North Carolina Short Term Rental Laws: AirBnB & Vacation Rental Regulations
North Carolina has few state-wide short-term rental laws and curbs local regulations making it easier for airbnb and vacation rental investors to get into the market. Learn more about the laws and taxes at the state and local level.
After Airbnb was established in 2008, North Carolina quickly emerged as a top location for investing in vacation rentals in the US market. The endless beaches, the warm weather, the beautiful nature, and the Great Rocky Mountains National Park are some of the factors contributing to making The Tar Heel State an attractive destination for both tourists and short term rental investors.
However, before you decide to buy an Airbnb property in this place, you should familiarize yourself with the North Carolina short term rental laws. Finding out the local Airbnb rules and regulations on your own can be overwhelming, especially for new and out-of-state real estate investors. To give you a headstart, we’ve put together everything you need to know about running a vacation rental business in NC: from how a short term rental is defined, through what permits you need to acquire, all the way to what taxes you have to pay.
Generally speaking, North Carolina boasts one of the most conducive legislations for short term rentals across the US. Regulations are few, and there is no requirement to register your business. As local authorities have adopted various municipal rules to meet the needs of local markets and residents, in this article we also cover the Airbnb laws in 12 of the most prominent NC markets for this rental strategy.
*Awning full-service property management is 15% of revenue and includes navigating the legal requirements and paperwork of setting up a vacation rental.
North Carolina’s Definition of a Short Term Rental
North Carolina defines and regulates short term rental properties under the North Carolina Vacation Rental Act. A vacation rental is defined as the rental of a residential property for vacation, leisure, and recreational purposes, for a period of less than 90 days, to a person who has another permanent residence where they plan to return.
This definition sets vacation rentals apart from hotels and excludes rentals to people traveling for business or employment purposes. It also excludes rentals to persons who have no other primary residence.
This definition differs from the definitions adopted by most other top Airbnb locations in the US. For example, according to the Florida, Texas, and Tennessee short term rental laws, this type of rental is limited to 30 consecutive days or less. Furthermore, the Florida, Tennessee, and Texas short term rentals laws don’t specify the purpose of traveling: leisure vs. business. The main reason for this difference is that the former three states define short term rentals, while the North Carolina Airbnb legislation focuses on vacation rentals.
Starting a Short Term Rental Business in North Carolina
Starting a vacation rental business in the North Carolina real estate market is easy and straightforward. Importantly, short term rentals do not need to be registered or licensed at the state level. In addition, the state laws prevent local governments from requiring owners or managers of rental properties to obtain permits or permissions or to register rental properties with the local government.
An April 2022 ruling of the North Carolina Court of Appeals in Schroeder v. City of Wilmington reminded municipal authorities of this clause and prompted some of them to back off from such requirements in their legislation. Nevertheless, in the State of North Carolina, local governments can still regulate vacation rentals through zoning ordinances.
At the state level, to run a North Carolina short term rental business, you need to register with the North Carolina Department of Revenue in order to be able to collect and file the necessary taxes. You can do this online or via mail. If you rent out your property for less than 15 days a year, you don’t have to pay taxes and don’t need to register. Similarly, if you rent out through a vacation rental marketplace facilitator like Airbnb or Vrbo, you don’t have to register with the tax authorities as the platform will collect and file taxes on your behalf.
As an aspiring Airbnb host, you should keep in mind that a landlord or a real estate broker and a tenant must sign a written vacation rental agreement for any vacation rental in North Carolina. The agreement must state the rights and obligations of both parties and outline all payment amounts and methods. The NC Vacation Rental Act has been written in a way that takes care of both property owners/managers and renters amid the growing tourism industry and the expanding homesharing sector.
Before you buy a property to rent out on a short term basis, you should also check out the county and city laws and regulations in your selected market.
Short Term Rental Licensing Requirement in North Carolina
North Carolina short term rental laws and regulations do not require properties to be registered or licensed. As mentioned above, the state law prohibits such requirements at the local level as well.
The lean vacation rental legislation makes North Carolina an ideal location for investing in Airbnb. Many other states - like California - limit the number of days for which a non-owner occupied short term rental can be operated or impose a wide range of other restrictions.
License Renewals for Short Term Rentals in North Carolina
Since North Carolina vacation rental properties do not require a license, there is no need to renew permits in this regard. Sales tax permits do not need to be renewed either unless there is a change in address.
Required Documents for North Carolina Short Term Rentals
To obtain a North Carolina sales and use tax ID number, you need to submit a business registration form online or mail Form NC-BR, Business Registration Application. You need to provide the following information:
- Proof of Ownership
- Social Security Number or Federal Employer Identification Number and North Carolina Secretary of State Number
- Business information including legal business name or owner’s name, trade name, address, mailing address, and phone number
- Partner or responsible person information including name, title, SSN, and home address
- Business details including start date, type of business, business description, and others
There is no fee associated with registering a business for tax purposes.
North Carolina Short Term Rental Taxes
As a North Carolina Airbnb business owner, you are responsible for paying a few different state and local taxes. The good news is that Airbnb and Vrbo collect and file those on behalf of the host, so you won’t need to worry about this unless you rent out your property outside of an established online marketplace.
Sales and Use Tax
The first tax that North Carolina short term rentals need to pay is sales and use tax, both at the state and the local level. North Carolina imposes a tax of 4.75%, while the local rates range from 2% to 2.75%. Thus, the total sales and use tax rate reaches 6.75% to 7.5%. This is remitted to the North Carolina Department of Revenue.
If you operate your North Carolina vacation rental through a marketplace, then the platform will collect and remit sales tax instead of you.
In most North Carolina cities, Airbnb hosts need to pay an occupancy tax too. The tax varies between different counties and cities and generally ranges from 1% to 8% of the listing price including cleaning and other guest fees. This is paid to local tax authorities.
The occupancy tax is collected by Airbnb, Vrbo, and other major short term rental platforms.
As a North Carolina vacation rental host, you need to pay income tax on all taxable income. This includes rental income after applicable deductions. The income tax is reported and paid once a year to the federal and state government.
Overall, North Carolina short term rental taxes are identical with the taxes which Airbnb hosts pay in other states. The fact that platforms like Airbnb and Vrbo are able to collect and pay those on behalf of hosts and guests makes it much easier to run a vacation rental business in North Carolina.
Short Term Rental Tax Deductions in North Carolina
As a savvy investor, you need to be familiar with available short term rental tax deductions. This allows you to minimize expenses and optimize return on investment. Here are the expenses that you can deduct:
- Mortgage interest
- Mortgage insurance premium
- Property tax
- Real estate depreciation
- Fixes and repairs
- Utilities such as electricity, gas, water, and internet
- Guest supplies
- Cleaning services
- Home office supplies such as equipment, office supplies, office furniture, and software
Statewide Short Term Rental Rules in North Carolina
The State of North Carolina imposes only minimal regulations on the vacation rental industry. The purpose of these is to provide for the safety of guests without putting unnecessary burden on the owners and operators of short term rental properties.
Most importantly, the landlord or real estate broker and the tenant need to sign a written rental agreement before the lease. In addition, landlords are obliged to provide fit premises which includes:
- Complying with building and housing codes;
- Making required repairs to keep the property fit and habitable;
- Keeping all common areas in a safe condition;
- Maintaining electrical, plumbing, sanitary, heating, ventilating, and other facilities;
- Providing operable smoke detectors and carbon monoxide alarms.
However, these are basic requirements with which both long term and short term rental investors need to comply in all US markets. The lack of more strict requirements makes North Carolina one of the best locations for buying an Airbnb property.
Short Term Rental Rules By North Carolina City
As demonstrated above, the statewide North Caroline short term rental laws are rather lean, while providing for the safety and comfort of Airbnb guests. The state legislation prevents local authorities from requiring licenses and permits from vacation rental owners, but local governments can still regulate the industry through zoning rules.
Because of the quick spread of the Airbnb industry across North Carolina, most cities have introduced their own vacation rental rules, varying from less restrictive to more limiting. Next, we will look at the Airbnb rules and regulations applicable to 12 of the best places to buy a short term rental property in North Carolina.
Charlotte Short Term Rental Laws
The City of Charlotte is one of the many local jurisdictions in North Carolina that has been debating and changing the applicable Airbnb laws in an attempt to regulate this growing industry while complying with state-level rules.
Currently in Charlotte a short term rental is defined as the rental of an entire dwelling unit when the homeowner is not occupying the property.
In line with the permissions of the North Carolina Vacation Rental Act, Charlotte imposes certain restrictions and regulations based on the zoning of Airbnb rentals. Charlotte Airbnb hosts must check the zoning requirements of the exact location of their short term rental property before renting it out to assure compliance with the local law.
The Charlotte-Mecklenburg Police Department maintains a free residential rental property registry which applies to both long term and short term rentals. Registration is obligatory for property owners that meet disorder risk criteria, while it’s voluntary for the rest.
Moreover, Charlotte short term rental property owners need to obtain a business license. Registering a business requires:
- Naming your business;
- Selecting a business structure;
- Obtaining licensing and permits;
- Creating an Employer Identification Number;
- Setting up a business bank account;
- Preparing to file and pay taxes;
- Listing business properties with the County Tax Assessors Office;
- Registering trademarks and patents if applicable;
- Considering business insurance.
Similar to the rest of North Carolina, vacation rentals in this city have to comply with building and housing standards and pay sales tax and occupancy tax.
Raleigh Short Term Rental Laws
The City of Raleigh defines a short term rental as a dwelling unit that is used for overnight lodging accommodations provided to renters, for no more than 30 days, for compensation. This can apply to a portion of or an entire dwelling unit including part or all of an accessory structure.
In Raleigh short term rentals are allowed as a limited use in zoning districts R-1, R-2, R-4, R-6, R-10, RX, OX, NX, CX, and DX. In residential zoning districts, short term renters cannot use such properties to hold special events or gatherings.
To operate a Raleigh short term rental property legally, you need to apply for a zoning permit from the City. This can be done online via the Permit and Development Portal.
Submitting a zoning permit application requires providing:
- Applicant information including name, address, phone number, and email address
- Property owner information including name, address, phone number, and email address
- Short term rental information including address, Property Identification Number, property type, and description. Short term rentals cannot exceed 25% or 2 short short term rental units, whichever is greater, in any single multi-unit building.
- Signed owner’s affidavit
- Floor plan for multi-unit dwellings
- Permit fee of $194 after the completion of the initial application review
Zoning permits need to be renewed annually.
Once again, Raleigh vacation rental properties are subject to all applicable state and local laws securing safety and are responsible for paying relevant taxes.
Durham Short Term Rental Laws
The City of Durham has not enacted any short term rental legislation. This means that Durham vacation rental properties are regulated by the general North Carolina short term rental laws. Most importantly, hosts need to provide a fit and safe property, sign a written vacation rental agreement with guests, and pay state and local sales and occupancy taxes.
The lack of Durham Airbnb laws is one of the reasons for the quick spread of new short-term rentals in the city.
Winston-Salem Short Term Rental Laws
The City of Winston-Salem does not have local Airbnb rules and regulations either. This means that owner-occupied and non-owner occupied Winston-Salem vacation rentals are permitted in all neighborhoods without an HOA. Airbnb businesses need to operate in line with the laws applicable to the State of North Carolina.
Greensboro Short Term Rental Laws
The City of Greensboro does not have a definition of a short term rental, so these types of properties are regulated by the legislation applicable to Tourist Homes (Bed and Breakfasts). A Tourist Home, meanwhile, is defined as a dwelling in which lodging is provided for overnight guests for a fee, with or without meals.
As Tourist Homes, vacation rentals need to meet certain standards and regulations. Specifically, guests cannot stay for more than 15 days within a 60-day period. A tourist home cannot be located within 400 feet of a rooming house or another tourist home. Only up to 6 guests are allowed at a time, and the owner or operator must reside on site.
The latter rule means that non-owner occupied short term rentals are not allowed in Greensboro. This is a major limitation for full-time and out-of-state investors.
Asheville Short Term Rental Laws
The City of Asheville defines a short term rental as the rental of an entire dwelling unit for less than a month. This is allowed only in the resort zoning district. This limits the geographic scope of where you can invest in an Asheville non-owner occupied vacation rental.
Meanwhile, you can rent out your property as a homestay even if it is located in a residentially zoned area. However, you have to live in the dwelling unit full time and rent out one to two bedrooms at most. In this case, you need to apply for a homestay permit.
Applying for a new homestay permit requires the following:
- Applicant information including name, phone number, and email address
- Property information including address, number of bedrooms, and square footage
- Floor plan
- Proof of residency including two forms
- Zoning application and technology fee of $208 after submitting an application
The City of Asheville warns applicants that processing applications and receiving an inspection may take longer than usual due to the high number of applicants.
Asheville homestay permits do not need to be renewed.
Overall, Asheville short term rental laws are very restrictive, preventing hosts from investing in non-owner occupied Airbnb properties outside of resort districts.
Banner Elk Short Term Rental Laws
The Town of Banner Elk is one more place in the State of North Carolina without local short term rental regulations. Investors must adhere to state regulations. This makes Banner Elk an excellent location for investing in Airbnb.
Lake Lure Short Term Rental Laws
The Town of Lake Lure has adopted official standards for residential vacation rentals to protect the health, safety, peace, and wellbeing of residential neighborhoods while allowing local hosts to benefit from the tourism sector.
In the town Lake Lure a residential vacation rental is defined as the rental of any portion of a single-family home, and in certain zoning districts the rental of any portion of a duplex, for occupancy, dwelling, lodging, or sleeping for less than 30 days.
Short term rentals are allowed in most zoning districts, subject to special requirements. As a general rule, overnight occupancy cannot exceed 2 persons per bedroom plus 4 additional persons, for a total of no more than 12 persons. Parking is permitted only in designated parking areas. Furthermore, the owner is responsible for removing all trash appropriately.
Owning a Lake Lure Airbnb property requires a vacation rental operating permit. A vacation rental operating permit application can be obtained in person from Town Hall or online. The following information is needed:
- Property owner information including name, address, mailing address, phone number, and email address
- Rental manager information including name, vacation rental company if applicable, mailing address, phone number, email address, and physical address
- Residence information including street address, tax PIN, zoning district, number of bedrooms, and proposed occupancy
- Site plan including off-street parking spaces
- Copy of the Rutherford County Property Information Card
- Copy of an Authorization of Agent Form if applicable
- Copy of a Standard Rental Agreement
- Registration with the Rutherford County Tourism Development Authority
- Proof of a valid Town Commercial Boat License if applicable
- Sewer certification letter if applicable
- Review fee of $300
Airbnb hosts are exempt from a Lake Luke vacation rental operating permit if they rent out for no more than 2 times per calendar year for a total of less than 2 weeks; if their property is located in a multi-family dwelling or a duplex; and if their rental is located outside the R-1, R-2, and M-1 zoning districts.
Generally speaking, running a Lake Luke Airbnb business is a lucrative opportunity, considering the local and North Carolina short term rental laws and regulations.
Brevard Short Term Rental Laws
The City of Brevard defines a short term rental as a dwelling unit used for lodging purposes, typically for less than 30 days.
To avoid causing harm to local communities while allowing residents to rent out properties on a short term basis, the city imposed specific vacation rental laws and regulations in 2016. For example, the maximum occupancy should be limited to 2 persons per bedroom plus 2 additional persons. Parking spaces should be provided according to the type of the dwelling unit.
Airbnb rentals are allowed in general residential, neighborhood mixed use, and downtown mixed use zoning districts.
No permit is required for running a Brevard short term rental business.
In 2021 the City of Brevard established a Short-Term Rental Task Force to collect data on short term rentals in the city, assess the positive and negative effects, and provide recommendations on updating existing legislation. Thus, if you consider investing in a Brevard vacation rental property, you should keep an eye on any new rules in this regard.
Oak Island Short Term Rental Laws
The Town of Oak Island does not regulate vacation rentals. State-wide North Carolina short term rentals laws remain applicable. This makes this beach town an excellent location for investing in an Airbnb rental property.
Pinehurst Short Term Rental Laws
The Village of Pinehurst does not have legislation related to short term rentals at the moment. However, the issue has been discussed by the Village Council for a while in an attempt to create a local bill that allows the municipal authority to regulate short term rentals.
So, if you plan to buy a Pinehurst vacation rental to take advantage of the strong demand by tourists, make sure to stay up to date on possible policy enactments.
Maggie Valley Short Term Rental Laws
The Town of Maggie Valley does not have its own vacation rental regulations, similar to other North Carolina top locations for Airbnb investments. Maggie Valley Airbnb hosts have to comply with state-level regulations related to safety and taxes.
These are the Airbnb laws and rules in 12 of the best vacation rental markets in North Carolina. They vary significantly, from having no local short term rental laws to prohibiting non-owner occupied vacation rentals altogether.
In sum, the State of North Carolina constitutes one of the best places to invest in Airbnb across the US. However, before buying a property, a smart investor needs to study the state- and city-level Airbnb rules to avoid legal issues. Luckily for investors, the North Carolina short term rental laws are some of the most conducive to business for Airbnb hosts. Importantly, many local cities and towns have also opted in favor of this rental strategy in support of the local economy.