I have a single-family house that will be vacant by the end of the month and already did put up rental ad for this property which is located in round rock city and the subdivision of this property is not regulated by any HOA. I was contacted by a business personal who wants to lease the property but will be sub-leasing the property to his clients or employees for short term rental (mainly corporate rentals or Airbnb).
Now my lease agreement with the tenant will be a year lease term with a fixed rent but the tenant will not be residing on the property but will be furnishing the property and then sub-leasing it to others.
I contacted the code enforcement department of the city of round rock in regard to any rental permit for this situation and the city officials mentioned that they don't have any such rental permitting program. Now they mentioned that Texas State law does require hotel occupancy tax be collected and remitted to the State and local government where the home is located for all stays less than 30 consecutive days. Stays over 30 consecutive days are not considered short term and are not required to remit hotel occupancy tax. Attached is an ordinance that was sent by the city officials which is not clear on this issue where if me as landlord should be liable for the hotel occupancy tax or if the tenant who is sub-leasing it to his clients should be responsible?
In my understanding if I am leasing my property to this tenant who is using it for sub-leasing business purposes then technically he shall be remitting the hotel occupancy tax and if this is the case can we have a lease agreement to be put in such a way that I am not liable for the hotel occupancy tax and as well to indemnify myself (landlord) if the tenant uses the property to sub-lease it to other clients?
It's great that you reached out to the code enforcement department for clarification on the rental permit and hotel occupancy tax requirements for your property. Based on the information you received from the city officials, it appears that you, as the landlord, would not be directly responsible for collecting and remitting the hotel occupancy tax.
Since your tenant will be sub-leasing the property, they would be the ones responsible for collecting and remitting the hotel occupancy tax to the State and local government. However, you may want to include language in your lease agreement that specifically outlines the tenant's responsibility to collect and remit the hotel occupancy tax, as well as any other applicable taxes or fees associated with sub-leasing the property.
Additionally, you may want to consider including indemnification language in the lease agreement to protect yourself from any liability arising from the tenant's sub-leasing activities. This can help ensure that you are not held responsible for any damages, losses, or legal expenses that may arise as a result of the tenant's sub-leasing activities.
It's important to consult with a lawyer review any custom language in the lease agreement, so that it accurately reflects your specific situation and provides adequate protection for your property and your interests.