Reading Time: 2 minutes

US: The city council of Victoria, Texas, is mulling a proposal to require privately-owned short-term rentals (STR) to pay the same tax as hotels.

The state taxes all STRs, but the city currently does not. Conventions and Visitors Bureau director Joel Novosad officially presented a proposal for the tax to the city council Tuesday. The proposal would see each property taxed at $25 dollars a year, after Novosad’s research on similar Texas municipal taxes.

Novosad said the number of STRs in Victoria has grown from 10 to 40 since 2017, and that the expansion in number and in revenue has made regulation more necessary.

The legislation would also create a registry of STRs, subjecting them to inspections and safety codes. Other cities with similar motions, like Pittsburgh, have expressed a need to clamp down due to injuries and even deaths resulting from parties at short-term properties.

“This levels the playing field,” Novosad said. “Short-term [properties are at an] advantage over [hotel] properties, charging and remitting taxes. This also makes sure that city staff know where short-term rentals are. There’s been a couple of cities out there where folks stayed at a short-term rental that may have not been registered with the city and accidents had happened.” 

He continued: “We recognise that there are implications that could potentially arise over time because they’ve come up in other places. One of the benefits of us being late in the game adopting something like this is we are able to observe challenges other people face in what happens over time. One of the ones that’s become common is that in certain areas where having an Airbnb has become common, you limit it.”

Highlights:

Victoria, Texas is considering a $25 annual tax on short-term rentals to match hotel taxes, plus a registry and safety inspections.

STRs in Victoria have grown from 10 to 40 since 2017, but the city currently does not collect local tax on them.

Tourism director Joel Novosad said the proposal levels the playing field with hotels and improves safety oversight, citing incidents at unregistered STRs elsewhere.

He noted Victoria benefits from being “late in the game” by learning from other cities’ struggles with STR density and regulation.