By Michelle Wagner | Outer Banks Voice on August 25, 2019
As the number of short-term vacation rentals listed with online lodging marketplaces continues to grow on the Outer Banks, some local officials are concerned about whether the county is receiving the occupancy tax it is owed.
There are an estimated 3,500 to 5,000 short-term rental homes in Dare County that are listed through platforms such as Airbnb, VRBO and Homeaway, County Tax Collector Becky Huff told the Dare Board of Commissioners at its Aug. 5 meeting.
During a presentation at that meeting, Huff acknowledged that there was no way of knowing how many short-term rentals could be flying under the radar in terms of taxes. “Not a clue,” she said. “People change so many and work with so many different vendors.”
Huff also told the commissioners that, “The listing department has a process where they are able to find a lot of them.” While there is no address provided on the advertisements, she estimated that her department can locate about 75 to 80 percent of them based on location and a photo of the house.
According to the tax department, the occupancy tax rate in Dare County is 6% of gross receipts derived from “the rental of room, lodging, campsite or similar accommodation furnished by any hotel, motel, inn, tourist camp, including private residences and cottages rented to transients.”
That tax does not apply to properties rented for less than 15 days in a calendar year or for 90 or more continuous days to the same person.
Dare County Manager Bobby Outten told the Voice in an interview that the tax department is working hard to ensure the occupancy revenue for such online rentals is being collected. But he acknowledged that it is an inexact science.
He noted that Airbnb collects occupancy tax and remits it to the county in one lump sum, but, “we can’t know if it is remitting all the tax or not.” As for VRBO, that company collects the occupancy tax from renters and remits it to the owners, who then pays it to the county.
A representative for Airbnb told the Voice that, “We’re collecting at the time of booking for each guest that books in North Carolina.” According to data provided by that company, Dare County’s combined Airbnb host income between June 1, 2018 and June 1, 2019 reached $13.9 million and represented roughly 81,000 guests.
At their Aug. 5 meeting, commissioners offered anecdotes about the proliferation of short-term rentals.
“I was talking to two people last week…and out of the nine homes on their street, five are Airbnb,” noted Chairman Bob Woodard. Commissioner Ervin Bateman told a similar story, saying that one Nags Head resident, who is also a hotel owner, said recently that there were nine Airbnbs on her street on the west side of U.S. 158.
The impact of these short-term rentals has been emerging as a public policy issue. This year, after initiating a town-wide survey to gauge sentiment about them, the Town of Nags Head implemented a registration program for owners and operators of units that are not managed by a real estate broker. The annual registration includes a $25 fee. Short-term rentals for the inaugural year must be registered by Dec. 31, 2019. Beginning in 2020, registration must be completed by Sept. 1 of each year.
As Nags Head tries to get a handle on this sector, some of the other players in the vacation rental industry also believe these operations should be more closely regulated.
Outer Banks Association of Realtors President Jean-Paul Peron said that these kinds of rentals are not members of his organization. “They are not under our control…and not under the jurisdiction of the [NC] Real Estate Commission,” he said. “All of our members abide by all the rules put forth by the state, as well as the Vacation Rental Act and property management rules and regulations.”
In the meantime, Huff told the commissioners that she believes most of them are trying to play by the rules.
“There will always be some who play the system, but we are trying very hard to make that as minimal as possible…ninety to ninety-two are honest and really want to do the right thing,” she said at the Aug. 5 meeting. Huff added that the county has launched several public awareness campaigns to educate residents of the occupancy tax requirement