Rental Tax StrategiesFor Texas owners

Steven Palmieri, Tax CFO for this rental practice, keeps the work in Dallas. The year arrives as a video call and the books you already share, whether the house is in Houston, in Austin, in the Hill Country, along the Gulf, or up in the Panhandle. There is no second office in your county, and the capitol in the photograph is not a waiting room we use.

When that house sits outside Dallas and Fort Worth, we are all Texans on the call anyway. The drive can be long. The night count, the bank, and the return still come across the same screen. What this page adds, and the other pages do not, is the state paper that can land after the federal return has already sat still.

The other pages on this address stay on the federal loss, the basis, the nights, and the books. They do not teach a state rate, and they do not name a city. Bring those pages a year of one property. Bring this page the letter that names the state.

A notice of appraised value is the county's letter that the number on the roll moved, or that the roll has an error you can see. When the district appraises property higher than the year before, the notice is supposed to go out by May 1, or by April 1 for a residence homestead, or as soon as practical after those dates. A protest can use Form 50-132. Tax Code section 41.44 says a notice of protest is enough when it identifies the owner, identifies the property, and says you are dissatisfied. The usual deadline is May 15, or the 30th day after the notice was delivered, whichever is later. The practical step is to read the date printed on the notice and to file before the earlier date that might apply. We do not print a bonus number of days for offshore work or full-time military, because that count has to be read on the live instruction before anyone relies on it.

You can ask the district for an informal conference before the board hearing. After the board rules, a written order follows. In a county with a population over 120,000, you can ask for the hearing notice by electronic delivery. None of that changes the federal loss. It changes what the county thinks the property is worth, and a value we invent on this page would be a fiction. There is no tax rate printed here.

Equipment and inventory you owned on January 1 and used to make money are rendered to the same district. The rendition is due April 15. A written request can move that date to May 15, and the chief appraiser may add up to 15 more days for good cause. Miss that day and the county can add a charge equal to one tenth of the year's tax on the equipment. That tenth is the penalty of 10 percent of the taxes imposed on the property, and it does not rewrite the federal depreciation schedule. If your own opinion of the total in that district is under 20,000 dollars, a shorter statement is allowed, with your name, your address, a general description, and the location. A good-faith value estimate on the rendition is for filing. It is generally kept out of a later protest, hearing, or suit, except a proceeding about whether you complied. You may instead report historical cost and the year you acquired the item. Keep that list in the same books that track depreciation, so the rendition and the federal return start from one pile. A statement prepared for a lender is a different paper, and a report on the financial statements stays with a firm that is allowed to sign that kind of report.

A building where the public rents sleeping rooms for 15 dollars or more a day is what this state treats as a hotel, and the state piece of the tax on that stay is 6 percent. Once a sleeping room is priced at 2 dollars or more a day, a city or county hotel tax can reach it as well, separate from that state piece. The state tax also reaches meeting and banquet rooms inside a hotel. A local hotel tax is due only on rooms ordinarily used for sleeping. A city stacks its own rate on top of the state rate. We do not copy one city's stack and call it the rate for the whole state. Look up the city.

A short-term rental, in the words Tax Code section 156.001(b) uses, is a rental of all or part of a residence to someone who is not a permanent resident, for 29 days or less. A platform that agrees to collect the state tax does so and files Form AP-102. If the platform does not agree, the owner collects and remits. An owner who rents only through a collecting platform does not collect the state tax on those stays, and still checks the city and the county for a local hotel tax. Stays booked on the owner's own site stay with the owner.

Labor to repair a family dwelling is outside the sales tax under the publication that draws that line, and the same publication says a dwelling rented for fewer than 30 days is outside that treatment. A short stay can turn a repair into a taxable job. We read the invoice against that line. The federal question is still on the other pages. An average stay of seven days or fewer can change how the passive tests apply when you materially participate, and nights you or your family stayed still count. The hotel tax does not answer the loss.

On a rental company, the franchise tax is the privilege tax the Comptroller describes for a taxable entity formed in this state or doing business here. A letter from that office about the report is the letter this section is written to meet. Who files, in the publication's own list, runs through corporations, limited liability companies, banks, S corporations, partnerships, and the further entities that publication names. A sole owner who holds the house in a personal name generally does not file. A single-member limited liability company does. When every owner of a general partnership is a natural person, that partnership generally stays off the report, and a limited liability partnership is the case that comes back on. Passive entities are on the do-not-file list. We read that classification from the facts. The initials on the deed do not decide it.

For the 2026 and 2027 report years, a rental company whose annualized total revenue is at or under 2,650,000 dollars owes no franchise tax and does not file the tax report. The information filing can still be open: Form 05-102 carries the public information report, Form 05-167 carries the ownership information report, and one of those is still due unless the company is on the skip list. Where the rental company's margin comes from selling goods at retail or wholesale, the 2026 and 2027 reports use 0.375 percent on that margin. A company whose work is the houses themselves, rather than a retail counter, uses 0.75 percent on those same reports. Compensation that the report will deduct stops at 480,000 dollars in those years. At or under 20 million dollars of annualized total revenue, the company may choose the EZ computation, which uses 0.331 percent and gives up the margin deductions. For the 2024 and 2025 report years the no-tax-due threshold was 2,470,000 dollars and the compensation limit was 450,000 dollars. Those earlier figures stay in their own years. They are not the 2026 numbers.

The rental company's report day is May 15, and a weekend or a holiday pushes that day to the following business day. The old no-tax-due report is not the filing for report years from 2024 on. A report that arrives after its day costs 50 dollars by itself. Tax that shows up during the first 30 days after the due date carries an added 5 percent of the tax, and tax that is still out past that 30th day carries an added 10 percent of the tax. The interest clock on that balance opens once 61 days have passed, and the percent itself stays on the state's interest page rather than being copied here. A timely extension payment is generally 100 percent of the prior-year tax or 90 percent of the tax that will be due, and an entity in its first annual report after becoming subject to the tax cannot use the 100 percent option. Entities that are not required to pay electronically extend to November 15 with Webfile or Form 05-164. An entity that paid 10,000 dollars or more in the previous state fiscal year pays electronically, with a first extended date of August 15 and a second of November 15. Where the rental company paid 500,000 dollars or more, more time is requested by making the electronic payment on time under payment code 13080, and that payment takes the place of also sending Form 05-164. The hour that makes the large payment count as on time has to be read on the live instruction, and this page leaves that hour where it is. A final report is due within 60 days after the entity no longer has sufficient nexus.

Skipping the information report can put the right to sue or defend in a state court at risk, and it can put officers and members on the hook for certain debts. That warning is the statute's, and financial institutions sit under a different rule. Officer changes after the filing wait for the next annual report, unless you amend for an error. The registered agent is a separate filing, sent to the Secretary of State, and it is not written onto these reports. Wages on a W-2 can feed the compensation deduction. Payments on a 1099 stay out of it. A constructed example, and only a constructed one, is a rental company under 2,650,000 dollars that still signs the information report in a year with no tax. We do not use a real return as the example. Computing the report from the books is tax work. A report on the financial statements is a different paper and stays with a firm allowed to sign it.

On a taxable sale the rental makes, the state's own portion of the sales tax is 6.25 percent of the price. A city, a county, or a transit district may add its own piece, and that added piece is capped at 2 percent. Stacked together, state and local cannot take more than 8.25 percent of one sale. The rate depends on the place, so the owner looks up the address on the day of the sale. We do not memorize a city's rate, and we do not guess that long-term residential rent is exempt. That guess is not a sentence we are willing to print.

Once the permit is approved, the letter that comes back is what tells the seller whether this rental files each month or each quarter. A month's report goes out on day 20 of the month that follows the month being reported, so the April activity is reported on May 20 when that day is open for business. When Saturday, Sunday, or a legal holiday is the day that report would leave, it goes out on the following day the office is open for business. A permitted seller may claim a discount of 0.5 percent of the tax reported and paid on time. The report itself, if it is late, costs 50 dollars before any tax is discussed. Tax that arrives in the first 30 days after the due day carries an extra 5 percent of the tax, and tax that is still unpaid after those 30 days carries an extra 10 percent of the tax. Interest on that past-due sales balance begins after 61 days, and the rate stays on the interest page.

Property management that sells landscaping, janitorial work, or pest control can be selling taxable real property services, unless a written statement the publications describe, or another rule in those publications, takes the job out. A landscaper who mixes taxable work and nontaxable work without stating them separately can have the whole charge treated as taxable when the taxable part is over 5 percent, unless the records overcome that. A self-employed person with no employees and with 5,000 dollars or less of those receipts in the most recent four quarters has a narrow exclusion, and pest control sits outside that exclusion. The rental's books have to mark each invoice as the taxable job or the other kind, because a mixed bill is where that 5 percent presumption starts. The federal loss is still the question on the rest of this address. A state letter does not make a held loss usable, and a usable loss does not answer the state letter. Bring both, and we will say which pile each one belongs to.