Short-term rentals in San Marcos, explained properly.

A Type 1 short term rental is in a residential-only zoning district classified as single family, or another district where the majority of the use is single-family residential. A Type 2 rental is in a non-residential zoning district where the majority of the use is not single-family residential (Sec. 34.801). To decide the majority, the City looks at an area of one-eighth square mile with the property as close to the center as possible, measured at 6,600 linear feet from the property; if the percentage of single-family properties in that area is greater than 50 percent the area is Type 1, and if it is less than 50 percent it is Type 2 (Sec. 34.801). The City verifies the zoning district classification of the property to determine the type when the application is filed (Sec. 34.805(a)(4)).

At a minimum the application lists all owners, operators and agents with contact details; proof of possession by warranty deed or valid lease; notarized owner authorization if the applicant is not the owner; a sketch or narrative of the parking spaces required by the Development Code; a floor-plan sketch showing sleeping areas, proposed maximum number of guests, evacuation routes and fire extinguisher locations; the name, address and 24-hour telephone number of the local responsible party; a list of all hosting sites used to advertise; written confirmation from the City Finance Department of hotel occupancy tax registration; and a sworn self-certification of compliance, including insurance and annual independent inspection of fire extinguishers, signed under penalty of perjury (Sec. 34.805(a)). Incomplete applications are not accepted (Sec. 34.805(b)). A license is denied if there is good cause, the application is incomplete, or it fails to comply with state or local law (Sec. 34.807(a)). The applicant is responsible for checking with their HOA that short term rentals are allowed (Sec. 34.805(a)(12)).

The permit expires annually from the date approved (Sec. 34.806(a)). A new permit is needed if a change in ownership, trade name or transfer occurs before the current permit expires, and the new owner or registrant has 30 days from the change to file the new permit and pay the fee (Sec. 34.806(b)). An approved permit may not be assigned or transferred, and an attempt to transfer it makes the permit subject to suspension or revocation (Sec. 34.809(j)). On a renewal application the director may deny renewal if there is reasonable cause to believe the registrant has violated a city, state or federal law on the premises or there are grounds for suspension or revocation (Sec. 34.806(d)). Failing to renew is a violation and may result in double fees (Sec. 34.811(c)(9), (g)).

The applicant is responsible for verifying with their Home Owners Association that short term rentals are allowed (Sec. 34.805(a)(12)), and acknowledges in the application that a City permit does not supersede property-specific restrictions on short term rentals that exist under law, agreement, lease, covenant or deed restriction (Sec. 34.805(c)).

Type 1 short term rentals in existence when the ordinance was adopted that are closer than 660 linear feet to another permitted short term rental on the same street are allowed to operate. A rental that has ceased operating for six months, including the renewal of a valid permit, is deemed permanently abandoned (Sec. 34.813). The ordinance that added these provisions is Ordinance 2024-14, adopted April 16, 2024.

The application names a local responsible party, who is the owner, operator or designated agent (Sec. 34.805(a)(7)). During any period when the rental is occupied or intended to be occupied by guests, that person must be available 24 hours a day for concerns about the condition, operation or conduct of guests, must have access to the premises and authority to make decisions, must respond within 60 minutes of being notified, and must take immediate remedial action as needed (Secs. 34.801, 34.809(m), 34.811(d)). A failure to respond within 60 minutes is listed as unlawful (Sec. 34.811(c)(11)). The City keeps a public list of licensed short term rentals that includes the local responsible party's information (Sec. 34.812(c)).

The maximum number of persons allowed to reside in a short term rental is set by the International Fire Code edition the City has adopted; the occupancy calculation sets the maximum number allowed to sleep or congregate (Sec. 34.809(a)). Parking must comply with the Development Code. Required parking may not be in the public right-of-way or in access easements, and the yard may not be used to provide the necessary parking (Sec. 34.809(b)). The tenant notice must tell guests that failing to conform to the occupancy and parking requirements is a violation and that an occupant or visitor can be cited (Sec. 34.809(g)(9)). Recreational vehicles and trailers may not be used for short term rental (Sec. 34.809(l)); there is no overnight sleeping outdoors and no outdoor sleeping spaces for rent (Sec. 34.809(e)(3)).

Applicants must keep an insurance policy sufficient for personal injury liability of guests (Sec. 34.809(c)). The rental must conform to all applicable City-adopted codes. A 2A:10B:C (standard five-pound) fire extinguisher must be mounted within 75 feet of all portions of the rental on each floor, smoke and carbon monoxide detectors must be installed, every sleeping area must have at least one operable emergency escape and rescue opening, and an evacuation plan must be posted conspicuously in each unit or permitted sleeping area (Sec. 34.809(d)). A sleeping area that does not comply may not be used for sleeping, must be kept locked when it has a door, and is left out of the maximum occupancy calculation; the owner or operator must tell every occupant in writing (Sec. 34.809(d)(6)). The owner self-certifies annual independent inspections of required fire extinguishers (Sec. 34.805(a)(10)).

Excessive noise or other disturbance outside the rental, including on decks, porches, balconies, patios, hot tubs, pools, saunas and spas, is prohibited under Section 7.4.2.1 of the San Marcos Development Code (Sec. 34.809(e)(2)). Radios, stereos, musical instruments, sound amplifiers and similar devices may be used only within the enclosed rental unit, and the owner or operator must use reasonably prudent business practices to keep guests from creating unreasonable noise or disturbances (Sec. 34.811(c)(8)). Any use of the unit is limited to activities incidental to dwelling, lodging or sleeping (Sec. 34.809(e)(4); Sec. 34.811(c)(7)). Operators must inform occupants of the relevant City codes and of occupants' liability for violations (Sec. 34.809(e)(1)).

All advertisements, including online or app-based listings, must include the short term rental permit number within the description or body (Sec. 34.809(f)(2)). It is unlawful to advertise a short term rental without the license number clearly displayed on the face of the advertisement (Sec. 34.811(c)(6)). Signage must comply with the City's current sign code and any design review requirements of the zoning district (Sec. 34.809(f)(1)). The application lists every hosting site used to advertise (Sec. 34.805(a)(8)).

The operator must post in a conspicuous location the maximum number of occupants under the International Fire Code; the location of required off-street parking and the prohibition on parking on landscaped areas; quiet hours and noise restrictions under Section 7.4.2.1 of the Development Code; restrictions on outdoor facilities; the owner's contact information if the registrant is not the owner, and a local responsible party's 24-hour contact if neither the registrant nor the owner is in the city limits during the rental; property cleanliness and trash pick-up requirements, including trash can location; emergency and non-emergency numbers and severe weather, disaster and flood-hazard information with evacuation routes; notice that failing to conform to occupancy and parking rules is a violation for which the occupant or visitor can be cited; and the short term rental permit and any other required permits (Sec. 34.809(g)).

On the director's request, to reconcile hotel occupancy tax discrepancies, each operator must submit a report for the calendar-year quarter covering the number of bookings and listings, average bookings per listing, year-to-date booking value, year-to-date revenue and average length of rental (Sec. 34.812(a)-(b)). A short term rental may be inspected at the initial and renewal permit application and on complaint or suspicion of a violation under established code enforcement procedures (Sec. 34.810).

A violation of the short term rental division is a Class C misdemeanor, with a fine not to exceed $2,000 plus court costs; each act of violation and each day of violation is a separate offense, and cumulative enforcement against repeated or multiple violations is authorized (Sec. 34.811(a)). Violations are also enforced under the remedies in Division 4 of the article (Sec. 34.811(b)). Violating any section of the article results in permit revocation under the revocation procedures (Sec. 34.811(e)). Failing to pay hotel occupancy tax within 90 days of a delinquency notice results in revocation (Sec. 34.811(f)). A permit may be denied, suspended or revoked for good cause, which includes failing to comply with the chapter, other City or state law, or special conditions, or operating in a way that adversely affects the public health, welfare or safety of the neighborhood (Secs. 34.801, 34.807). The revocation procedure text and the Division 4 remedies were not read for this page.

Texas Tax Code § 156.052 sets the state hotel occupancy tax at 6% of the price paid for a room, and § 156.051(a) applies it to rooms or spaces costing $15 or more a day. Section 156.001(b) makes a short-term rental (renting all or part of a residential property to someone who is not a permanent resident) a "hotel" for state and local hotel occupancy taxes. Stays of at least 30 consecutive days, with no interruption of payment, are not taxed (§ 156.101). Local hotel taxes are added on top and vary by city and county.

Whoever owns, operates, manages or controls a hotel must collect the state tax (Tax Code § 156.053), and the Comptroller's office treats short-term rentals the same way. The Comptroller does not issue printed hotel tax permits; a business that reports the tax sends Form AP-102 (Hotel Occupancy Tax Questionnaire) to the Comptroller. A short-term rental platform that has agreed with the owner to collect and remit state hotel tax files Form AP-102 itself, and an owner who rents only through such a platform does not collect and remit the state tax. An owner who takes bookings directly or through a platform that does not collect must collect and remit the state tax. Local hotel taxes are handled separately by the city and county.

Each calendar month is a reporting period, with the return and tax due to the Comptroller by the 20th of the following month (Tax Code § 156.151(b)). A taxpayer who owes less than $500 for a month or $1,500 for a quarter files quarterly, due the 20th day after the quarter ends (§ 156.151(c)). The Comptroller allows a 1% discount when the return is filed and paid on time.

Cities, some counties and special purpose districts may levy their own hotel taxes, generally up to 7%, and sports or community venue projects may add up to 2% (Dallas County up to 3%). Local hotel taxes apply to sleeping rooms costing $2 or more a day. The Comptroller collects only the 6% state tax; cities and counties collect their own local hotel taxes, so hosts should check with the city and county where the rental is.