How to Start a Short-Term Rental in Dallas: Permit, Taxes and Rules

Before you buy furniture or list a house on Airbnb, Vrbo or a similar platform, you need to answer two questions: whether Dallas will let you operate right now, and what Texas requires you to file. This guide covers both as they stand in October 2026, including the state paperwork, the taxes you will owe, and the status of Dallas's short-term rental rules.

Informational note: This article is general information, not legal or tax advice. Talk with a Texas real estate attorney about your deed, lease or HOA documents, and with a CPA about how your entity and taxes should be set up.

Where the Dallas short-term rental rules stand in 2026

Anyone searching for a Dallas short term rental ban is usually reading about Dallas's 2023 short-term rental ordinances. Those ordinances, including the registration requirement, are enjoined, which means a court has blocked them and the city is not enforcing them while the lawsuit continues. That is the situation as of the October 14, 2026 docket, but it is not permanent. The case is now before the Texas Supreme Court.

Date	What happened
February 2025	The Fifth Court of Appeals affirms the injunction.
July 2025	The Fifth Court of Appeals affirms the injunction again.
October 16, 2025	The City of Dallas petitions the Texas Supreme Court (No. 25-0748).
March 27, 2026	The Texas Supreme Court orders full merits briefing.
June 10, 2026	The city files its merits brief.
August 28, 2026	The respondents file their merits brief.
October 14, 2026	The reply brief is due. Amicus briefs have been received. No argument date or opinion has been issued.

What this means for you: the registration rules are not being enforced today, but the Court could rule at any time, and short-term rental rules can change quickly after a ruling. Two obligations do not depend on the lawsuit at all. Hosts still owe Texas hotel occupancy tax at 6 percent, and deed restrictions, HOA rules and your lease apply no matter what the city does. Check the Texas Supreme Court's public docket search for No. 25-0748 and the Dallas Development Services page on the City of Dallas website before you commit money to a property.

Materials and information you need before you start

• The property address, your deed or lease, and any HOA covenants or bylaws that apply to the unit
• Written permission from your mortgage lender or landlord if you do not own the property outright
• A registered agent with a physical street address in Texas, if you form an LLC
• $300 for an LLC Certificate of Formation, or a $25 assumed name certificate if you operate as a sole proprietor under a business name
• A federal Employer Identification Number (EIN) from the IRS, which you will need for bank accounts and tax filings
• A Texas Comptroller account for sales and hotel occupancy tax registration
• A guest log, bookkeeping system and safety checklist you will actually use
• Questions for your insurance agent about short-term rental coverage

Step-by-step: starting your Dallas short-term rental

Step 1: Confirm what your property allows

Start with the property, not the business. Three sources can block a short-term rental even when the city's rules are unenforced. First, check the recorded deed restrictions for the address, which are kept in the county real property records. Second, read the HOA covenants. Many associations restrict rentals or require minimum stay lengths, and some prohibit short-term rentals outright. Third, read your lease or mortgage if you do not own the home free and clear, because subleasing and commercial use clauses are common. Then ask the city, in writing if you can, whether any requirement currently applies to your address. Keep a copy of the answer.

Step 2: Choose your business structure

You can operate a short-term rental as a sole proprietor or through an LLC. A sole proprietor needs no state formation filing, but if you use a brand name instead of your own name, you must file an assumed name certificate with the county clerk in the county where the property sits. An LLC adds a separate legal entity, which can help separate personal and rental liabilities, but it adds a $300 filing fee, a registered agent, and annual franchise tax reporting. Texas has no state income tax and no corporate income tax. Ask a CPA which structure makes sense for your income and your liability exposure, because the answer depends on facts this guide cannot know.

Step 3: Check and reserve your business name

Search the Texas Secretary of State business database at sos.state.tx.us. For a preliminary availability check, call (512) 463-5555. An LLC name must be distinguishable from existing filings and must include an organizational designation such as Limited Liability Company, Limited Company, LLC, L.L.C., LC or L.C. The name cannot suggest a purpose the LLC is not authorized to pursue or falsely suggest a government affiliation. If you need time, you can reserve the name for 120 days for a $40 fee using Form 501, available as a PDF from the Secretary of State.

Step 4: File the Certificate of Formation

File the Certificate of Formation (Form 205) for an LLC through SOSDirect. The filing fee is $300. Electronic filing gives the fastest processing. The Secretary of State does not publish a guaranteed standard turnaround, and mailed or hand-delivered documents generally take at least one business day just to be entered. If you need a guaranteed date, Texas Express expedite service costs $50 per document for standard expedite, which is typically processed in two to three business days. Next Day Expedite is $500 per document for filings received by 12:00 p.m., and Same Day Expedite is $750 per document, also for filings received by 12:00 p.m. Expedite fees are added to the filing fee.

Your LLC must have a registered agent with a physical street address in Texas. The agent can be a Texas resident individual or a business entity that is qualified to do business in Texas. The LLC cannot serve as its own registered agent, and a post office box, mail forwarding service or answering service alone does not meet the requirement. The agent must consent to serve. Changing the agent or office costs $15.

Step 5: File an assumed name certificate if you use a brand name

If your LLC or other registered entity will do business under a name other than its legal name, file an assumed name certificate (Form 503) with the Texas Secretary of State for a $25 fee. Since September 1, 2019, registered entities no longer also file with the county clerk. Sole proprietors and general partnerships still file with the county clerk in each county where they keep a business office or do business, and that fee varies by county, so confirm it with your county clerk. A certificate can state a term of up to 10 years and must be refiled before it expires. The Secretary of State's name filing FAQ covers the details.

Step 6: Confirm which licenses and permits apply

Texas does not issue or require a general state business license. It also has no statewide general contractor or roofing license, and counties license nothing for a short-term rental other than the assumed name filing for sole proprietors. That does not mean you need nothing else. Texas expects owners to identify the specific licenses, permits and registrations that match their activity at the federal, state and local levels. The state's reference for this is the Texas Business Licenses and Permits Guide from the Business Permit Office within the Texas Economic Development and Tourism Office, which you can find by searching its title. If you plan to offer services beyond lodging, such as meals, pool care or transportation, check those separately, because they may carry their own requirements.

Step 7: Register with the Texas Comptroller for taxes

Most businesses that sell taxable goods or services need a Texas sales and use tax permit from the Comptroller. It costs nothing and typically takes two to three weeks to process. Apply at comptroller.texas.gov. Whether you need one depends on what you sell beyond the room itself, so confirm with the Comptroller before you assume the permit does or does not apply to you. The state sales tax rate is 6.25 percent.

Hosts also owe Texas hotel occupancy tax at a 6 percent state rate on short-term stays. Register for hotel occupancy tax with the Comptroller and confirm how to file and remit. Dallas may impose its own hotel occupancy tax in addition to the state tax. Check with the City of Dallas before you set your nightly rate, because the total you charge guests should reflect every tax that applies. Ask each booking platform whether it collects and remits hotel taxes on your bookings in Dallas, and whether you still have to file. Do not assume the platform handles it all.

Texas franchise tax is a privilege tax administered by the Comptroller. For the 2026 and 2027 report years, entities with total revenue at or below $2,650,000 owe no franchise tax, but they must still file a Public Information Report every year by May 15. That report has no fee to file with the Secretary of State. For entities above the threshold, the rate depends on how the entity is classified, with 0.375 percent for retail and wholesale and 0.75 percent for other entities, and a 0.331 percent EZ Computation rate for entities with under $20 million in total revenue. Confirm which rate and filing method apply to your LLC with the Comptroller or a CPA.

Step 8: Get insurance, lender and HOA approvals in writing

Many standard homeowners policies exclude or limit coverage for paid guests, so a policy that covered your home last year may not cover a rental this year. Ask your insurer whether it offers a short-term rental policy or endorsement and get the answer in writing. If you have a mortgage, your lender may require approval for rental use. If you have an HOA, get any required approval or confirmation before you accept a booking.

Step 9: Set up your listing and operations

Build your listing with accurate square footage, bed counts, occupancy limits and house rules, and make sure the listing matches what your deed, lease and HOA allow. Set up a cleaning schedule, a guest screening process, and a system for recording every stay, the nightly rate, and the taxes collected. Those records make your Comptroller filings and any future audit much easier to handle.

Step 10: Calendar your recurring deadlines and watch for changes

Put these dates in your calendar: May 15 for the Public Information Report, your sales and hotel occupancy tax filing schedule as the Comptroller assigns it, the expiration date of any assumed name certificate, and the annual requirement to keep a registered agent in place. Review the Texas Supreme Court docket for No. 25-0748 and the Dallas Development Services page at least once a month while the case is pending.

Common mistakes to avoid

• Treating the unenforced rules as permanent. The injunction keeps the 2023 ordinances from being enforced today. A ruling could change that quickly, so build your plan so it still works if the rules return.
• Skipping the HOA and deed check. The city's status does not override a private restriction. An HOA can fine you or sue even when the city does nothing.
• Using a registered agent with a mailbox address. A post office box or mail forwarding service alone does not satisfy the physical street address requirement.
• Forgetting the Public Information Report. An LLC below the $2,650,000 threshold owes no franchise tax but must still file the report by May 15.
• Assuming the platform handles all taxes. Confirm with each platform and with the Comptroller what is collected and what you must file yourself.
• Setting your price before checking taxes. The state hotel occupancy tax is 6 percent, and a Dallas tax may be added. Price with the full tax picture in mind.
• Relying on a homeowners policy without asking. Get the rental use question answered in writing before the first guest arrives.

What to expect after you file

An electronic LLC filing with standard processing can move faster than a mailed filing, but the Secretary of State does not guarantee a turnaround, so plan for some uncertainty. A sales tax permit typically takes two to three weeks. Many hosts find that the first few months are spent on setup and tuning rather than earning, and early bookings may not follow a predictable pattern. Revenue depends on the property, the location, the season and how you manage the stay. No one can promise bookings or income, and this guide does not make that promise. Plan for the costs described above, keep clean records, and treat the first year as a test of your numbers rather than a guaranteed return.

Where to get help and official information

• Texas Secretary of State for formation, name and assumed name filings
• Texas Comptroller of Public Accounts for sales tax, hotel occupancy tax and franchise tax
• Texas Small Business Development Center Network for free or low-cost advising on planning and recordkeeping
• SBA Dallas-Fort Worth district office for federal small business resources

A Texas real estate attorney can review your lease, deed restrictions and HOA documents, and a CPA can advise on entity choice, hotel occupancy tax and franchise tax. Those reviews cost money, but they are worth it when the rules are unsettled and the penalties for getting them wrong are real. This article is informational and is not legal or tax advice. Verify every fee, deadline and rule with the agency named before you act, and check the Dallas short-term rental status again before you sign a lease, close on a property or accept your first booking.