Mid-Term vs Short-Term Rentals in Texas: Tax, Rules and Income

Short version: In Texas the line between a short-term and a mid-term rental is 30 nights. At 30 consecutive nights or more, a guest usually stops owing hotel occupancy tax, most city short-term rental rules stop applying, and your federal tax treatment can shift. Below 30, even a 28-night “monthly” Airbnb stay is still a short-term rental. Here is what changes on each side of the line, and how to compare the income honestly.

Where is the line between short-term and mid-term?

Most Texas rules draw it at 30 consecutive days. Fort Worth defines a short-term rental as a stay of 1 to 29 consecutive days. Austin’s short-term rental licensing applies to rentals of less than 30 consecutive days. The state hotel occupancy tax uses the same 30-day test.

Platforms draw it somewhere else. Airbnb calls a stay of 28 nights or more a monthly stay and charges it month by month. So a 28 or 29 night Airbnb booking is a monthly stay on Airbnb and still a short-term rental for tax and city purposes. If you want mid-term treatment, set your minimum at 30 nights, not 28.

How does hotel occupancy tax change at 30 nights?

Texas charges a 6% state hotel occupancy tax, and cities and some counties add their own. In Dallas, for example, the total is 6% state plus 9% city.

A guest who has the right to stay for at least 30 consecutive days is a permanent resident under the Texas Tax Code and does not owe the state tax. The timing matters. If the guest agrees in writing, before the stay starts, to stay at least 30 consecutive days, the stay is exempt from the first day. Without that advance written agreement, tax is due on the first 30 days and the stay is exempt after that. A break in payment can end the exemption.

City hotel taxes generally follow the state rule, and Austin’s says so directly, but check your own city. Keep the signed agreement with your records in case the Comptroller or the city asks.

Do city short-term rental rules apply to a 30-day stay?

Usually not, because most city rules are written for stays under 30 days. In Fort Worth or Austin, a home rented only in stays of 30 nights or more generally sits outside the short-term rental rules. Do not treat that as a loophole. Zoning, HOA rules, your mortgage and your insurance can still limit how you rent, and a home that mixes nightly and monthly stays still has to follow the short-term rules for its nightly bookings.

Dallas is a special case right now. The city’s 2023 short-term rental ordinances are blocked by a court injunction, the city is not taking registrations, and the Texas Supreme Court has the case (No. 25-0748). Hotel tax and noise rules still apply. If the court rules, the rules for nightly stays in Dallas could change quickly, so a 30-day option is worth pricing now whichever way it goes.

What changes on your income taxes?

Texas has no state personal income tax, so the question is federal. Under the passive activity rules, a property whose average guest stay is 7 days or less is not treated as a “rental activity” (26 CFR 1.469-1T(e)(3)(ii)(A)). That is the basis of what investors call the short-term rental tax strategy, where losses from a short-term rental you materially participate in can offset other income.

Adding 30-night stays raises your average stay. A few long bookings can push the average for the year above 7 days, and then that treatment may not be available for that year. There is a second exception for an average stay of 30 days or less when significant personal services are provided, but it is narrower. If the tax treatment is part of why you bought the property, run your calendar past your CPA before you take long bookings, not after.

How does the income compare?

Nightly stays usually earn more per night. A 30-day stay usually earns less per night but fills every night of the month with one turnover. The honest comparison is net income for the same month, not the nightly rate.

Run both numbers on the same month of your real calendar. In a slow month a 30-day stay can win on net even at a lower nightly rate. In a peak month it usually will not.

What are the risks of a 30-day guest?

• The agreement. A guest who stays a month is living in your home. Use a written agreement that sets the dates, the rent, the deposit, utilities and what happens at the end of the stay. Airbnb’s new house rules policy, which applies to bookings made on or after November 20, 2026, still allows a rental agreement for monthly stays, uploaded under Contracts in your listing settings.
• A guest who will not leave. Removing an occupant after a long stay can mean a formal court process rather than a call to the platform. Ask a Texas real estate attorney how your agreement should handle it.
• Wear. Fewer turnovers means fewer chances to catch problems. Plan one walkthrough during the stay, with notice to the guest.
• Insurance and HOA. Some policies and HOAs treat stays of 30 days or more differently from nightly rentals. Read yours before the first booking.

Which Texas homes suit 30-day stays?

Homes near hospitals, large employers and universities, where travel nurses, relocating workers and families displaced by an insurance claim need a furnished place for one to three months. In Dallas and Fort Worth that means the medical districts and the big employment corridors. A home with a real workspace, a full kitchen, laundry and parking rents for 30 days more easily than one built around a hot tub and a game room.

How we handle mid-term stays

At HostStarter we run 30-day stays alongside nightly bookings for owners in Texas, Oklahoma, Arizona and Nevada, through Furnished Finder and our own direct booking site. Our fee is the same for both: 12.5% of revenue plus $99 a month. Furnished Finder’s listing fee is passed through at cost. We provide the lease and do high level guest vetting. We do not run background or credit checks.

If you are deciding whether to take 30-day stays this winter, read Should You Switch Your Short-Term Rental to 30-Day Stays This Winter?, or ask us for a free revenue projection and we will run both numbers on your calendar.