensing Framework

The regulatory landscape in El Paso is evolving. City officials have been actively exploring the implementation of a formal short-term rental licensing program. Based on community meetings held in 2022, the proposed licensing framework might include:

1. A registration or permit system for all STR properties
2. A single fee structure that would be renewable every three years
3. Potential grandfathering provisions for existing short-term rentals within a specific time period
4. Penalties and fines for non-compliance

Potential Additional Requirements

The city is considering several other requirements that might accompany the licensing process:

1. Density limitations based on distance between STR properties (possibly requiring STRs to be at least 500 feet apart)
2. Submission of a site plan for the property
3. Compliance with life safety requirements
4. Occupancy limitations based on property size

Monitoring System

In August 2023, rather than immediately implementing new rules, the El Paso City Council approved a pilot program to monitor complaints about short-term rentals through the city's 311 number. This system allows residents to report issues such as parking shortages, excessive noise, and trash problems, with data being presented quarterly to the city council to inform future regulatory decisions.

While El Paso's current lack of specific STR licensing requirements makes it easier to enter the market compared to other Texas cities, hosts should prepare for potential changes as the city continues to develop its approach to regulating the short-term rental industry.

Required Documents for El Paso, Texas Short-Term Rentals

El Paso stands out among Texas cities for its current lack of formal documentation requirements specifically for short-term rental operations. Unlike many other major Texas cities that have implemented comprehensive STR regulations, El Paso does not currently mandate any special permits or licenses for operating an Airbnb or VRBO property. However, hosts still need to maintain certain documents for tax and general business purposes.

Texas Hotel Occupancy Tax Permit

While not a city requirement, all short-term rental operators in Texas must register to collect and remit the state's 6% Hotel Occupancy Tax. This is a state-level requirement that applies to all STR hosts in El Paso. You can obtain this permit through:

1. The Texas Online Tax Registration Application system
2. Submitting Form AP-201 by mail to the Texas Comptroller's office
3. The permit allows you to legally collect and remit the required state occupancy taxes

General Business Documentation

Though not specifically required for STRs, prudent hosts should maintain:

1. Proof of property ownership (deed or mortgage documents)
2. Property insurance documentation showing appropriate coverage for rental activities
3. Federal EIN (if operating as a business entity rather than an individual)
4. Personal identification documents

Potential Future Requirements

Based on the city's ongoing discussions about STR regulations, hosts should be prepared for potential future documentation requirements that might include:

Site Plan: A diagram showing the entire property, including:

1. Power panel disconnect location
2. House water main valve location
3. Designated on-site parking spaces available for renters
4. Storage location of trash containers and scheduled trash pickup days

Floor Plan: A scaled drawing showing:

1. All interior rooms
2. Location and number of bedrooms with beds to be rented
3. Approximate square footage of the rental property
4. Maximum number of overnight renters based on occupancy limits

Safety Certification: Evidence that each bedroom meets local building and safety code requirements

Contact Information: Documentation of:

1. Owner's name and contact details
2. Local contact person who can respond within 30 minutes to complaints
3. 24/7 emergency contact information

Property Classification: Identification of whether the STR is:

• A homeshare (owner-occupied property where rooms are rented)
• A non-hosted accommodation (entire property rented without owner present)

Municipal Variations

It's important to note that while El Paso County itself doesn't have formal STR documentation requirements, some municipalities within the county may have their own rules. Property owners should verify whether their specific location falls under any municipal regulations that differ from the county-level approach.

The relatively light documentation requirements currently in place make El Paso an accessible market for new STR operators. However, hosts should remain vigilant about potential regulatory changes and be prepared to comply with new documentation requirements if and when they are implemented.

El Paso, Texas Short-Term Rental Taxes

Understanding the tax implications of operating a short-term rental in El Paso is crucial for maintaining compliance and maximizing profitability. While El Paso's regulatory framework for STRs remains relatively light compared to other Texas cities, hosts must navigate several important tax obligations.

Texas Hotel Occupancy Tax (HOT)

All short-term rental operators in El Paso must collect and remit the state's 6% Hotel Occupancy Tax. This tax applies to any property rented for less than 30 consecutive days where the room cost is $15 or more per day. For hosts using major booking platforms:

• Airbnb and Vrbo automatically collect and remit this tax on behalf of hosts for bookings made through their platforms
• For direct bookings, hosts must collect this tax themselves and submit it to the Texas Comptroller's office
• Tax payments are due by the 20th day of the month following the rental period
• Late payments incur penalties of 5% if paid 1-30 days late, increasing to 10% if more than 30 days late
• Interest on delinquent taxes accrues at a rate of 12% annually

Proposed El Paso Hotel Occupancy Tax

El Paso is actively considering implementing its own hotel occupancy tax specifically for short-term rentals. Based on the most recent proposals:

• The city is looking to implement a 17.5% hotel occupancy tax on all STR bookings
• This would be in addition to the state's 6% HOT
• The tax aims to create parity between traditional lodging businesses and STRs
• This proposed tax would significantly impact pricing strategies for hosts in the El Paso market

Federal Income Tax

Income from short-term rentals must be reported on your federal tax return. How this income is classified can significantly impact your tax liability:

• If classified as active business income, STR earnings are reported on Schedule C
• If classified as passive rental income, earnings are reported on Schedule E
• The tax rate applied to your rental income will depend on your overall income tax bracket
• Self-employment taxes may apply depending on the services provided to guests

Tax Deductions and Write-offs for STR Operators

El Paso STR hosts can potentially reduce their tax liability through various deductions:

Property-Related Deductions

• Mortgage interest on the rental property
• Property taxes
• Insurance premiums
• Depreciation of the property (using the Modified Accelerated Cost Recovery Method)
• Cost segregation (depreciating property improvements separately from the actual property)

Operational Expense Deductions

• Maintenance and cleaning fees
• Utilities paid by the owner
• Furnishings and supplies for guests
• Platform commissions and fees (Airbnb, Vrbo, etc.)
• Marketing and advertising costs
• Legal and accounting fees

Additional Potential Deductions

• Travel expenses related to property management
• Home office expenses (if you manage your STR business from home)
• Professional services like photography or interior design
• Software subscriptions for property management

The 14-Day Rule Tax Loophole

Some El Paso property owners may benefit from the so-called "14-Day Rule":

• If you rent your property for 14 days or fewer in a calendar year
• AND you personally use the property for at least 14 days annually (or 10% of the total rental days, whichever is greater)
• Then you can exclude the rental income from your tax return entirely
• However, you cannot deduct expenses related to the rental activity

Material Participation Considerations

To maximize available deductions, El Paso STR hosts should aim to qualify their rental activity as active rather than passive income:

• Maintain consistent and constant business activity
• Document your active involvement in property management
• Meeting material participation standards may allow you to write off up to $25,000 per property
• This can significantly reduce your overall tax liability

As El Paso continues to develop its approach to short-term rental regulation, staying informed about tax obligations and potential deductions will be essential for hosts to operate profitably while remaining in compliance with all applicable laws.

Texas Wide Short-Term Rental Rules

While El Paso's local regulations for short-term rentals remain relatively minimal, hosts must still comply with several important state-level requirements that apply across Texas. Understanding these broader regulations is essential for operating a compliant STR business in El Paso.

Definition of Short-Term Rentals in Texas

Texas law defines a "short-term rental" as any residential property "including a single-family dwelling or a unit in a condominium, cooperative, or time-share, that is rented wholly or partly for a fee for a period not longer than 30 consecutive days". This definition applies to all STRs across the state, including those in El Paso, regardless of whether they're listed on Airbnb, VRBO, or other platforms.

State-Level Licensing

One advantage for El Paso hosts is that Texas does not require any state-level licensing or permits specifically for short-term rental operations. This means you don't need to apply for or maintain any special state permits to operate your STR business. However, this absence of state regulation places more importance on understanding and following local rules, which can vary significantly from city to city.

Texas Hotel Occupancy Tax

The most significant state-level requirement for El Paso STR hosts is the Texas Hotel Occupancy Tax (HOT). All short-term rental operators must collect and remit a 6% state tax on bookings of fewer than 29 consecutive days where the room cost is $15 or more per day. For this tax:

• Registration with the Texas Comptroller's Office is mandatory for legal tax collection
• Taxes can be remitted monthly or quarterly depending on your volume
• Major platforms like Airbnb and VRBO typically collect and remit this tax automatically for bookings made through their sites
• For direct bookings, hosts are responsible for collecting and remitting the tax themselves

Texas Supreme Court Precedent

A landmark 2018 Texas Supreme Court ruling has significant implications for El Paso STR operators, particularly those in HOA-governed communities. The court unanimously ruled that short-term rentals can qualify as "residential use" of property. This means that, generally speaking, homeowners associations in Texas cannot prohibit short-term rentals solely on the grounds that they are not "residential" in nature, provided the property is being used for residential purposes by the guests.

This ruling provides some protection for El Paso hosts against overly restrictive HOA bylaws, though HOAs may still impose other types of reasonable restrictions on rental activities.

The relatively light touch of state-level regulation makes Texas, and by extension El Paso, a more accessible market for STR operators compared to some other states. However, El Paso hosts should remain vigilant about potential changes to both state and local regulations as the short-term rental industry continues to evolve and grow across Texas.

Does El Paso Strictly Enforce STR Rules?

El Paso stands out as one of the most Airbnb-friendly cities in Texas, primarily due to its current lack of formal short-term rental regulations and minimal enforcement efforts. Unlike other major Texas cities that have implemented comprehensive STR ordinances with strict licensing requirements and proactive enforcement, El Paso operates with a notably hands-off approach that has created a welcoming environment for hosts.

El Paso currently has no dedicated STR enforcement division or team within the city government. Without a formal licensing or registration system in place, local authorities have limited visibility into the short-term rental market and few mechanisms to regulate it. This creates a situation where hosts can operate their properties with minimal government oversight or interference.

In August 2023, rather than implementing immediate regulations, the El Paso City Council approved a pilot program to monitor complaints about short-term rentals through the city's 311 number. This data-driven approach allows residents to report issues such as parking shortages, excessive noise, and trash problems, with the information being presented quarterly to the city council.

The sentiment among El Paso's STR host community is largely positive regarding the current regulatory environment. On platforms like Bigger Pockets, hosts have expressed appreciation for the city's current hands-off approach, which has allowed them to operate their vacation rental properties with relatively few obstacles compared to other markets.

El Paso is decidedly Airbnb-friendly in its current state, with minimal enforcement of STR rules simply because there are few formal rules to enforce. Hosts are actively and openly operating throughout the city, taking advantage of the relatively unregulated environment. While the regulatory landscape may change in the future, the current reality makes El Paso one of the most accessible markets for short-term rental operators in Texas.

For those considering entering the El Paso STR market, the timing could be advantageous to establish operations before any potential new regulations take effect. The city's measured, data-driven approach to developing future regulations also suggests that any changes will likely be implemented gradually, giving hosts time to adapt their business models accordingly.

How to Start a Short-Term Rental Business in El Paso, Texas

Starting a short-term rental business in El Paso is relatively straightforward compared to other Texas cities, thanks to the current lack of comprehensive STR regulations. However, success requires careful planning and awareness of potential regulatory changes on the horizon. Here's a step-by-step guide to launching your STR business in El Paso:

Research the El Paso Market

Begin by thoroughly researching the El Paso vacation rental market. Identify popular neighborhoods, average nightly rates, and occupancy patterns. Look at existing listings on platforms like Airbnb and VRBO to understand what amenities and features are most appealing to guests in the area. Pay special attention to properties similar to yours to gauge competitive pricing and presentation strategies. Understanding the local market will help you position your property effectively and set realistic revenue expectations.

Secure an Appropriate Property

If you don't already own a property, focus on locations with strong rental potential. Consider proximity to Fort Bliss, the University of Texas at El Paso, downtown, medical centers, and other demand drivers. Evaluate whether the property can accommodate the number of guests you plan to host and if it offers features that will make it attractive to your target market. Remember that while El Paso doesn't currently have distance requirements between STRs, proposed regulations may include a 500-foot minimum distance between rental properties, so consider this when selecting a location.

Ensure Compliance with Basic Requirements

While El Paso doesn't currently have STR-specific regulations, your property must still comply with general zoning, building, and safety codes. Make sure your property meets basic habitability standards, has working smoke detectors, and addresses any safety concerns. Follow El Paso County's voluntary "Good Neighbor Guidelines" for vacation rentals, which include recommendations about noise, parking, trash management, and being responsive to neighbor concerns.

Register for Tax Collection

Obtain a Texas Hotel Occupancy Tax permit through the Texas Comptroller's office. All short-term rentals in Texas must collect and remit the state's 6% Hotel Occupancy Tax. For bookings made through platforms like Airbnb and VRBO, these companies will automatically collect and remit this tax on your behalf. For direct bookings, you'll need to collect the tax yourself and submit it to the state by the 20th day of the following month. Also, be prepared for a potential 17.5% city hotel occupancy tax that El Paso is considering implementing.

Prepare Your Property for Guests

Invest time and resources in preparing your property to attract bookings. This includes furnishing, decorating, and stocking your rental with essential amenities. Check out local listings to see what types of amenities your competitors are offering and ensure your property meets or exceeds these standards. Consider adding unique touches that will make your property stand out in listing photos and reviews. This preparation stage typically takes between 1-4 weeks, depending on the specific needs of your property.

Create Detailed House Rules and Policies

Develop clear house rules and policies that will help prevent issues with guests and neighbors. Include guidelines on noise, parking, trash disposal, maximum occupancy, and check-in/check-out procedures. While El Paso doesn't currently mandate occupancy limits, proposed regulations may include such restrictions, so it's wise to establish reasonable occupancy standards from the start. Having well-defined policies helps set guest expectations and reduces the likelihood of complaints.

Set Up Professional Photography and Create Listings

Invest in professional photography to showcase your property in the best possible light. Create detailed and appealing listings on platforms like Airbnb and VRBO, highlighting your property's unique features and amenities. Be transparent about your location and proximity to local attractions. Craft house rules that align with community standards and clearly communicate expectations to potential guests. Effective listings with quality photos can significantly increase your booking rate.

Establish a Management System

Decide whether you'll manage the property yourself or hire professional help. If self-managing, invest in property management software to handle bookings, communications, and financial tracking. If outsourcing, research reputable vacation rental management companies in El Paso that can handle guest communication, cleaning, maintenance, and ensuring compliance with any future regulations. Professional management can be particularly valuable if you don't live in the El Paso area or have limited time to dedicate to your STR business.

Implement a Maintenance and Cleaning Plan

Develop a reliable system for property maintenance and cleaning between guest stays. This might involve hiring professional cleaners and maintenance personnel or handling these tasks yourself if you live nearby. Regular maintenance prevents small issues from becoming major problems, while thorough cleaning is essential for positive guest reviews. Create checklists for cleaning staff to ensure consistency and establish protocols for addressing maintenance issues promptly.

Stay Informed About Regulatory Changes

El Paso is actively exploring new regulations for the STR industry, including potential licensing requirements, distance restrictions between properties, occupancy limits, and parking requirements. Stay informed about these developments by regularly checking the city's website, attending public hearings, and considering joining local host associations like the El Paso Short-Term Rental Alliance. Being proactive about regulatory changes will help you adapt your business model as needed and ensure continued compliance.

By following these steps and remaining attentive to the evolving regulatory landscape, you can establish a successful short-term rental business in El Paso. The current relatively permissive environment makes it an opportune time to enter the market, but being prepared for potential changes will help ensure your business remains viable in the long term.

Who to Contact in El Paso, Texas about Short-Term Rental Regulations and Zoning?

Navigating the evolving landscape of short-term rental regulations in El Paso requires knowing the right resources and contacts. Whether you're looking to start an STR business or ensure your existing operation remains compliant with current and future rules, these official channels and community resources can provide valuable guidance and support.

El Paso County Planning and Community Development Department

The primary point of contact for questions related to short-term rental regulations and zoning in El Paso is the Planning and Community Development Department. This department can provide information about current guidelines, zoning restrictions, and updates on potential future regulations.

1. Phone: 915-212-0104
2. Physical Address: City Hall, 300 N. Campbell, El Paso, TX

El Paso City Development Customer Service

For specific questions about development requirements, permits, or general inquiries about operating a short-term rental within city limits:

1. Phone: 915-212-0104
2. Email: DevCustomerService@elpasotexas.gov

El Paso Short-Term Rental Alliance (EPSTRA)

Founded in 2023, the El Paso Short-Term Rental Alliance has emerged as a crucial organization for STR hosts in the area. EPSTRA serves as a collective voice for hosts in discussions with city officials and provides valuable resources for operating responsibly within the community.

The alliance is led by Heidy Seoenz, who has been instrumental in advocating for balanced regulations that protect both host interests and community concerns. EPSTRA has established a collaborative relationship with city agencies, including working with the 311 system to address any issues with problematic properties.

Joining this alliance can provide you with:

1. Networking opportunities with other local hosts
2. Updates on regulatory developments
3. Resources for responsible hosting practices
4. A collective voice in ongoing policy discussions

You can connect with EPSTRA through their website at elpasostra.org, where they offer free membership to hosts.

EPSTRA representatives meet quarterly with city officials, including the city manager, code enforcers, and police chief. These meetings provide an opportunity for the hosting community to address concerns and collaborate on solutions. While these meetings aren't open to the general public, EPSTRA members can have their interests represented through the alliance.

By staying connected with these resources and actively participating in the STR community, El Paso hosts can remain informed about regulatory developments and contribute to shaping policies that support the sustainable growth of the short-term rental market in the city.