Chapel Hill, North Carolina, passes new vacation rental rules
- Aug 24, 2021 | Jennifer Sokolowsky
Short-term rental hosts in Chapel Hill, North Carolina, will be required to apply for zoning compliance permits for their properties under a new law approved by the Town Council. Previously, short-term rentals were not regulated in Chapel Hill.
The new rules also limit the number of “dedicated short-term rentals” used entirely for rental purposes without a primary resident. These types of rentals will be restricted to high-density, mixed-use, and commercial areas of Chapel Hill. Vacation rentals occupied by their owners are allowed in all neighborhoods, unless prohibited by a homeowners association.
All vacation rental hosts must abide by occupancy limits and parking restrictions, have smoke detectors on-site, and carry insurance. They must also designate a contact who can be available by phone within a two-hour window to resolve issues. Short-term rental guests are required to apply for a permit before hosting an event.
Existing short-term rentals have 18 months to comply with the new regulations. The council will review the effect of the new ordinance in spring of 2022.
Under the new law, short-term rental operators must also register with the town for occupancy tax, collect the tax from guests, and file regular occupancy tax returns. Hosts must also register with the state tax authority, collect state and county sales tax, and file regular returns with the state.
Airbnb and Vrbo collect both state and Chapel Hill sales and occupancy taxes on behalf of their hosts when guests pay for their stays.
MyLodgeTax can automate and simplify lodging tax compliance. For more on short-term lodging taxes in North Carolina, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.
Nearby Raleigh also created new regulations for short-term rentals earlier this year. These require hosts to get a city zoning permit and post their permit numbers on all advertisements. The law also bans special events and gatherings. In multifamily buildings, short-term rentals are limited to 25% of building units (or two units, whichever is greater).
