North Carolina Sales and Use Tax for Landlords - New Rules

[Account Closed]

House Bill 1050 (S.L. 2014-3), signed into law May 29, 2014 by Governor McCrory, provides that the gross receipts derived from the rental of a private residence, cottage, or similar accommodation listed with a real estate broker or agent where a person occupies or has the right to occupy such on or after June 1, 2014 is subject to the 4.75% general State and applicable local and transit rates of sales and use tax and any local occupancy tax imposed by a city or county. N.C. Gen. Stat § 105-164.4(a)(3) provides that the “rentals are taxed in accordance with new G.S. 105-164.4F.” 

I may rethink B&H here in North Carolina.  In the county I would operate in, there will be a 7.5% tax on the rent. Do I build that into the rent? So $1000 a month would have me tack on an additional $75 to cover the tax. I feel this is adding another level of taxation that penalizes landlords... State Income Tax, Franchise Tax, Property Tax, and now Sales Tax. I may keep my investments in Texas... Thoughts??

[Tom Dupree]

@Chris T. @Jonathan Prewitt

Let me throw out that I'm not a lawyer or CPA and this is outside my area of expertise / knowledge. It appears that this might be the link to the full law (including strike-throughs where changes were made):

http://www.ncga.state.nc.us/Sessions/2013/Bills/House/HTML/H1050v6.html

Section 8.1.(b) is for Accomodation Rentals

Here are the Exemptions from this Tax (item #2 would appear to apply to buy and hold long term rentals over 90 days ... not sure what happens if tenant leaves early or gets evicted).

Exemptions.