The state of North Carolina is a popular Airbnb destination that attracts many visitors throughout the year, especially in cities like Charlotte and Asheville. Before buying an investment property to rent out on Airbnb, though, investors need to check out North Carolina short term rental laws to make sure it's a smart place to invest.
North Carolina is one of the few U.S. states that defines and regulates short term rentals at the state level, via the Vacation Rental Act. In addition, most cities have their own rules that complement the statewide regulations.
In this article, we'll cover what you should know about the statewide North Carolina short term rental laws, city-level laws, various taxes and documents to expect, and more. However, always check with an attorney or your city government as these can and do change over time.
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North Carolina's definition of a short term rental
North Carolina regulates short term rentals in the Vacation Rental Act, Chapter 42A in the State General Statutes. Short term rentals, referred to as vacation rentals in the state of North Carolina, are defined as rentals of residential property for vacation, leisure, or recreation purposes for fewer than 90 days by a person who has a place of permanent residence to which they intend to return.
This definition excludes hotels, motels, and tourist camps as well as rentals to people traveling for business or employment purposes, rentals to persons having no other place of primary residence, and rentals for which no more than nominal consideration is given.
In contrast, most North Carolina cities have legislation concerning short term rentals in general rather than vacation rentals specifically and do not distinguish between rentals for leisure and business-related purposes.
Starting a short term rental business in North Carolina
When preparing to launch a vacation rental business in North Carolina, property owners need to take a number of steps to ensure compliance with both state and local requirements.
Here's what you'll need to start a North Carolina Airbnb business:
- Vacation rental agreement: The North Carolina short term rental bill requires hosts/property managers to have a written vacation rental agreement that each guest signs.
- Trust account: Investors and Airbnb managers need to set up a trust account in a federally insured depository institution or a trust institution authorized to do business in the state to deposit rent, security deposits, and other fees.
- Local STR and zoning permits: Many North Carolina markets require short term rental operators to obtain a non-transferable permit or license. In some cases, it's renewable, while in other cases it remains valid for as long as the property doesn't change ownership.
- Local business license: In some cities, Airbnb hosts might need to get a business license from local authorities.
- Insurance: Property owners need to have short term rental insurance that provides general liability coverage.
- Readiness to pay taxes: Property owners have to make sure that they complete all registration and processes that are required to be ready to pay occupancy and sales tax as soon as they launch their business.
- Zoning district regulations: Most North Carolina cities have strict zoning ordinances that allow short term rentals in certain districts only. Owners need to be familiar with these regulations and comply with them.
- Maximum occupancy: Hosts need to ensure compliance with local maximum occupancy standards.
- Health and safety regulations: North Carolina vacation rental property owners need to install fire and safety equipment including but not limited to smoke alarms and carbon dioxide detectors.
- Parking availability: Property owners need to make sure that they provide the required number of parking spaces based on the number of bedrooms that they rent out.
- Fee payment: Hosts have to pay a fee when applying for a short term rental zoning permit.
- Required paperwork: The exact documentation and information that property owners/agents need to present when applying for a permit varies from one North Carolina market to another, but in most cases it includes property address and details, owner and agent information, local contact information, proof of ownership, proof of residence, and more.
Before listing their property on Airbnb or another platform, North Carolina short term rental investors should check state, county, and city regulations concerning this type of business. Rules are usually available on the websites of local authorities. STR legislation is very dynamic in the state of North Carolina with multiple cities tightening or loosening regulations, so hosts need to look out for updates to existing rules. Meanwhile, if you have any doubts, it's a smart move to consult with a local legal expert. You could also hire a local Airbnb property manager to help you ensure compliance with rules and even manage your property from end to end.
It's crucial to be aware of all applicable rules when starting a North Carolina short term rental business to avoid permit suspension and fines.
Short term rental licensing requirements in North Carolina
North Carolina does not issue vacation rental licenses or permits at the state level. However, many cities across the state require property owners or agents to obtain a short term rental zoning permit in order to operate legally. Permits can be received after ensuring compliance with federal, state, and local regulations and submitting an application along with some documents.
Required documentation usually includes property zoning and other information, owner and agent information, liability insurance, and an agreement to follow all applicable rules and codes. An application fee typically needs to be paid, too.
License renewals for short term rentals in North Carolina
In some North Carolina cities, short term rental permits and licenses need to be renewed on an annual basis, while in other locations they are valid for as long as the owner and the agent remain the same. Renewals require submitting documents and paying a fee.
Required documents for North Carolina short term rentals
To apply for a zoning permit, North Carolina short term rental property owners need to submit the following documents:
- Personal ID
- Federal EIN
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Proof of ownership
- Proof of residence
- Proof of fee payment
Necessary documents vary from one North Carolina authority to another, so hosts need to check out requirements in their city before applying for a permit.
North Carolina short term rental taxes
In order to operate a North Carolina Airbnb business, property owners need to pay a number of taxes, including:
- Occupancy tax: Hosts have to collect and remit hotel occupancy tax at county and local rates. The combined occupancy tax is typically in the range of 6%-8%.
- Sales tax: Short term rental property owners have to pay sales tax including state, county, and local rates. The combined rate is usually around 7%.
- Short term rental income tax: Owners have to pay federal and local income taxes on the income they generate from their vacation rentals.
- Property tax: Short term rental property owners must pay property taxes at federal and municipal rates.
While taxes can add up to a significant portion of the Airbnb income that North Carolina hosts earn, there are multiple business-related expenses that they can deduct from their taxable income. Eligible deductibles include:
- Property depreciation (conduct a short term rental cost segregation study to maximize tax benefits)
- Mortgage interest
- Mortgage insurance premium (MIP)
- Property taxes
- Airbnb insurance
- Furniture, appliances, and electronics costs
- Property management fees
- Marketing and advertising costs
- Cleaning fees
- Accounting, legal, and other professional fees
- Maintenance expenses
- Home office and business travel costs
It's important to take advantage of all applicable deductions in order to reduce the tax burden of owning a North Carolina short term rental.
Statewide short term rental rules in North Carolina
The North Carolina Vacation Rental Act requires STR owners to comply with the following requirements:
- Vacation rental agreement: Landlords (property owners) or real estate brokers (property managers) need to provide tenants (guests) with a written vacation rental agreement that has to be signed in order to be valid, and the agreement must outline the daily fees, processing fees, cleaning fees, the manner of handling funds, and the rights and obligations of the landlord/broker and the tenant
- Trust account: Landlords or real estate brokers need to have a trust account in a federally-insured institution or a trust authorized to do business in North Carolina where rent, security deposits, and other fees get deposited
- Compliance with applicable building and housing codes
- Compliance with applicable elevator safety requirements
- Making all required repairs to keep the property in a fit and habitable condition
- Keeping common areas of the property in safe condition
- Maintaining electrical, plumbing, sanitary, heating, ventilating, and other facilities and major appliances in good and safe working order
- Providing operable smoke detectors
- Providing a minimum of one carbon monoxide alarm, per rental unit per level
Meanwhile, common city-level short term rental regulations require operators to:
- Have liability insurance
- Follow maximum occupancy rules
- Offer minimum parking spaces
- Collect and remit occupancy and sales taxes
North Carolina STR investors need to be familiar with both statewide and city-specific rules before starting an Airbnb business and to comply with all necessary regulations in order to avoid hefty fines and business discontinuation.
Short term rental laws by North Carolina city
Statewide North Carolina short term rental rules do not prohibit local authorities from establishing their own regulations to protect their local housing market and residents. Indeed, most North Carolina cities have introduced their own laws to further control the spread of the vacation rental industry and ensure that it does not violate the safety and peace of local populations.
These are the Airbnb laws and rules in the most popular tourist destinations across the state of North Carolina.
1. Raleigh, North Carolina short term rental laws
The city of Raleigh regulates short term rentals in Ordinance No. (2021) 193 TC 444, which became effective in 2021. The city defines a STR as a dwelling unit that can be used for overnight lodging accommodations provided to renters for no more than 30 days for compensation. An entire dwelling unit or a portion of it can be used, including all or part of an accessory structure. This definition excludes hotels, motels, inns, bed and breakfasts, hostels, and hospitality houses.
Raleigh vacation rentals are allowed as a limited use in the R-1, R-2, R-4, R-6, R-10, RX, OX, NX, CX, and DX zoning districts.
Operators need to apply for a short term rental zoning permit from the city. This generally requires the following documents:
- Application form
- Applicant's name, address, phone number, and email
- Property owner's name, address, phone number, and email
- STR address and information
- Signed owner's affidavit
- Building layout plan for multi-unit dwellings
- Floor plan/layout for detached accessory dwelling units
- Zoning permit fee around $200-250
Raleigh Airbnb hosts also need to comply with the following regulations:
- Not having cooking facilities in the bedrooms
- No exterior advertising
- Not utilizing the facilities for holding special events or gatherings in residential zoning districts
- Not using the premises for "Live-Work" or "Day Care, Home" uses
- Complying with applicable local and North Carolina Airbnb laws related to fire and building codes, smoke detecting and carbon monoxide detecting equipment, housing codes, and payment of taxes to governmental entities
- Maintaining a list of all lodgers for three years
- Posting the zoning permit number on all advertisements
The room occupancy tax rate in Wake County, where Raleigh is located, is 6%, while the combined sales tax rate is 7.25%.
All in all, Raleigh short term rental laws allow non-owner occupied Airbnb rentals but only in certain zoning districts. As long as investors are able to abide by these rules, they can find profitable investments in this North Carolina city.
2. Asheville, North Carolina short term rental laws
The city of Asheville distinguishes between short term vacation rentals (STVR) and homestays, where:
- A short term vacation rental is the rental of an entire dwelling unit for less than a month, which is only permitted in the resort zoning district
- Homestay is the rental of one or two bedrooms in a dwelling unit (house or apartment) for less than 30 days at a time where the applicant resides full-time and which is located in a residentially-zoned area
Operating a homestay, which is essentially an owner-occupied STR, requires a permit. Homestay permits are limited to one per person, immediate household, LLC, corporation, trust, or other legal entity. Only one permit is allowed per parcel/lot. Applications need to be submitted by the full-time resident of the dwelling unit and the property owner (if different) as co-applicants.
To apply for a homestay permit, operators need to submit:
- Applicant's name, phone number, and email
- Second applicant's name if available
- Property's address
- Number of bedrooms and square footage
- Two forms of proof of residency
- Owner form
- Floor plan
- $202 zoning application and technology fee
Asheville homestays need to follow these rules:
- No additional off-street parking needed
- Not be located within a detached accessory structure
- No signage used
- Exterior lighting is residential in nature
- Payment of applicable taxes including occupancy tax and sales tax
- Compliance with applicable building codes
Meanwhile, STVRs, which are only allowed in the resort zoning district, must meet the following requirements:
- Obtain an annual zoning permit
- Not display advertising visible from the outside
- Not provide activities other than lodging
- Provide off-street parking
- Not allow signage
- Use outside lighting that is residential in nature
- Maintain liability insurance
- Pay applicable taxes including occupancy and sales taxes
- Comply with all applicable building codes
- Ensure annual review and inspection for compliance with the annual zoning permit
The occupancy tax in Buncombe County, home to Asheville, is 6%, and the combined sales tax is 7%.
Generally speaking, Asheville short term rental laws make it a potentially challenging place to invest in Airbnb properties as non-owner occupied vacation rentals are restricted to the resort zoning district only. However, working with an experienced real estate agent or local Airbnb manager might help you find more feasible opportunities in the area.
3. Charlotte, North Carolina short term rental laws
The city of Charlotte removed all short term rental regulations from the City Unified Development Ordinance (UDO) in April 2022. To date, Charlotte vacation rentals remain unregulated.
The combined Charlotte and Mecklenburg occupancy tax rate is 8%, while the total sales tax is 7.25%.
In sum, there are no Charlotte short term rental rules, which means that currently both owner-occupied and non-owned occupied vacation rentals can be operated as long as they meet general North Carolina Airbnb rules. However, interested investors need to keep an eye on any new potential legislation.
4. Durham, North Carolina short term rental laws
The city of Durham does not have specific short term rental regulations. Nevertheless, all rentals are regulated by the Proactive Rental Inspection Program (PRIP) Ordinance.
According to the Ordinance, residential rental properties might be subjected to periodic inspections by a housing inspector. Moreover, they need to be registered and pay an annual registration fee of $200 for properties with two or less rental units and $400 for properties with 3+ rental units.
The current legal environment makes Durham a great place to invest in an Airbnb property from a regulatory perspective as all types of short term rentals are allowed. Thus, it's worth investigating options to find Airbnb properties for sale in the local market.
5. Greensboro, North Carolina short term rental laws
The city of Greensboro introduced new short term rental rules as of April 2024. All owners and operators of STRs need to obtain a zoning permit via the City's online zoning permit system.
Applying for a Greensboro short term rental zoning permit requires the following:
- STR address and information
- Total number of bedrooms
- Maximum number of persons allowed at a time
- Property owner's name, address, phone number, and email
- STR operator's name, address, phone number, and email
- Liability insurance with coverage of at least $1 million per occurrence
- Agreement to comply with all requirements
- $200 permit fee
Permits do not need to be renewed as long as the owner/operator remains the same. In case of change of property owner/operator, an application for a new permit should be submitted within 30 days as permits are non-transferable.
In addition, Greensboro Airbnb hosts need to comply with the following requirements:
- Abide by applicable federal, state, and local ordinances and laws related to minimum housing, building and fire codes, civil and criminal codes, fair housing and discrimination laws, and others
- Pay applicable occupancy and other taxes
- Post the zoning permit inside the rental
- Reference the zoning permit on all advertising
- Not post any signage on the property
- Limit maximum occupancy to two adults per rented bedroom
- Not allow publicly announced or promoted gatherings
- Prohibit gatherings involving more than twice the number of people renting the property
- Limit parking to one vehicle per rented bedroom
- Ensure that a STR not located within a multifamily building needs to be separated from existing STRs by 750 feet
Importantly, when renting out a whole house on a short term basis in Greensboro, the host needs to be in Guilford County or an adjacent county.
The occupancy tax rate in Guilford County, where Greensboro is located, is 3%, while the combined sales tax applicable in the area is 6.75%.
In sum, Greensboro short term rental laws allow investors to buy a property for the sole purpose of renting it out on Airbnb and other similar platforms as long as they live nearby or hire a local property manager.
6. Pinehurst, North Carolina short term rental laws
The Village of Pinehurst defines a short term rental as a transient lodging use of a residential dwelling that is rented for a period of less than 30 days for financial or other consideration for a total of more than 14 days in a calendar year and is not currently defined by the Pinehurst Development Ordinance (PDO) as a separate land use. In essence, this definition refers to non-owner occupied vacation rentals as opposed to homestays, where the full-time resident remains on site during the duration of the rental. The village regulates STRs via Ordinance #22-15, effective as of October 2022.
According to Pinehurst short term rental rules, new Airbnb properties are permitted only in the Hotel (H) Zoning District and the Village Mixed Used (VMU) Zoning District and require an approved development permit. Property owners can rent out their home or accessory dwelling in any zoning district for up to 14 days in a calendar year without the need to obtain a development permit or comply with Ordinance #22-15. Meanwhile, STRs existing before October 27, 2022 can continue to operate as nonconforming use as long as they obtain a nonconforming use certificate.
In addition, Pinehurst vacation rentals need to follow certain regulations including:
- Maximum occupancy of two persons per bedroom
- One parking space per bedroom
- One smoke detector per bedroom
- One carbon monoxide detector per floor
- Cooking facilities not permitted in bedrooms
- Bedrooms and other habitable rooms meeting size, ceiling height, egress, and minimum light and ventilation requirements established in the Pinehurst Municipal Code, the North Carolina State Building Code, and the North Carolina Vacation Rental Act
- Trash disposal procedures
- Sanitation schedules
- Noise ordinance hours
- Posting of house rules at the main entrance of the property
- Posting of the owner's or manager's contact information at the main entrance of the rental
The Pinehurst hotel occupancy tax rate is 6%, while the combined sales tax rate is 7%.
In conclusion, Pinehurst severely limits short term rentals by allowing them in two zoning districts only. Nonetheless, savvy investors may be able to find the right investment opportunities with the help of local professionals.
Do Airbnbs do well in North Carolina?
North Carolina short term rental laws do not limit vacation rentals across the state. However, city-level Airbnb rules vary widely. For instance, in Charlotte and Durham, STRs are unrestricted, while in Raleigh, Asheville, and Pinehurst they are limited to certain zoning districts only. Meanwhile, in Greensboro non-owner occupied short term rentals are a viable option as long as the host is available nearby.
In spite of diverse city-level restrictions, North Carolina remains a great state for investing in an Airbnb property as a result of strong tourism activities, year-round activities, and the relatively lenient Airbnb laws in some markets.
Ready to get started? Contact one of the best Airbnb property management companies to learn more about investing in North Carolina!
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