With home sharing sites like Airbnb and VRBO continuing to grow in popularity, it should come as no surprise that many South Carolina homeowners are looking to rent out a room or their entire place when they are out of town.
Short term rentals can change the landscape of a neighborhood and communities are looking at how to address that while addressing the demand for this style of housing. It’s important to speak with a South Carolina real estate attorney if you plan to purchase property to serve as a vacation rental in order to ensure you understand the legal requirements and potential liability issues.
Classifications on Short Term Rentals for Tax Purposes
Essentially, South Carolina has divided short term rentals into different classifications for tax purposes. These are:
- Hotels / Motels
- Investment property and second home rentals
- Primary residential home rentals (no more than 14 days per year)
- Primary residential home rentals (15 to 72 days a year)
- Residential home with no more than six bedrooms and occupied by the owner
Depending on the classification, the amount of taxes can vary. You may need to pay for a business license, as well as state accommodations and local and sales accommodations. If you rent your home for less than 14 days a year, you may be exempt, but the booking agents who list these will be required to pay them. One of the issues that may lead to tighter regulations on the short-term rental market is the failure of travel companies to pay all these owed taxes.
Factors to Consider
Just because you own a home doesn’t mean you can just snap a few photos, list it on a home sharing site, and start taking bookings. In addition to ensuring you’re in compliance with the tax laws, there are a few other issues to address:
- Do you need a business license? You may be required to register and obtain special licensing.
- Is your building zoned for rentals? You may need to review city zoning and planning codes to confirm. There are building and housing standards that must be met, which you can check with the local and state governments to be sure.
- Are you part of a community with a Homeowner Association (HOA)? If so, there may be special rules set forth regarding vacation rentals. It’s your duty to understand the rules and responsibilities related to your specific community.
- Are you required to obtain any special permits in order to rent out your home?
Insurance Policies and Special Coverage
You cannot have a standard homeowners’ insurance policy and expect it will cover you when renting out your home, no matter whether it’s a short-term or long-term rental. You need to speak with your insurance agent on what coverage is available regarding damage and theft of property in the home. You also need to carry adequate liability coverage in case someone is injured in your home. Ask about special home-sharing endorsements that may be available.
Retaining a South Carolina Real Estate Attorney
The Elliott Frazier Law Firm is experienced in real estate law transactions. If you are contemplating purchasing a home for investment purposes, or are considering turning your primary residence into a short-term rental, contact our office today to schedule a consultation.
Angela Elliot Frazier is a Family Law Attorney who practices in Greenville, SC. She graduated from the University of South Carolina School of Law, and has been practicing law for 14 years now. Angela Frazier believes in helping you through one of the most stressful times of your life. Learn more about her experience by clicking here.