Can You Airbnb Your ADU in Austin? STR vs Long-Term Rental (2026)

The Short Answer: It Depends

Can you list your Austin ADU on Airbnb? The answer depends on whether you live on the property and what type of STR license you can get. Austin's short-term rental (STR) rules are some of the most complex in the country. Here's what ADU owners need to know in 2026.

Austin's STR License Types

Type 1: Owner-Occupied (Allowed)

If you live on the property (in the main house or in the ADU), you can rent the other unit as a short-term rental.

• You must live on-site and be present during guest stays (or nearby)
• No cap on Type 1 licenses — you can always get one
• Must register with the city and collect hotel occupancy tax (HOT)
• Annual license fee: ~$450

Type 2: Non-Owner-Occupied (Restricted)

If you don't live on the property, you need a Type 2 license. These are severely restricted:

• The city stopped issuing new Type 2 licenses in most residential areas
• Existing Type 2 licenses are grandfathered but not transferable — they expire when the property sells
• Type 2 is only available in commercial zoning districts

In practice, most ADU owners who don't live on-site cannot legally Airbnb their unit.

Type 3: Bed & Breakfast (Niche)

A B&B license allows STR in an owner-occupied property with up to 5 guest rooms. Rarely used for ADUs but technically an option.

STR vs. Long-Term Rental: The Numbers

Let's compare the two strategies for a 500 sqft 1BR ADU in 78704 (South Congress area):

Short-Term Rental (Airbnb)

• Nightly rate: $120-$180
• Occupancy rate: 65-75%
• Gross monthly revenue: $2,500-$4,000
• Expenses (cleaning, supplies, platform fees, HOT): -$800-$1,200/mo
• Net monthly income: $1,700-$2,800

Long-Term Rental

• Monthly rent: $2,000-$2,500
• Expenses (maintenance, vacancy, management): -$200-$400/mo
• Net monthly income: $1,600-$2,100

So Which Is Better?

The math looks close, but there are important non-financial factors:

Factor	STR (Airbnb)	Long-Term Rental
Income	Higher ceiling	More predictable
Time commitment	High (turnover, guests, cleaning)	Low (set and forget)
Wear and tear	Higher	Lower
Vacancy risk	Seasonal dips	Occasional turnover
Legal risk	Regulations can change	Stable legal framework
Neighbor relations	Can cause friction	Generally fine

The Hybrid Strategy

Many Austin ADU owners use a hybrid approach:

1. Start with STR to maximize income and pay down construction costs faster
2. Switch to long-term once the loan is manageable or if you get tired of hosting
3. Medium-term rentals (30+ day stays) are another option — they avoid STR regulations entirely while commanding higher rents than standard leases. Platforms like Furnished Finder and Airbnb's "monthly stays" cater to traveling nurses, remote workers, and corporate relocations.

Tax Implications

• Hotel Occupancy Tax (HOT): STR hosts must collect and remit 15% HOT (9% city + 6% state). Airbnb collects state tax automatically but you're responsible for the city portion.
• Income tax: Both STR and LTR income are taxable. STR income may be subject to self-employment tax if you provide "substantial services" to guests.
• 14-day rule: If you rent for 14 days or fewer per year, the income is tax-free. Some owners use this for peak events like ACL, SXSW, and F1.

Our Recommendation

For most Austin ADU owners, long-term rental is the better default. The income is predictable, the legal framework is clear, and the time commitment is minimal. If you live on-site and enjoy hosting, STR can boost your income by 20-40% — but it's a part-time job, not passive income.

Whichever path you choose, the first step is the same: check your property's ADU eligibility to see what you can build.