For certain Dallas short-term-rental owners, the City’s 2023 STR restrictions remain under a temporary injunction while the litigation continues. But that does not mean every Dallas property is automatically free to operate as a short-term rental. A property may still be prohibited by an HOA or recorded deed restrictions; the owner may not be protected by the injunction in the same way as the plaintiffs in the litigation; and generally applicable City requirements concerning noise, nuisance, land use, occupancy, or unauthorized event use still apply. Hotel occupancy taxes and insurance requirements also remain. As of October 2026, the Texas Supreme Court has not yet granted the City’s petition for review. Short-term rentals are also real money in Dallas: the typical host earns roughly $35,000 to $36,000 a year per listing, and the City reported approximately $2.7 million in hotel occupancy tax from short-term rentals in fiscal year 2025.
The examples below focus primarily on the TREC One to Four Family Residential Contract (Resale), Form 20-19, effective July 1, 2026. This is the TREC form commonly used for resale single-family homes, duplexes, triplexes and fourplexes. Other TREC contracts contain different provisions. And these are not the only possible avenues. The TREC contract and its addenda can contain additional, transaction-specific termination rights, several of which are discussed below.
Why Is Dallas Unable to Enforce Its Short-Term Rental Ban Right Now?
In June 2023, the Dallas City Council adopted two ordinances addressing short-term rentals. Ordinance 32482 prohibited short-term rentals in areas zoned for single-family residential use, while Ordinance 32473 created a registration and regulatory system for the short-term rentals that remained permissible. The Dallas Short-Term Rental Alliance and several property owners sued, and a Dallas County judge granted a temporary injunction blocking enforcement. The City appealed. In its July 18, 2025 opinion on rehearing, the Fifth Court of Appeals affirmed the temporary injunction as to the Dallas Short-Term Rental Alliance, Sammy Aflalo, Vera Elkins, and Denise Lowry, but reversed it as to Danielle Lindsey. The court concluded that the protected plaintiffs had shown a probable right to relief on their due-course-of-law challenge and a probable, imminent, and irreparable injury. The City’s own May 2026 memo to its Finance Committee states that City Code Chapter 42B remains under temporary injunction and is not currently enforceable.
That distinction matters. The injunction does not create a blanket declaration that every Dallas homeowner has an unrestricted right to operate an STR. Even while the City’s 2023 STR ordinances are enjoined, a particular property can still be restricted by recorded deed covenants, condominium or HOA rules, or other private agreements. And the injunction does not prevent the City from enforcing generally applicable laws and ordinances, including applicable noise, nuisance, land-use, occupancy, code-compliance, and special-event or commercial-assembly rules. The City has also indicated that it continues to use other enforcement tools against problem properties.
What's Happening at the Texas Supreme Court, and What Happens Next?
The case, City of Dallas v. Dallas Short-Term Rental Alliance, No. 25-0748, reached the Texas Supreme Court after the City’s October 2025 petition for review, which sought expedited action in part because of the FIFA World Cup. The Court ordered full briefing in March 2026. The Alliance filed its merits brief on August 28, and the City’s reply brief, originally due September 14, was extended to October 14, 2026. The Court has not yet granted the City’s petition for review. Once briefing is complete, the Court will decide whether to grant or deny the petition.
If the Court denies review, the Fifth Court of Appeals’ ruling upholding the injunction for the protected plaintiffs will remain in place, and the underlying case will return to the Dallas County trial court for further proceedings. If the Court grants review, the case would proceed toward oral argument and a ruling on the issues presented, but that still would not necessarily constitute a final determination of the ultimate constitutionality of the Dallas ordinances. The City argues that property owners have no vested constitutional right to operate a short-term rental in single-family zoning and points to appellate decisions upholding similar restrictions in Fort Worth and Grapevine. In Modern Builders, LLC v. City of Fort Worth, the Second Court of Appeals held in May 2026 that owners of STRs in Fort Worth’s single-family residential districts had no vested right to lease their properties short-term and that the City’s ordinances rationally related to legitimate governmental interests. The Dallas owners, meanwhile, argue that Texas law protects the right to lease property for short terms and raise additional constitutional and statutory theories.
How Much Money Can You Make Renting a Dallas Home Short-Term?
It’s a genuine business for a lot of owners, not a side hustle. Airbtics reports a median of about $36,000 a year per Dallas listing on trailing-twelve-month data, at 61 percent occupancy and a $154 average nightly rate, across roughly 4,380 active listings. AirDNA‘s trailing-twelve-month figures put the average closer to $35,800 a year, on 60 percent occupancy and a $180 nightly rate. The two providers use different methodologies and listing universes, so their active-listing counts are not directly comparable. A well-run short-term rental in parts of Dallas can out-earn a comparable long-term lease by a meaningful margin, although results vary substantially by property, location, seasonality, management, and expenses.
How Much Does the City of Dallas Collect in Short-Term Rental Taxes?
More than you might expect, and growing. Short-term rentals are subject to hotel occupancy taxes. The state hotel occupancy tax is 6 percent, and the City of Dallas imposes a 9 percent hotel occupancy tax, for a combined 15 percent in state and City taxes. The City reported approximately $2.70 million in hotel occupancy tax from short-term rentals in fiscal year 2025, compared with $107.6 million in total City hotel tax that year, and approximately $1.29 million more in the first half of fiscal year 2026. Registered short-term rentals grew from 650 in fiscal year 2020 to 2,271 as of May 2026, while the City identified another 1,902 properties as likely unregistered. The City states that STR owners, operators, or managers are responsible for registering, collecting, reporting, and paying the City’s 9 percent tax; the state tax is administered separately by the Texas Comptroller.
Why Do So Many Dallas Homeowners Want Short-Term Rentals Banned?
The 2023 ordinances didn’t come from nowhere. In the first year after the ordinances were adopted, Code Compliance logged about 160 short-term-rental complaints, roughly eleven a month, concentrated in a handful of council districts. The complaints largely involved noise, parking, and trash, with a smaller number of properties operating as de facto event venues. Dallas councilwoman Gay Donnell Willis has pointed to a large gathering on Ivanhoe Lane as an example; neighbors there later described a Labor Day weekend party involving a crowd of more than 100 people and reported fighting and drag racing. The City’s May 2026 memo confirms that unauthorized commercial event venues, party houses, and assembly uses remain a concern independent of the pending litigation. That tension — real income for owners, real disruption for neighbors — is a major part of the policy dispute surrounding Dallas STR regulation.
Does My HOA Matter Even If the City Ban Stays Blocked?
Yes — and this is one of the most important distinctions for a Dallas homeowner. The City’s temporary injunction does not override private deed restrictions, restrictive covenants, condominium declarations, or HOA rules. If the recorded documents applicable to your property prohibit or restrict short-term rentals, the property is not automatically available for STR use simply because the City’s 2023 STR ordinances are currently under injunction. Before listing — or buying a property with STR income in mind — review the actual recorded declaration and any applicable amendments and rules. Our post on whether your HOA has filed its management certificate is a good place to start.
What About Insurance If You Rent Your Home Short-Term?
A standard homeowners policy may exclude or limit coverage for short-term rental activity. A claim arising during a guest’s stay could therefore be denied or limited without appropriate coverage. Call your carrier before you list, and make sure you understand whether you need a short-term-rental endorsement or separate commercial or STR-specific coverage. Do not assume a platform’s host protection or guarantee is a substitute for your own insurance.
Frequently Asked Questions
Is it currently legal to rent out my Dallas home as a short-term rental?
Not necessarily. For the owners protected by the current temporary injunction, Dallas’s 2023 STR ordinances are presently unenforceable while the litigation continues. But the injunction is not a blanket authorization for every Dallas property. A property may still be prohibited from operating as an STR by an HOA, condominium declaration, deed restriction, restrictive covenant, or other private agreement. The owner may also be subject to generally applicable City laws and ordinances, including nuisance, noise, land-use, occupancy, and event-use restrictions, as well as state and City hotel occupancy tax requirements and insurance obligations. The Fifth Court of Appeals also did not leave the injunction in place as to every individual plaintiff in the case, so the precise scope of the protection can matter. Before listing a particular Dallas property, the safest approach is to confirm the property’s private restrictions and the current status of the litigation with a Texas attorney.
How much does a typical Dallas short-term rental earn per year?
Roughly $35,000 to $36,000 per listing, at about 60 percent occupancy and nightly rates between $154 and $180, although individual results vary widely with location, property type, seasonality, pricing, management, and expenses.
How much hotel occupancy tax do short-term rental owners have to collect in Dallas?
A combined 15 percent in state and City of Dallas hotel occupancy taxes generally applies: 6 percent state tax and 9 percent City tax. The City of Dallas requires the owner, operator, or manager to register, collect, report, and pay the City’s 9 percent tax. The state tax is reported and paid separately to the Texas Comptroller.
Why did Dallas try to ban short-term rentals in the first place?
A sustained run of neighborhood complaints — about 160 STR-related complaints in the first year after the 2023 ordinances — centered on noise, parking, trash, and a smaller number of properties operating as unauthorized event venues.
A note on legal risk
Whether a particular Dallas property is within the practical protection of the current injunction, whether an owner is covered by the injunction’s terms, how a given HOA or deed restriction applies, and whether other City requirements are satisfied are fact-specific legal questions. The Fifth Court of Appeals’ July 2025 decision affirmed the temporary injunction as to the Dallas Short-Term Rental Alliance and three individual plaintiffs, but reversed it as to one individual plaintiff. The Texas Supreme Court has not yet granted the City’s petition for review, and the City’s reply brief is currently due October 14, 2026. This article describes the litigation status as of October 8, 2026, which can change at any time.
Anyone deciding whether to list, buy, or hold a Dallas short-term rental should confirm the property’s current restrictions and the status of the litigation and should consult a licensed Texas attorney and their insurance professional about the specific property. This article is general information, not legal advice, and is current only as of its publication date.
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