When are South Carolina vacation-home or room rentals of 15 days or more subject to sales tax on accommodations?

Plain-English summary

South Carolina Revenue Ruling 16-10 explained the accommodations-tax treatment when a person rented an entire residence or individual rooms for 15 days or more during the year.

The ruling started from a general rule: charges for sleeping accommodations furnished to transients were subject to South Carolina sales tax on accommodations. It then applied two major exemptions:

1. accommodations supplied to the same individual or business for 90 or more continuous days; and
2. a facility with fewer than six sleeping rooms on the same premises that was the owner or operator's place of abode while the remaining rooms were rented, provided the owner or operator—not a third party—booked the rentals.

RR 16-10 did not address the separate exemption for a qualifying residence rented for fewer than 15 days during the tax year; it referred readers to RR 15-4 for that issue.

The ruling's five scenarios

1. Whole home rented short-term

An owner used the home for only one or two vacation weeks and rented it weekly for the rest of the year, with no guest staying 90 continuous days. The rental charges were taxable.

2. One renter for at least 90 days

An owner lived in the home for six months and rented it to one person or business for the other six months. The charges were not subject to accommodations tax because the same renter occupied it for at least 90 continuous days.

3. Mixed long- and short-term rentals

A four-month, 120-day rental to one vacationer was exempt under the 90-day rule. Separate one-to-four-week rentals to other guests during the year were taxable.

4. Owner-occupied B&B with five or fewer bedrooms

The owner lived in the home throughout the year, acted as innkeeper, and rented the remaining rooms. Because the facility had fewer than six sleeping rooms and remained the owner's place of abode while guests stayed, the charges were exempt.

5. Owner-occupied B&B with six or more bedrooms

The same arrangement with six or more bedrooms did not qualify for the small-facility exemption. Short-term room charges were taxable.

Third-party booking agents

The ruling said a real estate agent, broker, listing service, or Internet booking service that rented the property was the retailer liable for accommodations tax on rentals shorter than 90 continuous days.

Those third-party rentals did not qualify for the fewer-than-six-rooms place-of-abode exemption because the property was not the booking agent's place of abode. This was different from an owner merely advertising through the owner's own website or a "Rent by Owner" website and handling the rental directly under the ruling's assumed facts.

Common questions

Q: Is every vacation rental of 15 days or more taxable?

A: Not every rental charge. A stay by the same person or business for at least 90 continuous days could be exempt, as could qualifying rooms in an owner-occupied place of abode with fewer than six sleeping rooms.

Q: Does a four-month rental qualify for the 90-day rule?

A: Yes. The ruling treated its 120-day example as exempt.

Q: Can short rentals and a long rental in the same year receive different treatment?

A: Yes. The 120-day rental was exempt while the separate short-term rentals were taxable.

Q: Does the small B&B exemption apply when a booking company rents the rooms?

A: No under RR 16-10. The third party was the retailer, and the property was not that retailer's place of abode.

Q: Did the ruling decide property-tax classification?

A: No. It expressly excluded property tax from its scope.

Citations and references

• S.C. Code Ann. Section 12-36-920 (sales tax on accommodations and exemptions)
• S.C. Code Ann. Section 12-36-70(1)(b) (retailer and seller definition)
• S.C. Code Ann. Section 12-36-510 (retail-license requirements described in the ruling)
• S.C. Regulations 117-307.3 and 117-307.4 (place-of-abode and 90-day rules)
• IRC Section 280A(g) and SC Revenue Ruling #15-4 (separate fewer-than-15-day issue referenced by RR 16-10)

Subject

Vacation Rentals of Residences, Vacation Homes, and Places of Abode for 15 Days or More a Year

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR16-10.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #16-10

SUBJECT:

Vacation Rentals of Residences, Vacation Homes, and Places
of Abode for 15 Days or More a Year
(Sales Tax on Accommodations)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

SC Revenue Ruling #04-12

REFERENCES:

S.C. Code Ann. Section 12-36-920 (2014 and Supp. 2015)
S.C. Regulation 117-307.3 (2012)
S.C. Regulation 117-307.4 (2012)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
S.C. Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public. It
is an advisory opinion issued to apply principles of tax law to a set of
facts or a general category of taxpayers. It is the Department’s position
until superseded or modified by a change in statute, regulation, court
decision, or another Department advisory opinion.

Overview:
A 7% sales tax is imposed upon the gross proceeds from the rentals or charges of sleeping
accommodations furnished at any place in which rooms, lodgings, or sleeping accommodations
of any kind, including taxpayer residences, are furnished to transients. Certain exemptions from
sales tax on accommodations under Code Section 12-36-920 apply, such as for “places of abode”
with less than six sleeping rooms or rentals for 90 or more consecutive days.
In 2014, the statute was amended to provide an exemption from sales tax on accommodations for
taxpayers who rent their residence for less than 15 days during the tax year. This new exemption
is addressed in SC Revenue Ruling #15-4, “Vacation Rentals of Residence: Sales Tax Exemption
for Rentals of Less Than 15 Days a Year and Property Tax Assessment Ratio of Rentals of Not
More Than 72 Days a Year.”

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The purpose of this revenue ruling is to provide updated guidance regarding the sales taxes on
accommodations to taxpayers who rent their vacation home or rooms in their residence for 15 or
more days a year. This document does not address property taxes for vacation rentals. See Code
Section 12-43-220(a) for applicable property tax rules.
Question:
If a person owns a home and rents his home or individual rooms in the home to others for 15 or
more days during the year, are the rental charges under any of the following scenarios subject to
the sales tax on accommodations under Code Section 12-36-920?
Assume the owner rents the entire home or individual rooms on his own through written
publications, such as newspapers or real estate guides, his own website or a “Rent by
Owner” website and does not employ the services of a real estate agent, broker, listing
service or internet booking service to rent the home or the rooms.
Scenario 1 – Owner Rents Home on Short Term Basis. The owner uses his home only for
one or two weeks a year for family vacations and rents it to others during the rest of the
year on a weekly basis. The person renting the home from the owner may rent it for more
than one week, but in no case does any one person rent it for 90 or more consecutive
days.
Scenario 2 – Owner Rents Home for 90 Days or More Consecutively to One Person. The
owner lives in his home for six months during the spring/summer months and rents it to a
specific person/business for the remaining six months during the fall/winter months.
Scenario 3 – Owner Rents for Short and Long Terms. The owner rents his home to one
vacationer for four months (120 consecutive days) and to all other vacationers for one to
four weeks at a time during the remainder of the year. The owner may stay in his home
during days the home is not rented.
Scenario 4 – Owner Rents Rooms in His “Place of Abode” with 5 or fewer bedrooms
(i.e., Operates a Bed and Breakfast) on Short Term Basis. The owner lives in a home with
five or fewer bedrooms throughout the year and also operates it as a “bed and breakfast”
whereby the remaining bedrooms are rented to others on a daily or weekly basis. The
owner serves as the innkeeper and provides the necessary amenities and services for each
guest. Any one person does not rent a room for 90 or more consecutive days.
Scenario 5 – Owner Rents Rooms in His “Place of Abode” with 6 or more bedrooms (i.e.,
Operates a Bed and Breakfast) on Short Term Basis. The owner lives in a home with six
or more bedrooms throughout the year and also operates it as a “bed and breakfast”
whereby the remaining bedrooms are rented to others on a daily or weekly basis. The
owner serves as the innkeeper and provides the necessary amenities and services for each
guest. Any one person does not rent a room for 90 or more consecutive days.

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Law and Discussion:
Code Section 12-36-920 imposes a sales tax on accommodations. It reads:
(A) A sales tax equal to seven percent is imposed on the gross proceeds derived
from the rental or charges for any rooms, campground spaces, lodgings, or
sleeping accommodations furnished to transients by any hotel, inn, tourist court,
tourist camp, motel, campground, residence, or any place in which rooms,
lodgings, or sleeping accommodations are furnished to transients for a
consideration. This tax does not apply:
(1) where the facilities consist of less than six sleeping rooms, contained on
the same premises, which is used as the individual’s place of abode; or
(2) to gross proceeds from rental income wholly excluded from the gross
income of the taxpayer pursuant to Internal Revenue Code Section 280A(g) as
that code is defined in Section 12-6-40(A). 1
The gross proceeds derived from the lease or rental of sleeping accommodations
supplied to the same person for a period of ninety continuous days are not
considered proceeds from transients. The tax imposed by this subsection (A) does
not apply to additional guest charges as defined in subsection (B) or separately
stated optional charges on a bill to a customer for amenities, entertainment,
special items in promotional tourist packages, and other guest services.
(B) A sales tax of five percent is imposed on additional guest charges at any place
where rooms, lodgings, or accommodations are furnished to transients for a
consideration, unless otherwise taxed under this chapter. For purposes of this
subsection, additional guest charges are limited to charges for:
(1) room service;
(2) laundering and dry cleaning services;
(3) in-room movies;
(4) telephone service; and
(5) rentals of meeting rooms.
(C) Real estate agents, brokers, corporations, or listing services required to remit
taxes under this section shall notify the department if rental property, previously
listed by them, is dropped from their listings.

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This item was added in 2014. This document does not address the exemption for a home being rented that qualifies
as a dwelling unit under Internal Revenue Code (“IRC”) Section 280A(f) and the taxpayer uses the home during the
tax year as a residence under IRC Section 280A(d). See SC Revenue Ruling #15-4 for guidance when renting a
home for less than 15 days a year.

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(D) When any business is subject to the sales tax on accommodations and the
business has more than one place of business in the State, the licensee shall report
separately in his sales tax return the total gross proceeds derived from business
done within and without the corporate limits of municipalities. A taxpayer who
owns or manages rental units in more than one county or municipality shall report
separately in his sales tax return the total gross proceeds from business done in
each county or municipality.
(E) The taxes imposed by this section are imposed on every person engaged or
continuing within this State in the business of furnishing accommodations to
transients for consideration.
Code Section 12-36-70(1)(b) defines the terms “retailer” and “seller” to include every person
“furnishing accommodations to transients for a consideration, except an individual furnishing
accommodations of less than six sleeping rooms on the same premises, which is the individuals
place of abode.”
Code Section 12-36-510 establishes who, as a retailer or seller, must obtain a retail license before
engaging in business. Code Section 12-36-510(B)(3) provides that a retail license is not required
of persons furnishing accommodations to transients for one week or less in any calendar quarter.
Item (B)(3) does not apply to rental agencies or persons having more than one rental unit.
Accommodations taxes must be remitted annually, on forms prescribed by the Department, by
April 15 of the following year.
Regulation 117-307.3 concerns certain facilities that are not subject to the sales tax on charges
for accommodations, and states, in part:
(A) The tax applies to the gross proceeds from the rental or charges for any
rooms, lodgings or accommodations furnished to transients by any hotel, inn,
tourists court, motel, residence, or any place in which rooms, lodgings or
accommodations are furnished to transients for a consideration, except where
such facilities consist of less than six sleeping rooms, contained on the same
premises, which is used as the place of abode of the owner or operator of such
facilities. For this exception to apply, the facility must serve as the owner’s or
operator’s “place of abode” during the same times at which the remaining
sleeping rooms are rented to transients and the rooms must not be rented to
transients by a person other than the owner or operator using the facility as his or
her “place of abode.”

(B) The gross proceeds derived from the lease or rental of accommodations
supplied to the same person for a period of 90 continuous days shall not be
considered proceeds from transient.

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(C) Real estate agents, brokers, corporations or listing services leasing or renting
accommodations, whether owned by them or others, to persons for periods of less
than 90 continuous days are retailers liable for the sales tax on accommodations.
Regulation 117-307.4 concerns rentals of 90 or more continuous days, and states:
A business, usually an airline, bus company or railroad, will reserve a certain
number of rooms in a hotel for use by its personnel. Usually the hotel is
guaranteed a certain minimum occupancy. The hotel is paid for the number of
rooms that are occupied and would not necessarily furnish the same rooms each
time. Such proceeds derived from the rentals of the accommodations supplied
would be subject to the sales tax.
A business rents from a hotel certain specific rooms on a continuing basis. These
rooms are occupied by authorized personnel of the corporation, on a daily basis.
The hotel is paid for the specific number of rooms that are rented, whether they
are used or not.
Transactions of this nature would not be subject to the tax if the contract remains
in force for a time in excess of 90 continuous days.
Based on the above, the furnishing of accommodations for a consideration is subject to the sales
tax on accommodations. However, the sales tax on accommodations does not apply if:

1. The same room is provided to the same individual or same business for a period of 90 or
   more continuous days or
2. The facility consists of less than six sleeping rooms, contained on the same premises,
   which is used as the “place of abode” of the individual who owns or operates such facility
   providing the owner (and not a real estate agent/on-line travel company) books the rental.
   As stated above in Regulation 117-307.3, the exemption from sales tax on accommodations for a
   “place of abode” applies when the facility serves as the owner’s or operator’s “place of abode”
   during the same times at which the remaining sleeping rooms are rented to transients and the
   rooms are not rented to transients by a person other than the owner or operator using the facility
   as his “place of abode.” It has been the Department’s longstanding position that this exemption
   applies to bed and breakfast facilities where the owner is living on site as an innkeeper.
   Conclusion:
   The sales tax on accommodations under Code Section 12-36-920 is applicable to rental charges
   by a person who owns a home and rents his entire home or individual rooms in the home to
   others for 15 days or more during the year as described in the following scenarios.

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Note: The conclusion under each scenario assumes the owner rents the entire home or
individual rooms on his own through written publications, such as newspapers or real
estate guides, his own website or a “Rent by Owner” website and does not employ the
services of a real estate agent, broker, listing service or internet booking service to rent the
home or the rooms.
Scenario 1 – Owner Rents Home on Short Term Basis. The owner uses his home only for
one or two weeks a year for family vacations and rents it to others during the rest of the
year on a weekly basis. The person renting the home from the owner may rent it for more
than one week, but in no case does any one person rent it for 90 or more consecutive
days. The rental charges do not qualify for an exemption and are subject to the sales tax
on accommodations under Code Section 12-36-920.
Scenario 2 – Owner Rents for 90 Days or More Consecutively to One Person. The owner
lives in his home for six months during the spring/summer months and rents it to a
specific person/business for the remaining six months during the fall/winter months. The
rental charges are not subject to the sales tax on accommodations under Code Section 1236-920(A) since the home is provided to the same individual/business for a period of 90
or more continuous days.
Scenario 3 – Owner Rents for Short and Long Terms During Year. The owner rents his
home to one vacationer for four months (120 consecutive days) and to all other
vacationers for one to four weeks at a time during the remainder of the year. The owner
may stay in his home during days the home is not rented. The rental charges to the one
vacationer for a period of 90 continuous days or more (120 consecutive days in this
example) is not subject to the sales tax on accommodations under Code Section 12-36920(A). The rental charges to all other vacationers who rent for less than 90 consecutive
days, however, are subject to the sales tax on accommodations under Code Section 1236-920.
Scenario 4 – Owner Rents Rooms in His “Place of Abode” with 5 or fewer bedrooms
(i.e., Operates a Bed and Breakfast) on Short Term Basis. The owner lives in a home with
five or fewer bedrooms throughout the year and also operates it as a “bed and breakfast”
whereby the remaining bedrooms are rented to others on a daily, weekly or monthly
basis. The owner serves as the innkeeper and provides the necessary amenities and
services for each guest. Any one person does not rent a room for more than 90
consecutive days. Under Code Section 12-36-920(A)(1), the rental charges are not
subject to the sales tax on accommodations since the home, which has less than 6
sleeping rooms, serves as the owner’s “place of abode” during the same time at which the
remaining rooms are rented to guests.
Scenario 5 – Owner Rents Rooms in His “Place of Abode” with 6 or more bedrooms (i.e.,
Operates a Bed and Breakfast) on Short Term Basis. The owner lives in a home with six
or more bedrooms throughout the year and also operates it as a “bed and breakfast”
whereby the remaining bedrooms are rented to others on a daily, weekly or monthly
basis. The owner serves as the innkeeper and provides the necessary amenities and
services for each guest. Any one person does not rent a room for more than 90
consecutive days. The rental charges do not qualify for an exemption and are subject to
the sales tax on accommodations under Code Section 12-36-920.
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Note: If a real estate agent, broker, listing service, or internet booking service (i.e., third party
rental agent) rents the owner’s home, or individual rooms in the owner’s home, as described
above, then the real estate agent, broker, listing service, or internet booking company is the
retailer and is liable for the sales tax on accommodations for any rentals made by the real estate
agent, broker, listing service, or internet booking service of less than 90 consecutive days. The
rentals by a real estate agent, broker, listing service, or internet booking company do not qualify
for the exemption for a facility that consists of less than six sleeping rooms, contained on the
same premises, since the facility is not used as the “place of abode” of the real estate agent,
broker, listing service, or internet booking service. See Regulation 117-307.3.
For additional information concerning the sales tax on accommodations, the sales tax on
“additional guest charges,” or the application of the sales or use tax to purchases of beds, linens,
supplies and other items by an accommodations facility, see SC Regulation 117-307.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Rick Reames III
Rick Reames III, Director
July 27
, 2016
Columbia, South Carolina

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