The gist
A short-term rental refers to a residential property, including those registered with Airbnb or Vrbo, that is rented for a fee for less than 30 days, according to the Texas Secretary of State website.
One of the top priorities for officials has been figuring out how to bring short-term rentals flying under the radar into compliance, said Stephanie Polk, League City's convention and visitors bureau manager.
In May, the Galveston County Appraisal District began taxing short-term rentals as businesses, which means any furnishing or fixtures on the property would be valued for taxation, subsequently increasing tax bills, according to the Texas Tax Code.
“By establishing a separate business personal property account for the furniture and fixtures used in short-term rental for business purposes, we ... ensure the appraisal of those homes is fair and equitable,” Chief Appraiser Krystal McKinney said.
McKinney said she expects other counties to follow suit.
“As more short-term rentals pop up, most counties with tourist-type attractions and venues will start following the same practice,” she said.
How it happened
McKinney said the county has established 975 short-term rental business personal property accounts with a preliminary market value of $14 million. All property owners have the right to protest by the deadline on their notices.
Gillespie, Blanco and Kerr counties use the same appraisal practice, she said.
The move is the appraisal district’s attempt to make the county’s real estate market equitable at a time when buying a single-family home has become unaffordable to some, McKinney said.
“Furnished short-term rentals typically sell for more than single-family homes,” she said. “This appraisal method will help level the playing field and alleviate some of the taxable burden on the single-family homeowner’s plate caused by the skyrocketing market values of short-term rentals.”
McKinney confirmed appraisal notices had been sent out, and property owners should expect to receive them in the upcoming weeks.
The impact
Following in the footsteps of county regulators, Bay Area cities, such as League City, are trying to determine how to regulate short-term rentals in their own jurisdictions.
“It’s been very difficult and very challenging [to track short term rentals],” Polk said. “Getting in touch with where they are, who they are and getting in contact with them is a huge obstacle in and of itself.”
While League City required short-term rental hosts to pay a 7% hotel occupancy tax, it did not require booking platforms to collect the tax and send it to the government, according to a 2023 audit done by the city.
The Texas State Comptroller’s Office has a voluntary collection agreement with Airbnb and Vrbo, under which those platforms are required to collect the state’s hotel occupancy tax.
Due to the oversight, League City did not collect roughly $85,000 in hotel occupancy tax that it was owed from short-term rentals between 2020 and 2022, according to a comptroller’s office report.
To get a clear picture of how many short-term rentals operate in League City, city staff began using Rentalscape, the same short-term rental compliance tool Galveston uses, in July, Polk said.
“You will not be under the radar anymore,” Polk said. “It’s going to be a really transparent system once it turns on. League City is serious about working through this and making it really easy for people to comply with the regulations that are in place.”
