Form a Business

Guides · Texas

Rental property LLCs in Texas

Yes, you can hold a Texas rental in an LLC. You file a $300 Certificate of Formation with the Secretary of State. Texas has no Secretary of State annual report for LLCs; instead a taxable LLC files a franchise tax Public Information Report with the Comptroller by May 15 each year, even when no tax is due. Rental rules are city by city, and in Austin, Houston, Dallas, San Antonio and Fort Worth a short-term rental permit does not move with the property into your LLC. Forming the LLC doesn't move your deed, and a home you live in may lose its homestead exemption if you deed it to the LLC.

Last checked 2026-10-23. General information, not legal or tax advice.

Local rental rules come first

Austin. A short-term rental (a residence rented for less than 30 consecutive days) needs a city license from Austin Development Services Code Compliance. Since February 2025, short-term rentals are an accessory use to residential uses in all zoning districts, as long as the property has a valid operating license. A license lasts two years; a new one costs $736.60 and a renewal $369.60, each including a $94.60 notification fee. Licenses are non-transferable, so a property that moves into your LLC needs a new application. Booking platforms collect the city Hotel Occupancy Tax, but you still file quarterly reports (austintexas.gov Short-Term Rentals; City Code ch. 4-23).

Houston. It is unlawful to operate, rent, lease or advertise a short-term rental (a dwelling unit rented for less than 30 consecutive days) without a certificate of registration, with fines of $100 to $500 per violation and each day counting separately (Code §§ 28-722, 28-723; Ord. 2025-322, effective Jan. 1, 2026). Each rental needs its own certificate, valid only at its address. If the owner isn't an individual, the application includes the Secretary of State documents showing the entity is in good standing (§ 28-731(b)(4), (d)). A certificate is nontransferable and "null and void if the registrant sells or conveys any ownership or leasehold interest" in the property, so your LLC has to apply for its own after the deed (§ 28-736). The city's April 2025 FAQ lists a non-refundable $275 application fee plus a city administrative fee. The city says that on January 1, 2027 it will begin notifying platforms to remove listings that lack a certificate (houstontx.gov Short-Term Rentals; Houston STR FAQ).

Dallas. Two programs apply. Owners of rental single-family homes, duplexes and condo units must register each unit every year with an online application, a non-refundable fee (the program page lists $74.00 beginning October 1, 2025; the city's FAQ page still says $64) and an Owner's Self Inspection Checklist with an affidavit; the city inspects at least once every five years (dallascityhall.com Single-Family Rental Registration). Short-term rentals (fewer than 30 consecutive days) are separate: owning, operating or advertising one without a registration is an offense, the annual fee is $248.00, and the registration expires after one year or when ownership of the property changes, whichever comes first (Dallas City Code §§ 42B-4, 42B-5). The city lists the zoning districts where short-term rentals may be located: MO(A), GO(A), multifamily, central area, mixed use, multiple commercial and urban corridor; confirm current enforcement with Code Compliance before you list (dallascityhall.com Short-Term Rentals).

San Antonio. Every short-term rental (fewer than 30 consecutive days) inside the city limits needs a permit, and its hotel occupancy tax is reported monthly. Type 1 is the owner's or operator's primary residence. Type 2, a property they don't occupy, is allowed by right up to 12.5% of the units on a block face (one per block face regardless); past that, you need a special exception from the Board of Adjustment. Permits cost $450 (Type 1) or $1000 (Type 2) plus an 8% surcharge, last three years, and are per unit. A permit "cannot be transferred to another owner or location" (San Antonio Development Services STR fact sheet; ordinance amended June 13, 2024).

Fort Worth. Short-term rentals (1 to 29 days) must register with the city every year before they're listed: $150 the first year and $100 to renew, and the registration is not transferable. They're allowed in mixed-use and most form-based, commercial and industrial districts, and not in the A-#, AR, B, R1, R2, CR, C, D and UR residential districts; the application needs a zoning confirmation (fortworthtexas.gov Short-Term Rentals, updated January 2024). Long-term rentals: registration is voluntary for one- and two-family rentals with no violations, mandatory for those with fire-safety or public-health and sanitation code violations ($200 a year per unit with violations), and $13 a year per unit for complexes of three or more units; out-of-state owners must name a local agent (fortworthtexas.gov Rental Registration; Multifamily Inspection & Registration Program).

Elsewhere in Texas. Rental rules are local. Ask your city and county before the first lease, and see the state hotel tax below if you rent short-term.

What the LLC protects, and what it doesn't

Texas's LLC law says: "Except as and to the extent the company agreement specifically provides otherwise, a member or manager is not liable for a debt, obligation, or liability of a limited liability company, including a debt, obligation, or liability under a judgment, decree, or order of a court." (Tex. Bus. Orgs. Code § 101.114). The company agreement can change that, so read yours.

  • Guarantees still bind you. A personal guarantee you sign for a lender is your own promise.
  • Your own acts are yours. A repair you make yourself, or your own negligence, isn't shielded by the LLC; ask a Texas attorney.
  • Missed state filings can cost you the protection. If an LLC forfeits its right to transact business for not filing its Public Information Report, the Comptroller says "each officer, director, partner, member or owner becomes personally liable for certain debts of the entity" (Comptroller PIR/OIR page).
  • It isn't insurance. The LLC still needs coverage that pays claims and defense costs.

One LLC, or one per property?

Separate LLCs keep one property's judgment away from the others, at $300 each plus a Public Information Report each year for every LLC. Texas also allows series LLCs: a company agreement may set up designated series of members, managers, membership interests or assets with separate rights, powers or duties for specified property (§ 101.601). A series' assets are walled off from the company's other debts only to the extent its records "account for the assets associated with that series separately from the other assets of the company or any other series," and only if the company agreement and the certificate of formation both say so (§ 101.602(b)). A registered series also files a certificate of registered series with the Secretary of State for $300 (§§ 101.602(c), 4.162). The Comptroller lists series LLCs among the entities subject to franchise tax. Ask a Texas attorney whether a series fits. More: Should you have a separate LLC for each rental property?. Other states: Mississippi · Alabama · Arkansas · Indiana · Louisiana · Tennessee.

Form it where the property is, or register there

The simplest setup is a Texas LLC for Texas property. An LLC from another state registers by filing Form 304, the Application for Registration of a Foreign Limited Liability Company, with the Secretary of State ($750). It needs a Texas registered agent and office, and the LLC can't be its own agent. A foreign entity must register to transact business in Texas (Bus. Orgs. Code § 9.001), and "owning, without more, real or personal property in this state" is on the list of activities that don't count as transacting business (§ 9.251(15)).

Leasing isn't on that list. The Secretary of State says Texas statutes don't define "transacting business" and that it can't give a legal opinion on whether a particular entity is, so ask a Texas attorney before you rely on the exception. An unregistered foreign entity may be enjoined by the attorney general, can't sue in a Texas court until it registers, owes a civil penalty equal to the fees and taxes it would have paid, and after 90 days of doing business owes a $750 late fee for each year of delinquency (SOS Form 304 instructions). A registered foreign LLC that is subject to franchise tax files the Comptroller's report and Public Information Report too (SOS Foreign Entities FAQs).

What it costs the state

  • Certificate of Formation: $300 (SOS Form 205 instructions; Tex. Bus. Orgs. Code §§ 4.152, 4.154)
  • Paying by card (optional): "a convenience fee of $0.25 plus 2.25% of total fees"; ACH is accepted too (SOS Form 205 instructions)
  • Name reservation (optional): $40 (§ 4.151(2))
  • Annual report to the Secretary of State: none for LLCs. The yearly filing is the Public Information Report to the Comptroller, due May 15 or the next business day; the Comptroller's PIR page states no filing fee (SOS Formation FAQs; Comptroller)
  • Franchise tax: if annualized total revenue is at or below the Comptroller's no-tax-due threshold ($2,650,000 for 2026 and 2027 reports), you file no franchise tax report, but the Public Information Report is still due (Comptroller)
  • Foreign LLC registration: $750
  • EIN: free from the IRS

Compare services: LLC services compared.

Forming the LLC, in order

  1. Pick a name that contains "limited liability company" or "limited company" or an abbreviation of either (Bus. Orgs. Code § 5.056(a)), and that is distinguishable from names on the Secretary of State's records.
  2. Name a registered agent: an individual Texas resident or an entity registered in Texas, at a street address where process can be served. The LLC can't be its own agent, and the agent must have consented (SOS Form 205 instructions).
  3. File the Certificate of Formation (Form 205) with the Secretary of State ($300). It says whether the LLC has managers and names each initial manager, or each initial member if there are none, with an address, plus an initial mailing address.
  4. Write a company agreement (Texas's term for an operating agreement).
  5. Get an EIN and open the LLC's bank account.
  6. Watch the mailing address you gave: the Comptroller uses it for tax information and correspondence (SOS Form 205 instructions).
  7. Register or license each rental with the city (above).

Forming the LLC doesn't move your deed

Putting your rental in the LLC takes a new deed, recorded with the county clerk of the county where the property sits (Prop. Code §§ 11.001(a), 11.004(a)).

  • Record it. An unrecorded conveyance is "void as to a creditor or to a subsequent purchaser for a valuable consideration without notice" unless the instrument is acknowledged, sworn to or proved and filed for record (§ 13.001(a)).
  • Put the LLC's mailing address in the deed. A deed can't be recorded without each grantee's mailing address unless you pay a penalty filing fee, the greater of $25 or twice the recording fee (§ 11.003).
  • The county charges a recording fee, and the Constitution bars new transfer taxes on deeds. The Texas Constitution says that after January 1, 2016, "no law may be enacted that imposes a transfer tax on a transaction that conveys fee simple title to real property" (art. VIII, § 29). Recording is priced per page: Bexar County charges $25 for the first page and $4 for each additional page (Bexar County Clerk). Check your county clerk's schedule.
  • If you live in the home, check the homestead exemption first. The residence homestead exemption applies to a home "owned by one or more individuals" and occupied as the individual's principal residence by an owner (Tax Code § 11.13(j)(1)); the Comptroller says "an individual must have an ownership interest in the property and use the property as the individual's principal residence." An LLC isn't an individual, so ask your county appraisal district whether a deed to your LLC ends the exemption before you sign.

Have a Texas attorney prepare the deed. After it records, update leases, rent payment instructions, deposits and insurance, and re-apply for any city short-term rental permit.

Check the mortgage before you transfer

Federal law lets a lender enforce a due-on-sale clause, and a transfer to an LLC isn't one of the exceptions for 1–4 unit homes (12 U.S.C. § 1701j-3(d)). Fannie Mae allows a transfer to an LLC the borrower controls for loans it acquired on or after June 1, 2016 (Fannie Mae Servicing Guide D1-4.1-02). Ask your servicer in writing.

Insurance and taxes

Tell your insurer before title moves. For federal income tax, a single-member LLC is disregarded unless it elects corporate treatment (IRS). For Texas franchise tax, sole proprietorships are not taxable entities, but single-member LLCs are (Comptroller Franchise Tax Overview). Texas has no state property tax; local taxing units set rates and collect it (Comptroller). Short-term rentals add the state hotel occupancy tax, 6 percent, which covers rentals of 29 days or less. A platform that agrees to collect it does so for you; otherwise you collect and remit it, and cities and counties may add local hotel taxes (Comptroller Hotel Occupancy Tax; HOT FAQ).

Keeping each LLC in good standing

  • File the Public Information Report (Form 05-102) with the Comptroller every year, due May 15 or the next business day. It is due even when you owe no franchise tax. If tax is due, the franchise tax report is due the same day (Comptroller).
  • Missing the report can forfeit the LLC's right to transact business: it loses its right to sue or defend in a Texas court, and its members can become personally liable for certain debts (Comptroller PIR/OIR page).
  • Keep the registered agent and office current; failing to do so may result in involuntary termination of the LLC (SOS Form 205 instructions). Changes go to the Secretary of State, not on the PIR (Comptroller).
  • Renew city registrations on their own clocks: Austin every two years, Dallas (rental and short-term registrations) and Fort Worth every year, San Antonio every three years. Houston says certificates issued by December 31, 2026 expire December 31, 2027. File Austin's quarterly and San Antonio's monthly hotel tax reports.

Before you file or transfer a property

  • Attorney: the deed, the homestead exemption, series vs. separate LLCs
  • Servicer: is the transfer allowed?
  • Insurance agent: named insured, coverage
  • CPA: franchise tax, Public Information Report and hotel occupancy tax
  • City: short-term rental permit or rental registration in the LLC's name
  • Calendar: May 15 each year; city permit renewals; hotel tax reports

Form it with Corpus

Corpus prepares and files your Certificate of Formation and includes the first year of registered-agent service. The Texas page shows the current price. Corpus isn't a law firm: the deed, the loan, taxes and city permits are separate steps.

Start a Texas LLCOr let your AI assistant do the intake

Sources

Last checked 2026-10-23. Corpus is not a law firm and does not provide legal or tax advice.