Frequently Asked Questions
Sales
Tax
Q: Do persons renting vacation cottages owe
sales tax on the proceeds of those rentals?
A: Pursuant to GS 105-164.4, persons who rent
private residences and vacation cottages owe a 4
½ percent state sales tax on gross rental
receipts. (This rate will change to 4 percent for
rentals after July 1, 2005.) Persons who rent such
cottages also are responsible for any applicable
county sales tax.
No sales tax is owed on rental receipts from a
private residence or cottage rented for fewer than
15 days in a calendar year or rented to the same
person for 90 or more continuous days. GS 105-164.4(a)(3).
If owners rent the residence or cottage themselves,
they are liable for the sales tax. GS 105-164.4(a)(3).
If rental agents rent the premises on behalf of
the owners, the rental agents are liable for the
sales tax. GS 105-164.4(a)(3).
Q: Must all local option sales tax be apportioned
to municipalities under the same formula, that is,
either per capita or ad valorem?
A: Yes. GS § 105-472, which is part of Article
39, provides that the county shall choose either
a per capita or ad valorem basis of distributing
sales tax to its municipalities. Each of the statutes
applicable to ½ cent local option sales taxes,
GS 105-486, 105-501 and 105-520, provides that distribution
shall be in accordance with Article 39. Thus, all
distributions must be made on the same basis.
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